Speedy break up and sale of Vantis in pre-pack administration came after a long behind-the-scenes process
Even by pre-pack standards the turnaround of the Vantis administration seemed unusually quick. Just two weeks before, it suspended its shares pending a financial review of the firm.
However, it seems behind the scenes Vantis was further into the sale process than many realised. The accountancy group suspended its shares at 10.25p on 14 June and FTI Consulting was to advise the business on its next move.
Just two weeks later, on 29 June, Vantis announced that FTI’s Chad Griffin, previously a partner at KPMG, and former Deloitte insolvency practitioner Simon Granger were appointed administrators and the business was lined up to be broken up and sold.
The deal appeared to happen so fast that insolvency practitioners at other firms told Accountancy Age that they were not invited to take part in the bidding for Vantis between the suspension of shares and the date of the administration.
“No one came to us to ask if we would like to buy any parts of the business,” said one insolvency practitioner at a Top 20 firm.
However, a source close to the case said the marketing of the business had begun as long ago as December 2009. At the end of last year Vantis called in Deloitte’s mergers and acquisition (M&A) team to market and sell parts of the financial management business, Accountancy Age understands.
In April, the Deloitte team also contacted interested parties and realistic buyers for the accounting and tax arm, which makes up approximately two thirds of the business.
April also saw Vantis insolvency partners come together to organise a manage- ment buyout of the business’ recovery unit. This was led by Jeremy French and Geoff Rowley.
Meanwhile, FTI Consulting was called in as advisers in September to one of the business’ largest creditors, one of the three banks that were collectively owed around £54m at the time Vantis entered administration.
As advisers to the bank, FTI “shadowed” the Deloitte process and Vantis was left with a handful of potential purchasers. The administrators agreed it would be more cost effective to continue with the interested buyers than to “throw the dice” and begin the process again, according to the source. Deloitte had not commented at the time of going to press.
The administrators agreed a deal with rival listed firm RSM Tenon, which bagged various parts of the business including the London, Leicester and Epsom offices, and the insolvency arm of Marlow, for an initial payment of £5.7m. RSM Tenon is expected to pay a further £1.1m from money it hopes to receive from some work in progress.
For an undisclosed sum 28 insolvency partners, led by Rowley and French, took up the entire insolvency and restructuring network at Vantis, except the Marlow operation. The new combined insolvency group will be called FRP, (French Rowley Partners).
Other management buy- outs to come out of the wood- work include a consortium of managing partners which bought seven offices to be merged into five legal entities.
The pre-pack work by Griffin and Granger seemed to do the trick, with no redun- dancies or closures as yet announced across the group.
Vantis was created in 2002 and has consistently featured in the Top 20 largest firms in the country. However, the firm hit the headlines for the wrong reasons following criminal charges against two of its tax employees over gift aid tax schemes at the end of last year, which was the start of negative stories for the firm that has ended with the break-up of the company.
It is expected secured creditors such as Lloyds, RBS and Barclays could receive 20p for every pound owed – although this is subject to change. Unse- cured creditors including HMRC, which is owed about £5m, are likely to receive 1p for every pound – although some insolvency practitioners believe that even this is overly optimistic.
With every pre-pack the administrators must produce a SIP 16 report to the creditors and the Insolvency Service, detailing how much creditors could be repaid and why the IP chose to sell the business to connected parties.
A source close to the case said the SIP 16 report should be due any day and administrators would continue to investigate the books at Vantis to ascertain exactly what took place inside the firm.