Neither employees nor unsecured creditors are due to receive any of the £500,000 owed to them by a closed alternative business structure.
Further details behind of the collapse of Nottingham-based The Will Writing Company were revealed last week in an administrator’s statement. The company was incorporated 20 years ago and became an ABS in 2016 but was forced to appoint administrator Begnies Traynor in February.
The administrator said the company began to experience financial difficulties as a consequence of increased online competition, leading to cash flow problems and the threat of winding up by HM Revenue & Customs.
As part of a pre-packaged sale agreement the company has received £100,000 and is due a further final payment of £20,000 next month. National firm Taylor Rose TTKW, together with Philips Trust Corporation, said earlier this month it had purchased the ‘assets and database’ of TWWC and the Family Trust Corporation.
The accounts show the Will Writing Company owed more than £550,000 at the time of closure: around £67,000 to staff for arrears of wages, salary and holiday pay, £71,000 to National Westminster Bank and around £433,000 to unsecured creditors.
The report confirms that the bank, as a secured creditor, will be paid back in full. But the staff, as preferential creditors as well as the remaining unsecured creditors are likely to receive nothing.
Administrators said the pre-pack sale was the most appropriate outcome because it enabled the secured creditor to be paid in full and resulted in a greater realisation than if the company had been broken up and sold.
The total pre-administration costs come to around £30,000, consisting of £9,600 in legal fees, £14,000 in administrator fees and £6,000 in agent’s fees. The administrators said their assignment came to 68.3 hours at an average rate of £201 per hour.
In June 2016, when the ABS licence became effective, the firm’s chief executive stated that becoming an entity regulated by the SRA was ‘our proudest day ever’. The business model involved two solicitors and two legal executives working with 50 ‘consultants’ across the country meeting clients in person.