Claims from unsecured creditors owed money by a failed new-breed firm have risen higher than administrators expected, documents have revealed.
An administrator’s progress report on Cubism Law, which went into administration last year, states that 65 claims totalling £1.54m have been received from unsecured creditors. Unsecured claims were estimated at £1.37m when the administrators drew up their previous statement.
Preferential claims for unpaid holiday pay have also risen on previous estimates, with 21 former staff saying they are owed £40,000.
The report says it is uncertain what dividends will be paid to either preferential or unsecured creditors. Even the only secured creditor, HSBC Bank, is not likely to be paid back the full £550,000 owed.
The report states that work in progress and debts collected during the administration amount to around £145,000. An estimated £334,000 remains to be recovered.
Pre-administration costs were approved last October, with insolvency specialist Quantuma paid £38,000 and law firm Pinsent Masons allocated £166,000. The joint administrators’ time costs for the period of administration are £52,000, which is down from the original £75,000 estimate. Legal costs post-administration are almost £92,000, slightly higher than first thought because a significant number of matters have required legal oversight.
The alternative business structure, where fee-earners were treated as consultants and received around 60-70% of income from their own cases, suffered cash flow problems at the start of last year. Income was not sufficient to meet trading costs, with consultants departing the business when payments due to them were withheld.