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Birkby’s Plastics Limited and Verve Industries Limited (Both in Administration) (“the Companies”) Joint Administrators’ final report for the period 3 October 2012 to 2 April 2013
2 April 2013
Ernst & Young i
Abbreviations The following abbreviations are used in this report:
The Act The Insolvency Act 1986
the Bank Lloyds TSB Bank plc
Birkby’s Birkby’s Plastics Limited
the Companies Verve Industries Limited and Birkby’s Plastics Limited
EY Ernst & Young LLP
FYXX Financial year ending 31 March XX
the Group Verve Industries Limited, HBH Holdings Limited and Birkby’s Plastics Limited
HBH HBH Holdings Limited
HBPO HBPO Gbmh
Honda Honda Trading Limited
JLR Jaguar Cars Limited and Land Rover
KPMG KPMG LLP
LTSBCF Lloyds TSB Commercial Finance Limited
MBO Management Buyout
OEM Original equipment manufacturer
The Pension Scheme Birkby’s Plastics Limited Pension Scheme
The Rules The Insolvency Rules 1986
Supply agreement Supply agreement signed by Honda, JLR and Toyota
Toyota Toyota Motor Europe Ltd
Trough-Tec Trough-Tec Systems Limited
Treves Treves UK Limited
Verve Verve Industries Limited
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Contents
1. Summary of the Administrators’ Proposals ......................................................... 2 1.1 Final progress report .................................................................................................................. 2 1.2 Purpose of the Administrations ................................................................................................... 2 1.3 Initial Meeting of Creditors .......................................................................................................... 2 1.4 Proposed conduct of the Administrations ..................................................................................... 2 1.5 The End of the Administrations ................................................................................................... 3
2. Actions taken during the Administration ............................................................. 4 2.1 Birkby’s Trading Profit ................................................................................................................ 4 2.2 Verve trading ............................................................................................................................ 4 2.3 Birkby’s debtors......................................................................................................................... 4 2.4 Stock ........................................................................................................................................ 6 2.5 Chattel assets ............................................................................................................................ 7 2.6 Birkby’s – other realisations ........................................................................................................ 8 2.7 Verve – Joint venture shares ....................................................................................................... 9 2.8 Verve – other realisations ........................................................................................................... 9 2.9 Reports on directors conduct .................................................................................................... 10 2.10 Birkby’s Employment Tribunal ................................................................................................... 10
3. Distributions to creditors ................................................................................. 11 3.1 Secured Creditors .................................................................................................................... 11 3.2 Preferential Creditors............................................................................................................... 11 3.3 Non Preferential Creditors ........................................................................................................ 11 3.4 Prescribed Part ....................................................................................................................... 11
4. Receipts and Payments Account ....................................................................... 13 4.1 Receipts.................................................................................................................................. 13 4.2 Payments ................................................................................................................................ 13
5. Joint Administrators Remuneration and Disbursements .................................... 14 5.1 Remuneration – Birkby’s ........................................................................................................... 14 5.2 Remuneration – Verve .............................................................................................................. 14 5.3 Basis of remuneration – Birkby’s & Verve .................................................................................... 14 5.4 Disbursements......................................................................................................................... 14
Appendix A Statutory Information ...................................................................... 16
Appendix B Receipts and Payments from 3 April 2012 to 2 April 2013 ............... 19
Appendix C Summary of Joint Administrators’ Time-Costs from 3 April 2012 to 2 April 2013 ........................................................................................................ 21
Appendix D Office Holders’ Charging Policy for Fees and Disbursements ............. 22
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1. Summary of the Administrators’ Proposals
1.1 Final progress report
In accordance with Rules 2.47 and 2.110 of the Insolvency Rules 1986 I provide below the final progress report in respect of the Administrations of the Companies.
This report covers the period 3 April 2012 to 2 April 2013 and should be read in conjunction with the Administrators’ proposals dated 24 May 2012 and the Administrators’ progress report dated 31 October 2012.
1.2 Purpose of the Administrations
The purpose of an Administration is to achieve one of three objectives:
a) To rescue the company as a going concern
b) To achieve a better result for the company’s creditors as a whole than would likely if the company were wound up (without first being in administration)
c) To realise property in order to make a distribution to one or more secured or preferential creditors
The Administrators concluded that it was not reasonably practicable to achieve the rescue of the Companies as a going concern in accordance with paragraph 3(1)(a) of Schedule B1 to the Insolvency Act 1986, as the business had previously been marketed for sale on two occasions, which had not resulted in any firm offers.
Instead, the Joint Administrators concluded they were likely to be able to achieve objective b) (a better result for creditors as a whole than would be likely if the Companies were wound up), as the Joint Administrators were able to trade the business in the short term to allow customers to re-source production. Trading also provided the opportunity to enhance asset realisations in relation to book debts, stock, plant and machinery.
The only alternative strategy was an immediate closure of the whole business, which would have resulted in significantly lower realisations and would have been detrimental to the body of creditors as a whole.
