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£1.6 million returned to creditors by Sheffield insolvency practitioner

A Sheffield-based Insolvency Practitioner () has realised more than one and a half million of returns to creditors of failed firms in the past 30 months.

Covering just 60 cases handled by one of its IPs – the returns averaged out at £27,000 per case according to , which is pushing for more transparency on the amount IPs charge for their services.

The figures show that businesses owed money through insolvency cases can often glean a return on what is owed when another company goes into liquidation.

, associate and insolvency practitioner at Wilson Field, said: “I have reviewed 120 cases where I have taken lead appointments over the last several years, and one of the common frustrations of being an insolvency practitioner is hearing from creditors who claim; ‘I can’t see any reason to complete a proof of debt, as the assets always go on IP fees and the creditors get nothing’.

“Having been in my role at Wilson Field for almost three years, I thought would be a good time to review if there is any truth behind those comments, based on my own caseload.”

When a business becomes insolvent, a firm of insolvency practitioners will be appointed to look after the affairs of the company and realise the remaining assets, with the primary objective of maximising returns to creditors.

Andy added: “The majority of my work consists of corporate appointments and my caseload is split approximately fifty-fifty between insolvent and solvent work. I have distributed just short of £800,000 over three years to creditors in insolvent cases and would anticipate further distributions from this existing caseload during the next twelve months of a similar amount.

“A common misconception is that insolvent businesses simply leave a trail of unpaid creditors struggling to make ends meet in the wake of a collapse, and although this can be the unfortunate outcome in some cases, it is generally not the full story.

“At £1.6m over approximately 60 appointments, that equates to an average distribution per case of in the region of 27,000 GBP. This means that distributions were made in more than 60 per cent of all insolvent cases.

“Averages can be misleading, however and it is important to point out that two of these cases to date account for 250,000 and 125,000 GBP each, whereas 20 cases had modest realisations resulting in no distribution to creditors.

“The Insolvency profession is much maligned and it is correct that in recent years, transparency to creditors has been key, but it is my opinion that we should be even more transparent as a profession and provide the above information on an annual basis to let creditors know that we are working hard to get them the best return in every single case.

“Such disclosure would remove the perception that all realisations go on insolvency fees, allowing interested parties to weigh up the benefits of instructing specific firms of IP’s based on whether they have a track record of returning healthy dividends to creditors.”

 

 

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