Business Recovery

Questions raised over Smith & Williamson’s high administration fees

Bondholders at LCF are expected to receive just 25% of their investments back

Accountancy and restructuring firm, Smith and Williamson, is reportedly facing questions regarding a build up in fees to almost £8m for the administration process of London Capital and Finance (LCF).

As reported in the Times, insolvency practitioners at Smith and Williamson said that £5.6m worth of fees have already been incurred since the process began in 2019.

In its latest progress report filing with Companies House, payments were laid out to reach £7.7m by January 2022.

Moreover, a further £3.7m has been levied by third-party professional advisors, as the costs for the entirety of the winding up process reaches £13.2m.

Andrea Hall, a member of LCF Bondholders, who is representing investors who lost money upon the group’s collapse, told the Times that the costs were “eye watering”.

She added that the bondholders were “very unhappy” about the situation, claiming that the members should be able to see a recent report commissioned to assess the administrator’s fees.

LCF managed to raise £238m from selling risky investment opportunities to retail investors, promising high returns via rates of interest.

Administrators have now predicted that the investors will receive just 25% of their money back.

Henry Shinners, partner at Smith and Williamson, said that the high costs were a result of “having to sift through over two million documents and track tens of thousands of financial transactions” in an effort to recover the bondholders’ funds.

He added: “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.”

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