1.3 Initial Meeting of Creditors
Birkby’s has insufficient property to enable a distribution to be made to unsecured creditors other than by virtue of the prescribed part. Verve has insufficient property to enable any distribution to unsecured creditors.
In accordance with the provisions of paragraph 52(1) of Schedule B1 to the Act, the Joint Administrators did not convene a creditors’ meeting at the time the proposals were distributed (although creditors were given the opportunity to request a meeting if they wished).
No request was received from any creditor to call a creditors’ meeting, and as a result the Joint Administrators’ proposals were deemed to be approved on 11 June 2012.
1.4 Conduct of the Administrations
It was proposed that the Joint Administrators would manage the affairs, business and property of the Companies in order to achieve the purpose of the Administration. This included, inter alia:
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► Continuing to trade whilst the customers re-sourced their supplies;
► Realising the remaining assets, principally the book debts, stock and plant and machinery;
► Conducting investigations into the conduct of the Directors of the Company and reporting to the Department of Business, Innovation and Skills pursuant to the Company Directors Disqualification Act;
► Distributing the realisations to the secured creditors;
► Dealing with unsecured creditor enquiries;
► Dealing with statutory reporting and compliance obligations; and
► Finalising the Administration including payment of all Administration liabilities.
1.5 The End of the Administrations
In the Joint Administrator’s proposals it was proposed that at the end of the Administrations:
► if realisations were sufficient to allow a distribution to unsecured creditors, the Company concerned would move into creditors’ voluntary liquidation upon the filing with the Registrar of Companies of a notice pursuant to paragraph 83 of Schedule B1 to the Act; and
► if the Company concerned had no property to permit a distribution to its creditors, the Administration would come to an end upon the filing with the Registrar of Companies of a notice pursuant to paragraph 84 of Schedule B1 to the Act.
Birkby’s has sufficient property to allow a distribution to unsecured creditors and as a result, the Joint Administrators have filed the relevant notice with the Registrar of Companies. Once this notice has been registered, Birkby’s will move into creditors’ voluntary liquidation. The liquidators will be RH Kelly and CGJ King of Ernst & Young LLP and any act required or authorised under any enactment to be done by the liquidators may be done by either or both of them.
Verve has insufficient property to allow a distribution to unsecured creditors and therefore the Joint Administrators have filed the relevant notice with the Registrar of Companies. In accordance with the provisions of paragraph 84(6) of Schedule B1 to the Act Verve will be deemed to be dissolved three months after the registration of this notice.
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2. Actions Taken During the Administration
2.1 Birkby’s Trading Profit
On the date of appointment, the Joint Administrators entered into a Supply Agreement with Toyota Motor Europe NV/SA (“Toyota”), Honda of the UK Manufacturing Limited (“Honda”), Jaguar Cars Limited and Land Rover (“JLR”). Under this Supply Agreement, the three customers agreed to:
► Pay for the assets utilised in trading, being tooling and raw materials, at amounts significantly in excess of that which would have been achieved in a ceasing to trade scenario;
► Accept a variable price increase to allow a profit to be generated after the costs of trading had been met; and
► Pay the costs of the Joint Administrators and their staff in dealing with trading activities.
As a result of this agreement, the Joint Administrators took the decision to trade Birkby’s in Administration to generate additional net realisations for the benefit of the secured creditors and general body of creditors.
The trading profit under the Supply Agreement was agreed at 5% of weekly turnover, subject to a maximum of £25,000 per week and a minimum of £10,000 per week.
Trading continued for a 13 week period from 3 April to 29 June 2012, with the maximum profit of £325,000 (per the Supply Agreement) being generated for the benefit of creditors.
2.2 Verve trading
Verve did not continue to trade following the appointment of the Joint Administrators. However, certain directors employed by Verve were retained on a temporary basis to assist in the trading of Birkby’s.
Any costs associated with the retention of these Verve employees have been recharged via Birkby’s to Toyota, Honda and JLR under the Supply Agreement and therefore there was no impact upon Verve.
2.3 Birkby’s debtors
2.3.1 Product debtors
At the date of appointment, the total product debtor balance was c.£1.29m. After provisions for uncollectable amounts and adjustments for credit balances, the net collectable balance was assessed at c.£1.27m, with collections of £1.26m achieved, as shown below.
Ledger
Balance on
appointment
(GBP) Adjustments
Provisions for
uncollectible
amounts
Estimated
collectible
opening
balance
Collections
to date Outstanding
Product
GBP 1,099 (5) (9) 1,085 1,076 9
Euro 189 - - 189 188 1
Total product debtors 1,289 (5) (9) 1,274 1,264 10
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The debtor balances were assigned to LTSBCF who were owed £378,000 at the date of appointment. This liability has been settled in full from debtor realisations.
2.3.2 Tooling debtors
At the date of appointment, outstanding tooling debts were c.£0.50m.
The tooling debtor book included amounts due to be paid to Birkby’s and then paid on to the tooling manufacturers. From a commercial perspective, customers were unwilling to settle these debts, as the tooling manufacturer retained title to the tooling. Therefore, to gain title to the tooling, all customers opted to pay the tooling manufacturer directly. As a result of this, certain amounts within the tooling debtor book were not legally collectible and the net collectable balance was assessed at c.£0.26m, as shown below.
