KPMG bills £285,000 for insolvency firm collapse

I'm all right Jack.

Nice work if you can get it.

Bills that equal or are greater than the amount recovered.

Maybe its time the creditors started asking exactly how they have spent 100 hours and recovered so little.

Posted by: Eleanor, 26 Aug 2011 | 17:38

We know, don't we

All us folks who did the actual work know that our managers were simply using a chargeable job code for what would elsewhere be classed as non-chargeable.

Memories of the Mirror Group are still uppermost in my mind. I can but hope those who got away with it then, are still able to live with the desperation that they caused those hard-working pensioners.

Complaining to the Institute is of no use when peers play a part in that set-up.

Posted by: RR, 01 Sep 2011 | 09:27

Powerless Creditors

The small unsecured creditors have no influence over the proceedings and no effective redress against the excesses of the insolvency practioners. The biggest mistake the Conservative Government made in 1986 was passing the Insolvency Act 1986 and its associated legislation - it was a carte blanche for excesses by insolvency practioners. The Creditors Committee being packed with fellow insolvency practioners and the small creditor and the shareholders being powerless.

Posted by: Finian Manson, 01 Sep 2011 | 11:31

Charge-out rates.

What gets me riled is that the charge-out rates don't reflect the reality.

The report will give something like:

x hours @ £70 ph (support level i.e. photocopying)

x hours @ £250 ph (Partners)

The support staff don't get £70 ph. More likely £7 ph.

The same happens all the way up the various levels of staff.

In my opinion it reflects the reality better if the difference in staff costs and charge-out rates just gets added to the Partner rate i.e.

x hours @ £7ph

x hours @ £313 ph (350 + (70-7))

Very nice work if you can get it. No wonder unsecured creditors get so little if at all!

Posted by: Graeme, 01 Sep 2011 | 12:48

@ Charge Out Rates

Whilst individual cases of excessive charging don't help the industry reputation (as in any industry), the GBP7/hr comment seems a little facetitious - what's she going to photocipy on? Oh, a 15 grand photocopier, using expensive toner and paper and electricity, in a heated and air-conditioned office, for which city centre rents are being paid, then there's branding and marketing etc etc... Then, I know Labour tried to drum it out of us for years, but how about the concept of going into business to make a profit, from which the very high taxes can be derived? Creditors and courts do actually keep a check on rates as well. Not to mention that IPs help to create value and employment in situations where there might otherwise be none.

Posted by: @ Charge Out Rates, 01 Sep 2011 | 17:02

We're all in it together

Many years ago (when Accountancy Age was still a magazine with Journalistic standards) I had a letter published regarding the Due Diligence on the MG Rover deal pointing out that as it was done in 4 days it was either

(a) crap or

(b) proof that all other due diligence work was a rip off.

With the hindsight of many years I have realised that both were correct

BUT

that the people ripped of are not only the creditors

but also the students and newly qualifieds whose hours are used to hide the lunches of the partners stitching up the deal.

Cynic?

Moi?

Posted by: Eleanor, 02 Sep 2011 | 20:58

SIP9

With reference to the comment by Finian Manson, shareholders have little influence within an insolvency procedure because there is generally no prospect of a return to them and they are therefore not affected by how the process is undertaken. Before anyone then comments that this is as a result of the IP's fees, it is not, it is a statement of fact that if there was to be a return to creditors then the Company was not insolvent in the first place and would/should not be in a formal procedure (other than a Member's Voluntary Liquidation where the shareholdres do have more control).

There are an awful lot of naive and innaccurate comments posted here. OK there have been cases of IP's and their staff "dumping" time on jobs but in the majority of cases you will find that most IPs are writing-off a lot of time. Although they may post £150 p/h as a charge out rate they may only have a 50% recovery rate.

Finian Manson's other comment regarding the IA'86 is also laughable. This was partly introduced to make insolvency processes clearer, easier and cheaper to commence for Director's of failing businesses. In addition as a consequence of the IA'86 the crown lost their preferential status resulting in lower dividends for the government and increased dividends for the small creditors to which you refer.

Further controls include the introduction of SIP9 (Statement of Insolvency Practice) which provides that all IPs and their staff must record their time by grade, by task type and in 6 minute intervals. Cases are then regularly reviewed by the IP's RPB and this is one of the areas they focus on in great detail.

I suggest you try and get your facts straight before attempting to tarnish an entire industry!

Posted by: Annon, 07 Sep 2011 | 08:03