Vantis receives 'going concern' warning

Uncertainty over cash from Stanford liquidation

By Insolvency News, 2 February 2010. Posted in Industry

Listed accountancy firm Vantis has been forced to issue an going concern warning with its interim results amid concerns about its cash position.

Vantis has been left short of cash after spending six months working on the liquidation of the Stanford empire without receiving any fees.

Ernst & Young, which audits Vantis plc, said: "material uncertainties associated with receipts from the Stanford insolvency ... may cast significant doubt on the company’s ability to continue as a going concern".

The firm warned shareholders that it had been unable to collect any fees for the liquidation work on Stanford International Bank due to the US and Switzerland freezing the assets which it needs to realise before it can recover its fees.  Vantis said: “The group is confident that outstanding time costs will be recovered in due course but the various legal actions mean that timing is uncertain.”

Net debt at the firm had risen to £40.4m at the end of October, and the firm is now in the midst of a cost-cutting programme which is likely to include redundancies. 

Business Recovery Services revenue was up 43% to £17.4m, while BATS fell 17% to £29.6m. Operating margin fell to 8% due to reduced revenue in BATS and higher costs in BRS and support functions. Margins were expected to remain under pressure until the benefits of cost reductions came through.

Vantis' chairman Mike Wheeler said: "The group has initiated cost reduction and working capital improvement programmes, which are expected to deliver improved performance in the new financial year commencing May 1, 2010. We expect further growth in Business Recovery Services, but the performance of BATS [business advisory and tax] will be constrained until the UK economy improves."

Vantis made a loss of £9m for the six months to October 2009, compared with a profit of £3.2m for the same period in 2008.

It's been a dismal year for Vantis - in October the firm was forced into a management reshuffle after two senior employees were charged with cheating the public revenue in relation to a multi-million pound tax avoidance scheme.

Vantis shares, which were trading at around 90p nine months ago, slipped 1p to 28p.

Whatever the outcome, Vantis' situation is likely to be used as a prominent example in any coming debate over the level of insolvency practitioners' fees. 

Comments What do you think?

  • IP | 10:41 2 February 2010

    Vantis are not the only ones with this issue. I think the most visible effect will be highly effective IP partners in these firms leaving when they see their disappointing profit shares at the end of one of their most successful years. Will we see more independent insolvency firms? Will IPs rebel against accountancy partners sucking them dry, year in year out?

  • Chris Johnson | 12:44 2 February 2010

    I wonder just what amount of experience Vantis had of liquidating offshore financial vehicles that come with complex multi-jurisdictional problems, fraud and asset freezing. Probably none I suspect. These are fairly common problems in the Cayman Islands and even more so in places like Antigua where there is far less supervision. Maybe Vantis shoulfd have left it to the local specialists.

  • IP | 17:53 2 February 2010

    If the cash gets freed up, they could still suffer a severe reduction in their fees if they have been learning on the job.

  • Method Man | 08:45 3 February 2010

    Couldn't have happened to a nicer firm.

  • Long suffering lawyer | 09:47 3 February 2010

    When are creditors going to realise that the professionals acting on their instructions cannot fund these recovery exercises indefinitely? Time for some hands to be dipped into bank pockets, I'd suggest.

  • Miss Chief | 10:56 3 February 2010

    A lesson to everyone - stick to what you know.

    As regards partners leaving to form their own smaller firms, unless they have had some experience actually running a business themselves, dealing with staff, compliance, getting in the work and monitoring its production, then they might be in for something of a shock.

    Vantis took over some good small businesses and I wonder just how easy it might be for the parters of those former independent firms to extracate themselves.

  • IP | 11:04 3 February 2010

    Independent doesn't mean small. In the case of Vantis we hear its Insolvency Team is billing £17m on its own. I think we may see the rise of larger independent firms with less conflicts by dumping their low profit accountancy arms...

Follow these comments

We'll send you an email whenever there's a new comment. No spam, promise.


Add a comment

We're sorry to have this, without it we get hundreds of spam comments every day.