In addition, the Joint Administrators have been able to negotiate payment of c.£172,000 in relation to tooling costs incurred by Birkby’s which had not been invoiced to the customer prior to appointment.
2.3.3 Disputed monies
Around the date of our appointment, certain customers made payments to Birkby’s in relation to the tooling ledger, as follows:
These amounts were paid into Birkby’s bank account in the expectation that they would be “passed through” to tooling manufacturers. However, due to the appointment of the Administrators intervening, these amounts were not paid on as anticipated.
Instead, the amounts received from Tachi-S and Toyota have reduced the amounts due to LTSBCF at the date of appointment, and the amount received from DS Smith (included in the tooling ledger debtor collections) has provided realisations for the benefit of creditors.
The customers have disputed the application of these funds, and are seeking to assert that these monies should have been held on trust for their benefit, or the benefit of the tooling manufacturer.
The Joint Administrators have set aside a proportion of debtor realisations equivalent to the disputed monies pending clarification of legal position with the customers. The level of realisations which ultimately becomes available to the floating charge holder will be dependent upon the resolution of this issue. To date, none of the customers have commenced legal action.
Ledger
Balance on
appointment
(GBP) Adjustments
Provisions for
uncollectible
amounts
Estimated
collectible
opening
balance
Collections
to date Outstanding
Tooling
GBP 251 (15) (63) 174 174 -
Euro 253 - (168) 85 85 -
Total tooling debtors 504 (15) (231) 258 258
Date rec'd Amount (£)
Tachi-S Co Limited 30/03/2012 212,225
Toyota 30/03/2012 185,411
DS Smith 03/04/2012 76,288
Total disputed monies 473,923
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2.4 Stock
2.4.1 Overview
At the date of appointment, Birkby’s had stock with a book value of £1.9m, although c.£0.5m of stock was identified as obsolete.
The Joint Administrators received retention of title claims from 41 suppliers in respect of c.£0.8m of stock. Of these claims, £358,000 were settled through the return of stock or through payments to suppliers for stock used during trading.
Accordingly, the Joint Administrators estimate that there was c.£1.04m of net realisable stock at book value at the date of appointment, as shown below:
2.4.2 Stock used during the trading period
Any stock owned by Birkby’s which was used during the trading period has generated realisations of 100 pence in the £, either through a charge to the customers under the Supply Agreement, or through direct sales to departing customers.
Total stock realisations from the trading period are £1.1m, of which:
► c.£0.67m is for sales made to customers under the Supply Agreement; and
► c.£0.44m is for sales made to departing customers.
2.4.3 Stock remaining following the cessation of trading
Following the cessation of trading, Birkby’s systems indicated that there was stock with a book value of c.£486,000 left on site, of which c.£145,000 was subject to potential ROT claims, leaving c.£341,000 available to realise from obsolete stock.
This stock principally consisted of items which were not required by any of the customers, and was dealt with as follows:
► Any items which were not purchased by customers were re-ground into secondary polymer and sold to a local merchant, or sold as scrap plastic without being re-ground;
► The remaining polymer was marketed to all customers and suppliers, as well as to several polymer traders; and
► Residual bought out parts were marketed to all suppliers and customers, but garnered no interest and were subsequently scrapped.
The realisations from this residual stock were £49,000.
£'000
Finished
Goods WIP
Raw
materials Total
Stock at date of appointment 386 150 1,386 1,922
Retention of title stock (358) (358)
Stock owned by Birkbys at DoA 386 150 1,028 1,564
Obsolete stock (132) (42) (352) (526)
Realisable stock at DoA 254 108 676 1,038
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2.5 Chattel assets
2.5.1 Overview
The Joint Administrators appointed GVA Grimley LLP (“GVA”) to dispose of Birkbys’ chattel assets. GVA’s valuation of the chattel assets on site at the date of appointment is shown below:
This valuation was before the costs of realisation and as Birkby’s was closing, GVA advised that the ex-situ valuation was the appropriate valuation.
GVA disposed of the chattel assets via three online auctions held on bidspotter.co.uk.
In addition, various assets have been sold by private treaty, including the Presma machine, which was sold for c.£300,000.
2.5.2 Assets secured to Lloyds
Two of the machines were subject to asset finance provided by Lloyds TSB Bank Plc (“Lloyds”), who were owed c.€201,000 at appointment.
These machines generated realisations of £480,000 in auction one. Given payments made to Lloyds as a result of ongoing trading, the amount due under the financing agreement had reduced to €136,000 at the time the machines were sold.
This amount (c.£110,000) has been paid to Lloyds in settlement of their debt and the surplus has been made available to the floating charge holder.
2.5.3 Realisations to date
Total chattel asset realisations to date are £2.19m, c.£0.79m in excess of GVA’s ex situ value, as analysed below:
2.5.4 Professional costs – GVA and Bidspotter
For the online auction processes, both GVA and Bidspotter fees were paid via a buyer’s premium, charged at an additional 15% on top of the price paid for the assets. Therefore, no deduction was made from the amount shown above in respect of realisations from the auctions.
