The administration costs of collapsed mini-bond provider London Capital & Finance (LCF) are expected to total £7.7m by next January.
The latest progress report from joint administrators Smith & Williamson revealed that fees have already reached £5.6m. By 29 January 2022, the end of the third year of the administration, costs are expected to hit £7.7m, according to the document filed with Companies House.
The insolvency firm said it should be noted that while the administrators’ remuneration has yet to be agreed, it is required to provide fee estimates within the reports.
Four administrators from Smith & Williamson and one from FRP Advisory are leading the insolvency.
In December 2020, Smith & Williamson announced to all bondholders that it had issued a claim against 15 defendants seeking to recover £178m of bondholders’ funds invested in LCF.
The firm said although a legal ruling currently restricts the amount of information that can be shared about this, it will update all bondholders with further information when legally able to do so.
Andrea Hall, of LCF Bondholders, a group representing some of the investors who lost money in the firm’s collapse, told The Times that the fees were “eye watering” and that the bondholders were “very unhappy about the costs.
However, Henry Shinners, partner at Smith & Williamson and joint administrator of LCF, said that the firm is transparent about its fees.
He said these are subject to the approval of the creditors’ committee that then has agreed to pay some of the fees on account and is in discussions around the unpaid balance.
“We are transparent about all costs incurred in the administration of LCF and the costs are disclosed, in full, in progress reports provided to creditors every six months,” said Shinners.
“Costs in the administration of LCF are driven by the level of investigation work required in having to sift through over two million documents and track tens of thousands of financial transactions to work out where bondholders’ money has gone and seek to recover it.
“Legal challenges by parties connected to LCF, which we believe have been unnecessary and designed to obstruct our work, have also added significantly to the costs. However, these challenges have proved to us that we are on the right track and that those who we are pursuing are worried.
“Our substantial investigation work has led to us issuing legal proceedings against a number of parties with a view to recovering substantial funds for the bondholders.
“We firmly believe that recoveries for bondholders from our work will significantly outweigh the costs of obtaining those recoveries.”