Aero administrators to report findings

Corporate insolvency practitioners are more known for their efforts at trying
to rescue businesses rather than their detective skills, but the Aero Inventory
administration may change that perspective.

A creditor report posted by the three appointed KPMG administrators to the
£256m airplane parts supplier showed that under the Directors Disqualification
Act the trio would have to investigate the directors’ actions and forward their
findings to the Insolvency Service, even if they find nothing untoward.

Aero’s finance director Hugh Bevan and chief executive Rupert Lewin were
removed from their roles in October after the company told shareholders in a
statement that there were accounting errors in stock levels. Its shares on AIM
were suspended and the company entered administration.

The initial part of the administrators’ investigation is attempting to work
out the stock levels held by Aero – a process which is hampering a sale of the
insolvent supplier’s assets. A source close to the case said the “circumstances
around the statement made by the company to the stock market is under
investigation”.

Chris Laughton, restructuring and insolvency partner at Mercer & Hole,
said: “These days it is a fundamental part of the insolvency practitioners role
to look at directors’ actions and submit a report.”

In cases where wrongdoing is found, insolvency practitioners would have to
report this to the Insolvency Service, which would decide if the directors would
be disqualified. One of the problems administrators often face is finding the
resources to track down assets, added Laughton. They have to identify the cost
of taking action and the likelihood of recovery.

Aero administrators racked up £2m in time fees for the first month of their
work, including £450,000 in legal costs from lawyers CMS Cameron McKenna.
Reports last year suggested Aero’s current board wants the Serious Fraud Office
to look into the events leading up to the company’s collapse.