GVA received 10% of the buyer’s premium, with the remaining 5% being shared between Bidspotter’s commission and a rebate to the Administration, as follows:
£'000
Market value
in situ
Market value
ex situ
Plant, machinery and fixtures 3,500 1,400
Auctions 1,717,248
Presma 301,390
GVA total 2,018,638
Other private treaty assets 174,787
Total chattel asset realisations 2,193,425
Less: paid to Lloyds (110,067)
Net chattel asset realisations 2,083,358
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As a result, the Administration has benefited from c.£39,500 of additional realisations in respect of the buyer’s premium charged on the sale of chattel assets through the online auction process.
Where assets were sold by private treaty and not through the online Bidspotter process, GVA’s fees were agreed at 5% of the purchase price. This has been deducted from realisations achieved.
2.5.5 Exit from site
The removal of the majority of assets was undertaken through a third party specialist who managed the process of removing the injection moulding machines from site.
The exit was completed and the lease was surrendered prior to the beginning of the next rent quarter (Friday 28 September 2012), avoiding an additional rent payment of £180,000.
2.6 Birkby’s – other realisations
2.6.1 Cash at date of appointment and interest received
Birkby’s had c.£43,000 in its bank accounts at the date of appointment.
The Administrators have received £45,138 in interest on sums held throughout the Administration.
2.6.2 Rental and other prepayments
Prior to our appointment, Birkby’s had prepaid c.£162,000 in respect of the rent at the Headlands Road site for the quarter to 24 June 2012. If trading had not continued, it is likely that this prepayment would have been irrecoverable.
However, as trading has continued, the Joint Administrators have been able to realise the value of this and other prepayments made by Birkby’s by charging them to the customers under the Supply Agreement.
2.6.3 Tooling removal income
Throughout the Administration period, the Joint Administrators’ and Birkby’s staff were obliged to deal with various third party assets, (principally tooling) located on site.
Following the completion of trading, any customers who removed tools from site were charged an appropriate tool removal fee to cover the costs involved.
2.6.4 Tooling storage income
Upon appointment, there were a large number of tools (c.500) on site. Of these tools, c.200 were collected by customers during the Administration period.
On the basis of legal advice, the Joint Administrators undertook a process to identify and inform the potential owners of the remaining c.300 tools. This involved contacting all known previous customers and advertising in trade press.
Realisations Bidspotter Administration
First £100,000 5% 0%
Subsequent £150,000 2% 3%
Additional realisations (£250,000 +) 1% 4%
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Very few parties expressed an interest in collecting the tools and following the expiry of the deadline for responses, the Joint Administrators proceeded to scrap the uncollected tools.
In line with legal advice, the proceeds from the scrappage of the tools were held by the Joint Administrators on behalf of the potential owners of the tools. However, in accordance with the circular sent to customers, the Joint Administrators were entitled to deduct storage charges for the tools until the date the tools were scrapped. This utilised all of the proceeds from the scrapping process.
The tooling storage income received by the Joint Administrators is £82,000. This amount is a combination of the Customers contributions to the removal of their own tools and storage charges for tools stored on site.
2.6.5 Pension debtor
Under an arrangement with the pension scheme, certain pensioners were paid their pension using the Birkby’s payroll system, with the pension scheme reimbursing Birkby’s on a monthly basis.
In the week prior to the appointment of the Joint Administrators, Birkby’s had paid c.£40,000 to various pensioners on behalf of the pension scheme. However, the repayment due from the pension scheme was not received until after appointment. Therefore, this amount forms part of the floating charge realisations.
2.6.6 Kautex income
Kautex occupies an adjoining plot of land on Headlands Road and this income reflects an agreed contribution to shared utility services. Therefore this income has been applied to the benefit of the trading period.
2.6.7 Novation monies
Birkby’s held various contracts for the manufacture and supply of tooling to customers. As Birkby’s was ceasing to trade, the Joint Administrators were asked to novate certain of these contracts to create a direct relationship between the tooling manufacturer and the end customer.
Novation fees of £38,600 have been generated as a result of this.
2.7 Verve – Joint venture shares
Verve held 50% of the share capital in a joint venture, Trough-Tec Systems Limited (“Trough-Tec”). The other 50% was held by Hird Rail Services Limited (“Hird”).
Under the joint venture agreement, the insolvency of one of the joint venture partners gave the right for the other joint venture partner to purchase the remaining 50% of the share capital at a value to be determined by Trough-Tec’s auditors.
Therefore, immediately following appointment, Hird requested a valuation of Trough-Tec, and accordingly, the Joint Administrators have received a payment of £500 for the share capital in line with the auditors value.
Given the Joint Venture had not commenced trading the Administrators do not intend to challenge this value.
2.8 Verve – other realisations
The Joint Administrators do not anticipate any further realisations in Verve.
