Legal costs for the administration of the European arm of international firm King & Wood Mallesons have so far grown to more than three times the initial estimate, the latest update has revealed.
A progress report published by administrator Quantuma shows legal costs to date of £1.3m rather than the £450,000 initially estimated. ‘The number of legal issues and assistance required far exceeded initial expectations,’ the report states.
City firms CMS Cameron McKenna, which later became CMS Cameron McKenna Nabarro Olswang, and Pinsent Masons are among the firms that have advised on the process.
The report also states ’solicitor manager fees’ have increased from an estimated £120,000 to £376,538. Quantuma said this was down to it being ‘hard to accurately predict’ the level of involvement required from a managing solicitor.
The collapsed firm has received 159 claims from unsecured creditors, totalling £18.9m. Yet only £600,000 has been made available, the report states. Quantuma’s report shows that Barclays, the firm’s secured creditor, has received £6.5m so far. In total, its security is valued at £16.5m.
At the end of the 2015/2016, KWM Europe had more than 900 staff and 163 partners. But a string of high profile partner departures followed in the next 12 months. By early 2017 the firm was unable to pay salaries and cancelled trainee contracts. The European arm of the firm went into administration on 17 January 2017.
The administrator's report, published on 1 March, also reveals that some former employees have been listed as ‘preferential creditors’ in respect of wages, holiday pay and ‘any successful claim by employees regarding a failure to consult by the firm in accordance with EU guidelines.
‘The joint administrators are in the process of declaring and paying a distribution to the preferential creditors of 100p in the £ and this is expected to be paid shortly,’ the report said.