Administrators and lawyers charged more than £960,000 for fees incurred in the six months after national firm Cobbetts went into administration, a report by administrator KPMG reveals.
The administrator’s progress report also shows that expenses of almost £1.7m were racked up in the six months to 5 August.
Cobbetts was sold to national firm DWF in a pre-pack administration in February.
The progress report, filed with Companies House this month, states that joint administrators, Mark Granville Firmin and Howard Smith, charged £610,766 in fees and expenses.
This included £44,000 (104 hours) dealing with the sale to DWF, £67,861 (220 hours) corresponding with creditors and £10,953 (44 hours) answering questioning from some of Cobbetts’ 439 former employees.
Over the course of six months, legal fees and expenses came to £353,289. A sum of £169,367 was paid to Pinsent Masons in outstanding fees, with a further £68,500 paid for counsel’s advice.
Jonathan Jeffries, a partner at Pinsent Masons, was paid £25,225 for acting as solicitor manager and dealing with client funds.
On top of legal and administrator costs, a further £725,000 was paid in rent and licence fees and other expenses.
The report states in its executive summary that fixed and floating charge creditors will be repaid in full. Any further funds will be used to make a ‘distribution’ to unsecured creditors, but it is not yet possible to estimate the amount or timing of payments.
The report detailed that Cobbetts had experienced difficulties since 2009 when it suffered from the economic downturn and a falling number of property and corporate transactions.
The LLP had entered into expensive new leases in 2006 and 2007 and had been attempting, unsuccessfully, since 2009 to sub-let empty space in the Manchester office to help balance the books.
Cashflow pressures grew in June 2012 and the firm was forced to reach deferral agreements with its landlords, HM Revenue and Customs and certain retiring members.
In early January this year managers suggested that turnover for the previous month was significantly below budget. When investigations pointed to a long-term downturn in trading, the board decided it would be inappropriate to take additional short-term funding, or £2.5m from members by way of a cash call, and chose to seek a sale of the business.
The joint administrators agreed a pre-pack sale to DWF for £3.9m.