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2.9 Reports on directors conduct
The Joint Administrators have submitted their reports on the conduct of the directors of Verve and Birkby’s to the Department for Business, Innovation and Skills in line with their statutory responsibilities.
These reports are confidential.
2.10 Birkby’s Employment Tribunal
Certain employees, some of whom have been supported by their trade unions, have taken action against Birkby’s for failure to consult in respect of the redundancies made in the Administration.
A tribunal hearing was held on 19 March 2013, where judgement was given for the claimants. These claims will fall to be dealt with in the creditors’ voluntary liquidation.
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3. Distributions to creditors
3.1 Secured Creditors
3.1.1 LTSBCF & Lloyds
LTSBCF had fixed charge security over the sales ledger, and was owed £378,000 on appointment.
Lloyds had fixed charge security over two injection moulding machines and was owed €201,000 on appointment.
Both LTSBCF and Lloyds have been fully repaid from realisations.
3.1.2 Birkby’s Plastics Limited Pension scheme (“the Pension Scheme”)
The Pension Scheme is the third ranking secured creditor for its s.75 deficit.
The Pension Scheme holds a debenture from the Group companies incorporating fixed and floating charges. We are uncertain of the precise amount of the Pension Scheme’s claim, however, the Directors estimated it to be £10.3m in their Statement of Affairs.
After the payment of the costs of realisation, preferential claims and the Prescribed Part, all floating charge realisations will be made available to the Pension Scheme. However, based on a liability of £10.3m we do not anticipate that the Pension Scheme will be repaid in full.
To date payments of £3.3m have been made in respect of this claim.
3.2 Preferential Creditors
All preferential creditor claims in both Verve and Birkby’s have been settled as a result of the continuation of trading, as all arrears of wages and holiday pay have been paid to employees made redundant during the trading period. The cost of settling these claims has been accounted for as a cost of trading.
3.3 Non Preferential Creditors
Non-preferential claims continue to be submitted and will be dealt with in the conduct of the liquidation. The directors’ Statements of Affairs estimates that the non-preferential claims for Verve and Birkby’s will be in the region of £1.1m and £7.0m respectively.
Final claims may be higher due to contingent claims and other non-preferential creditor amounts becoming known.
We do not expect there will be a distribution to the non-preferential creditors of Verve.
It is not anticipated that there will be sufficient realisations to enable a distribution to the non-preferential creditors of Birkby’s other than by virtue of the Prescribed Part.
3.4 Prescribed Part
The prescribed part is a proportion of floating charge assets set aside for non-preferential creditors pursuant to section 176A of the Insolvency Act 1986. The prescribed part applies to floating charges created on or after 15 September 2003.
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3.4.1 Prescribed Part - Birkby’s
The Joint Administrators of Birkby’s currently estimate that the value of the net property will be c.£4.2m, and the value of the Prescribed Part will be £0.6m.
3.4.2 Prescribed Part - Verve
The Joint Administrators of Verve currently estimate that the value of the net property will be £nil, and the value of the Prescribed Part will be £nil.
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4. Receipts and Payments Account
A receipts and payments account for the Administrations for the period 3 April 2012 to 2 April 2013 is shown at Appendix B.
4.1 Receipts
Receipts to date principally relate to trading, stock, debtor and chattel asset realisations.
4.2 Payments
4.2.1 Trading costs
All relevant trading costs have been met by the customers under the Supply Agreement and therefore the creditors will not suffer the impact of these costs.
4.2.2 Non trading costs
The Joint Administrators have incurred the following costs to date in dealing with the non-trading aspects of the Administrations:
► Employee costs in relation to the small number of employees who were retained in the period to 28 September 2012 to assist with various closure tasks ; and
► Utilities, rent, rates and other site related costs for the post-trading period.
4.2.3 Professional fees
The following other professionals were engaged to assist in the Administrations. They were chosen on the basis of their experience in similar assignments:
Name of firm Nature of service How contracted to be paid
GVA Grimley Valuation and disposal of chattel assets
As set out above
DWF Administrator’s appointment documentation
Time cost basis
Walker Morris Legal advice relating to validity of appointment, trading matters, retention of tile claims, intellectual property and the leasehold property.
Time cost basis
Professional fees for GVA and Bidspotter in relation to the online auctions are discussed above. In addition, commission of £14,750 was paid to GVA for the sale of the Presma machine.
Walker Morris’ fees have been fixed on the basis of time costs incurred, and weekly updates on costs have been provided to allow legal costs to be allocated between trading and non-trading issues. To date, £142,539 has been incurred, of which £96,361 relates to trading issues and has been paid by the customers.
In addition, £5,307 has been paid to DWF LLP, who assisted the directors with the Joint Administrator’s appointment.
Joint Administrators’ Remuneration and Disbursements
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5. Joint Administrators Remuneration and Disbursements
5.1 Remuneration – Birkby’s
To date, the Joint Administrators have incurred total time costs of £2,056,914 (being £667,337 of non-trading costs and £1,389,577 of trading costs). Attached at Appendix C is a detailed analysis of time spent and charge out rates, for each grade of staff for the various areas of work carried out to 2 April 2013, as required by the Association of Business Recovery Professionals’ Statement of Insolvency Practice No. 9.
