“A Bridge too Far” was the cinematic reference used by one adviser this week
to describe the woes suffered by Vantis.
After months struggling with releasing assets from the complex cross-border
liquidation of Stanford International Bank (SIB), it appears that this case has
stretched the firm to its limits.
The firm had hit on positive news over recent weeks. It had extended its £19m
debt facility to 2011, while Nigel Hamilton Smith and Peter Wastell, joint
liquidators for SIB, had gained control of Swiss assets to the tune of $100m
But things turned sour when the Antiguan courts threw them off the
liquidation – a decision Vantis is trying to overturn.
Further efforts to restructure Vantis debt and sell of a part of the business
have so far failed to materialise. Running out of cash, its shares were
suspended on AIM at 10.25p on Monday valuing the firm at just £6m, and
restructuring specialists from FTI Consulting have been called in.
Insolvency experts and media commentators had previously questioned whether
the firm had the sheer mass to handle what was always likely to be a huge
insolvency appointment with the potential to drain its coffers. This week that
question was answered.
“They put all their money into one big job. You shouldn’t gamble on the wheel
turning to black,” said an insolvency specialist.
Others have pointed to the due diligence and risk assessment undertaken by
the firm prior to the appointments of Hamilton-Smith and Wastell, in terms of
understanding the cash strain the liquidation process would have on the business
if assets failed to be freed up quickly – a process Vantis has said was
But for the future, there are several options open to Vantis and its
Entering into a drawn-out administration would seem the least likely option,
advisers told Accountancy Age. Such a move could lead to clients, and staff,
ditching the firm as uncertainty looms over it.
“If a formal insolvency solution is required for Vantis, then as for any
professional services firm it would be the last option,” said Chris Laughton,
insolvency partner at Mercer & Hole.
A pre-pack administration is a possibility. Agreeing a sale prior to entering
administration could shed the business of some of its credit obligations,
enabling its new owners to restructure the firm into profitability.
The firm’s latest figures show a £10m loss for the six months to October 2009
with a 2% drop in revenues. Its tax arm suffered a reputational hit when an
investigation into charity gift aid tax schemes saw now-former Vantis managers
Roy Faichney and David Perrin facing criminal charges.
Throw in the uncertainty over claiming its fees for its work to date on SIB,
then a potential buyer of the whole business has to take a lot into account.
The last option would be “cherrypicking” off the most attractive pieces of
the firm. As a consolidator, the firm built up by buying smaller practices, and
advisers have flagged up the option of local partners leading management
buy-outs of single offices.
“This could give them enough cashflow to keep going,” said one adviser.
Cherrypicking could be a quicker process than searching for a buyer of the
whole, or significant part. A big buyer would require a significant cash
injection, with few firms able to muster up the funds besides, ironically, its
listed rivals RSM Tenon and Begbies Traynor.
Bringing cash into the business will be required with some urgency, say
experts, as quarterly rents will be due, plus VAT and wages will have to be
covered. “The next two weeks are critical,” said an insolvency expert.
Andrew Jenner, a director at KATO Consultancy, said that the problems at
Vantis had again put the consolidator model into question, even if it could be
argued that its problems were down to its decision to take on SIB.
“They have been growing, but it’s then about sticking with what you know.
It’s about not over-reaching yourself,” said Jenner.
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