PwC’s Lehmans fees top £210m

PwC's Lehmans fees top £210m

Uk's biggest insolvency practice releases six-month update detailing the work it has undertaken in return for its fees

The job of unravelling Lehman Brothers, regarded as the world’s biggest
insolvency to date has earned PwC £210m so far for its work on the European
division.

The Big Four leader released a six-month update which said that as of 14
March, the total amount which had been approved by the creditors’ committee was
£210,867,150.

Approved time costs for the six-month period to 14 March 2010 amount to
£57,673,774, comprising of 189,470 hours at an average hourly rate of £304.

The
Accountancy Age
2009 Top 50 survey
shows PwC’s fees for the administration to date
are larger than the annual revenues of every firm outside the top six UK
practices.

But the job of winding down Lehmans is of such unprecedented scale the fees
are relatively minimal when the assets of the failed investment bank are taken
into account.

“Administrators’ costs were £57.6m in the 6-month period. Costs in the 18
months to date represent just 0.65% of total assets controlled by the
administrators,” PwC added.

The administrators have also been considering the report drawn up by Anton
Valukas on Lehman Brothers which named auditors Ernst & Young’s US and UK
divisions.

PwC did not say any legal procedures had been started against the firm, but
at the same time would not rule out taking further action.

“The administrators have reviewed the report and will take such actions as
are consistent with their duties in relation to the matters raised in the
report.

“Given the subject and context of the report it is inappropriate to comment
further in public forum.”

The report detailed the progress which has been made during the last six
months.

Steven Pearson, joint administrator, said:

“We have had an exceptionally productive six months. We have now gained
control of over $48bn (£31bn) of securities and cash to date.

“As advised in January, we have implemented a highly innovative claim
resolution agreement, which has enabled us to begin returning client assets.”

$8.6bn has been clawed back within the last six months, enabling PwC to
return a further $1.0bn of assets to clients during the period, bringing the
total returned through bilateral agreements to $14.3bn.

The PwC team has also made headway with claims against Lehmans’ affiliates
for assets they believe belong to the European arm.

“Of particular note was a bilateral asset agreement with Lehman Brothers
Japan. The administrators have filed $217.3bn of gross claims against affiliates
to date,” the firm said.

A date for proving unsecured claims against LBIE has been set for 31 December
2010, the administrators added.

Further reading:

Lehman
assets funnelled through UK-based arm

Lehman
Brothers accused of using front company

PwC
settles with Lehman Brothers micro-creditors

Lehman
collapse contributed to IASB funding issues

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