To date, trading costs of £1,352,109 have been drawn under the Supply Agreement. These costs have been met by the Customers and will not be a cost to the creditors.
In addition, non-trading costs of £600,000 have been drawn from floating charge realisations with the consent of the secured and preferential creditors
5.2 Remuneration – Verve
To date, the Joint Administrators have incurred total time costs of £22,378 against which no fees have been drawn. Attached at Appendix C is a detailed analysis of time spent and charge out rates, for each grade of staff for the various areas of work carried out to 2 April 2013, as required by the Association of Business Recovery Professionals’ Statement of Insolvency Practice No. 9.
5.3 Basis of remuneration – Birkby’s & Verve
The Joint Administrators proposed that their remuneration be fixed on the basis of time properly given by them and their staff in dealing with the matters arsing in the Administrations.
As there are insufficient funds available for distribution to the unsecured creditors, other than via the prescribed part, the basis of the Administrators’ remuneration falls to be agreed with the secured creditors and the preferential creditors in accordance with the provisions of Rule 2.106(5A) of the Insolvency Rules 1986. The secured creditors and preferential creditors have agreed this basis.
At Appendix D there is a statement of the Administrators’ policy in relation to charging time and disbursements.
In certain circumstances, creditors are entitled to request further information regarding the Administrators’ remuneration or expenses, or to apply to court on the grounds that the costs are considered to be excessive. (Rules 2.48A and 2.109 of the Insolvency Rules 1986). Further information is provided in Appendix D.
5.4 Disbursements
Both the secured and preferential creditors have approved the Joint Administrators’ proposal that they be entitled to draw Category 2 disbursements, shown at Appendix D.
5.4.1 Birkbys
The Administrators have incurred disbursements of £33,848 and the full amount has been drawn, with £30,000 being paid by the customers under the Supply Agreement and the remainder being paid from floating charge realisations.
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5.4.2 Verve
The Administrators have incurred disbursements of £434 and it is proposed that this amount will be drawn before the closure of the case.
Appendix A: Statutory Information
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Appendix A Statutory Information
Company Information
Company Name: Verve Industries Limited
Registered Office Address: c/o Ernst & Young LLP
1 Bridgewater Place
Water Lane
Leeds
LS11 5QR
Registered Number: 06444479
Trading Name(s): None
Trading Address(es): Headlands Road
Liversedge
West Yorkshire
WF15 6QA
Details of the Administrators and of their appointment
Administrators: R H Kelly and C G J King
Date of Appointment: 3 April 2012
By Whom Appointed: The appointment was made by Lloyds TSB Commercial Finance Ltd
Court Reference: High Court of Justice, Chancery Division, Leeds District Registry, 518 of 2012
Any of the functions to be performed or powers exercisable by the Administrators may be carried out/exercised by either of them acting alone or by any or both of them acting severally.
Statement concerning the EC regulation
The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State.
Share Capital
Class Authorised Issued & Fully paid
Number £ Number £
Ordinary 100,000 100,000 100,000 100,000
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Directors and secretary and their shareholdings
Name
Director or Secretary
Date Appointed
Current Shareholding
Ian Parker Director 4 December 2007 51,000
Nicola Rose Director/Secretary 4 December 2007 14,000
Macartan Flanagan Director 4 December 2007 14,000
Thomas Moore Director 4 December 2007 7,000
John Child Director 4 December 2007 14,000
Company Information
Company Name: Birkby’s Plastics Limited
Registered Office Address: c/o Ernst & Young LLP
1 Bridgewater Place
Water Lane
Leeds
LS11 5QR
Registered Number: 02486780
Trading Name(s): None
Trading Address(es): Headlands Road
Liversedge
West Yorkshire
WF15 6QA
Details of the Administrators and of their appointment
Administrators: R H Kelly and C G J King
Date of Appointment: 3 April 2012
By Whom Appointed: The appointment was made by Lloyds TSB Commercial Finance Ltd
Court Reference: High Court of Justice, Chancery Division, Leeds District Registry, 517 of 2012
Any of the functions to be performed or powers exercisable by the Administrators may be carried out/exercised by any one of them acting alone or by any or all of them acting severally.
Statement concerning the EC regulation
The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State.
