Administrators and lawyers handling the affairs of collapsed firm SSB Group could not even find enough available funds to pay their own fees, it has emerged.
A newly-published report on the first six months of the administration by FRP Advisory, has revealed that the sale of the Sheffield firm’s work in progress comes to just £731,000.
That compares with more than £200m that is owed by the business to various creditors, which went into administration in January.
The FRP report states that there were insufficient assets in the administration estate to meet administrators’ remuneration in full, together with the fees due to the legal adviser Pinsent Masons and solicitor manager Leonard Curtis Legal. As such, the joint administrators sought a contribution to these costs directly from SSB’s biggest creditor, Katch Fund Solutions. The company provided funding to allow the joint administrators to draw fees of £540,000 during the last six months.
The pre-administration fees come to around £120,000, while the total costs incurred in the reporting period come to £822,000, based on 2,180 hours worked.
The report offers no strands of hope for the creditors owed millions by the claims firm, which had thousands of ongoing cases when it went under.
Work in progress was transferred to a number of providers, namely Cheval Legal, Harcus Parker, Consumer Rights Solicitors, JMR and the Recovery First Panel. The money paid included £186,000 for goodwill and shares in SSB Compliance, which has already been used to pay off the HSBC fixed charge.
Administrators retained 24 staff to assist with transferring client data but they were made redundant and all offices vacated by the end of March. On appointment, funds of around £112,000 were held in the client account, which has now been brought down under £50,000 after some clients balances were reconciled.
Litigation funder Katch is owed £63m and is entitled to various assets recovered in the administration. Even after these funds are paid, the company is likely to suffer a ‘significant shortfall’.
Employees owed £237,000 for arrears of pay, unpaid pension contributions and holiday pay are not likely to receive any distribution, meaning they will have to pursue their claims through a government-backed scheme. HM Revenue & Customs, which has a claim for £129,000, will also receive nothing.
The outlook is bleak for the 47 creditors who have submitted claims coming to £28m, with nothing left in the funds recovered to pay any distribution. According to the company’s books and records, joint administrators estimate there may be £142m owed to unsecured creditors in total.
SSB Group is one of the biggest ever law firm failures, with around 220 people losing their jobs and a string of legal businesses owed thousands of pounds when it went under. Since it went into administration, former cavity wall clients have come forward to say they are being chased for legal costs, having been promised their cases were no win, no fee.
The matter has also raised the spectre of the SRA’s response to the collapse of the firm. The Legal Services Board announced in April it would conduct a review of the regulator’s actions in conjunction with a similar review of the handling of the Axiom Ince closure. It was said at the time that the SSB review would be completed this summer, although the Axiom Ince review was supposed to be published in the spring and is yet to see the light of day.