Share Capital
Class Authorised Issued & Fully paid
Number £ Number £
Ordinary 8,380,000 8,380,000 8,380,000 8,380,000
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Directors and secretary and their shareholdings
Name
Director or Secretary
Date Appointed
Current Shareholding
Ian Parker Director 11 January 2008 Nil
Nicola Rose Director/Secretary 11 January 2008 Nil
Macartan Flanagan Director 11 January 2008 Nil
Thomas Moore Director 11 January 2008 Nil
Victor Shelton Director 15 October 2010 Nil
John Child Director 11 January 2008 Nil
Appendix E : Receipts and Payments
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Appendix B Receipts and Payments from 3 April 2012 to 2 April 2013
Birkbys Plastics Limited
From 3 April 2012 From 2 October 2012 Total
Receipts & payments account to 2 October 2012 to 2 April 2013
Receipts
Total receipts Total receipts Total receipts
Administration sales 8,084,130.69 1,415,044.66 9,499,175
Plant and machinery 2,193,152.90 272.04 2,193,425
Bidspotter premium - 39,596.32 39,596
Trading advance/(refund) 1,618,861.59 (1,323,827.00) 295,035
Book Debt (charged to LTSBCF) 1,021,577.50 26,358.30 1,047,936
Disputed Book Debt 473,922.95 - 473,923
Debt uninvoiced at date of appointment 171,992.33 12.74 172,005
Stock 1,144,763.21 17,891.44 1,162,655
Tooling income 237,075.20 - 233,675
Scrappage of tools (storage income) 82,047.80 - 82,048
Cash at date of appointment 42,839.93 - 42,840
Sundry Income 41,668.25 38,871.29 80,540
Bank interest 30,198.68 14,939.47 45,138
Kautex 9,051.46 - 9,051
Third party funds 55,911.82 (55,911.82) -
Total receipts 15,207,194.31 173,247.44 15,377,041.75
Payments
Total payments Total payments Total payments
Employee costs (2,774,577.24) (6,745.41) (2,781,323)
Material purchases (2,245,080.25) (798.92) (2,245,879)
Royalties (51,312.34) - (51,312)
Insurance (179,364.90) 38,168.15 (141,197)
Quality control services (49,997.35) - (49,997)
ROT settlement (353,010.41) - (353,010)
Ransom payments (295,110.85) 96.07 (295,015)
Hire of Equipment (108,125.12) (6,701.12) (114,826)
Haulage costs (55,607.95) - (55,608)
Property costs (255,113.56) (40,899.78) (296,013)
Utilities (218,461.00) (32,858.53) (251,320)
Telephone and IT services (15,353.29) (54.76) (15,408)
Administrators fees and disbursements - (1,985,957)
Professional Fees (136,839.22) (25,758.10) (162,597)
Repairs and renewals (38,153.84) (5,200.43) (43,354)
Refund of excess profit - (1,779,293)
Secured creditor (LTSBCF) (378,533.35) - (378,533)
Secured creditor (PPF) - (3,300,000.00) (3,300,000)
Secured Creditor (Lloyds) (110,066.90) - (110,067)
Sundry expenses (4,891.55) (7,548.16) (12,440)
Stationary and printing (2,874.83) (1,504.27) (4,379)
Bank charges (5,664.26) (20.35) (5,685)
VAT Payable (423,350.30) 118,488.06 (304,862)
Total payments (7,701,489) (3,271,338) (14,738,076)
Balance in hand 7,505,706 (3,098,090) 638,965
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Verve Industries Limited
The only receipts in Verve have been £500 for the Shares in Trough Tec and £2.24 bank interest.
All payments made in relation to Verve have been via Birkby’s, other than a Corporation Tax payment of £0.72.
Appendix K: Summary of Joint Administrators’ Time-Costs
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Appendix C Summary of Joint Administrators’ Time-Costs from 3 April 2012 to 2 April 2013
Birkby’s Plastics Limited
Verve Industries Limited
Non - trading
Hours Partner
Executive
Director
Assistant
Director
Senior
Executive Executive Analyst Support Intern Total
Accounting and Administration 8.0 8.0 3.0 64.0 96.2 64.1 213.7 42.5 499.5
Bank & Statutory Reporting 2.0 21.0 97.5 5.5 81.5 9.0 - - 216.5
Creditors 0.5 1.5 2.0 7.5 81.3 23.0 - 29.5 145.3
Debtors - 1.5 20.0 5.5 111.5 4.0 - 39.0 181.5
Employee Matters 8.0 - 63.0 4.5 83.5 1.2 - - 160.2
General 19.3 0.5 - 12.5 - - - 5.0 37.3
Immediate Tasks - - - - - 8.9 - - 8.9
Investigation/CDDA - - - - - 8.5 - - 8.5
Job Acceptance & Strategy - - 6.0 - - - - - 6.0
Other Assets 1.5 14.5 53.5 144.3 80.2 26.0 - 3.0 323.0
Other Matters 41.0 - 1.5 34.3 70.0 2.5 - 2.0 151.3
Property 2.0 7.5 7.0 - 12.0 18.5 - - 47.0
Retention of Title 4.5 4.0 8.0 45.2 319.3 126.1 5.5 17.0 529.6
Statutory Duties 3.0 1.5 11.5 5.0 33.4 21.5 - - 75.9
VAT & Taxation - - 62.3 32.9 17.4 77.2 47.0 - 236.8
Total Hours 89.8 60.0 335.3 361.2 986.3 390.5 266.2 138.0 2,627.3
Time Costs (£) 50,608 31,898 143,055 116,708 224,339 58,067 36,929 5,735 667,337
Average Hourly Rate (£) 564 532 427 323 227 149 139 42 254
Trading
Hours Partner
Executive
Director
Assistant
Director
Senior
Executive Executive Analyst Support Intern Total
Trading - cash & accounting 8.5 44.0 212.5 458.4 308.0 54.0 726.9 50.0 1,862.3
Trading - customers 9.0 18.0 149.0 105.0 485.7 103.5 - - 870.2
Trading - Employee matters - 4.5 50.5 7.0 383.5 1.0 - - 446.5
Trading - HBPO exit - 16.5 - 4.0 - 10.8 - 8.0 39.3
Trading - Honda 20.0 3.0 104.0 21.0 304.5 6.0 - - 458.5
Trading - JLR 13.0 3.5 69.5 42.0 13.5 273.5 - 5.5 420.5
Trading - suppliers 5.0 5.5 37.5 96.7 666.4 337.0 1.0 159.0 1,308.1
Trading - Toyota exit 12.0 12.5 10.0 105.5 - - - - 140.0
Trading - Treves exit 3.0 8.5 - 9.0 18.5 1.5 - 6.5 47.0
Trading 7.0 21.0 2.0 4.0 190.5 249.5 - 42.5 516.5
Total Hours 77.5 137.0 635.0 852.6 2,370.6 1,036.8 727.9 271.5 6,108.9
Time Costs (£) 42,238 71,778 251,330 262,838 524,483 136,943 81,308 18,660 1,389,577
Average Hourly Rate (£) 545 524 396 308 221 132 112 69 227
Staff Grade
Hours Partner
Executive
Director
Assistant
Director
Senior
Executive Executive Analyst Support Intern Total
Accounting and Administration - - - - - 1.2 0.7 - 1.9
Bank & Statutory Reporting - - 1.0 - - - - - 1.0
Employee Matters - - - 7.2 - - - - 7.2
General 0.8 - - - - - - - 0.8
Immediate Tasks - - - - - - - - -
Other Assets - - - - - - - - -
Other Matters - - - 1.0 - - - - 1.0
Property - - - - - - - - -
Retention of Title - - - - - - - - -
Statutory Duties - - - - 0.1 2.5 - - 2.6
VAT & Taxation - - 12.5 8.3 4.4 24.7 - - 49.9
Total Hours 0.8 - 13.5 16.5 4.5 28.4 0.7 - 64.4
Time Costs (£) 740 - 9,298 6,323 1,431 4,509 77.5 - 22,378
Average Hourly Rate (£) 925 - 689 383 318 159 111 - 347
Appendix L: Office Holders’ Charging Policy for Fees and Disbursements
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Appendix D Office Holders’ Charging Policy for Fees and Disbursements
Fees
The Insolvency Rules 1986 provide that the Administrators’ remuneration may be fixed on the basis of time properly spent by the Administrators and their staff in attending to matters arising in the Administration.
The Administrators have engaged a manager and other staff to work on the case. The work required is delegated to the most appropriate level of staff taking account of the nature of the work and the individual’s experience. Additional assistance is provided by cashiers dealing with the Company’s bank accounts and statutory compliance diaries, secretaries providing typing and other support services and filing clerks. Work carried out by all staff is subject to the overall supervision of the Administrators.
All time spent by staff working directly on case-related matters is charged to a separate time code established specifically for the case. Each member of staff has a specific hourly rate, which is subject to change over time. The average hourly rate for each category of staff over the period is shown in Appendix C. The current hourly rates may be higher than the average rates as hourly rates have increased over the period covered by this report. Summarised below are our current hourly rates:
Disbursements
Statement of Insolvency Practice No. 9 (“SIP 9”) published by R3 (The Association of Business Recovery Professionals) divides disbursements into two categories.
Category 1 disbursements comprise payments made by the office holders’ firm, which comprise specific expenditure relating to the administration of the insolvent’s affairs and referable to payment to an independent third party. These disbursements can be paid from the insolvent’s assets without approval from the Secured Creditor. In line with SIP 9, it is our policy to disclose such disbursements drawn but not to seek approval for their payment.
Category 2 disbursements comprise payments made by the office holders’ firm which include elements of shared or overhead costs. Such disbursements are subject to approval from the Secured Creditor as if they were remuneration. It is our policy, in line with SIP 9, to seek approval for this category of disbursement before they are drawn.
Current hourly rate Previous hourly rate Previous hourly rate Previous hourly rate
Effective from 1 July 2012 1 July 2011 1 July 2010 1 July 2008
£ £ £ £
Partner 570 545 520 495
Director 545 520 425 405
Assistant Director 410 390 370 350
Senior Executive 320 305 290 275
Executive 230 220 210 200
Analyst
- Level 3 185 175 125 120
- Level 2 140 135 105 100
- Level 1 130 125 90 85
Accounting & Treasury Executive 115 110 105 100
Appendix L: Office Holders’ Charging Policy for Fees and Disbursements
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Summarised below are the Joint Administrators disbursements to date:
Birkby 's Verve
Category 1 expenses 22,220.19 0.00
Category 2 expenses 11,627.35 434.34
33,847.54 434.34
