More than 2,500 unsecured creditors of the now defunct Parabis Group will lose almost £50m, a report from the company’s administrators reveals.
Highlighting the extent of the collapsed insurance firm’s liabilities, a statement of administrator’s proposals on Companies House shows when Parabis went into administration last year, the LLP owed £31.5m to unsecured creditors, while the limited company owed a further £16.1m to unsecured creditors.
The report published by insolvency firm AlixPartners showed that law firms, barristers’ chambers and medical experts will be repaid less than 2p in the pound. Secured creditors, mostly the firm’s banks, are set to receive £32.5m after the costs of the administration are taken into account, leaving them £40m short. That syndicate includes Lloyds Banking Group and Royal Bank of Scotland, which are owed £16.7m and £8.8m respectively.
Unsecured creditors include King & Wood Mallesons, which is owed £249,431; Argent Medical Legal Reporting which is owed more than £3m; call centre provider Webhelp UK, which is owed £462,970; and publisher LexisNexus UK which is owed £103,676.
Barristers among the unsecured creditors include Christopher Bamford of Tanfield Chambers who is owed £58,493, Paul Russell QC of 12 King’s Bench Walk who is owed £52,215, Simon Wilton of Hailsham Chambers who is owed £47,059 and Quintin Fraser of 39 Essex Street Chambers who is owed £66,967.
Key factors the administrators cited for the collapse of Parabis include regulatory changes, a poor understanding of the commercial implications of Alternative Business Structures (ABSs), buying other businesses at the top of the market and a lack of integration.
‘Crucially, LLP, failed to integrate the business acquisitions, with separate case management and accounting systems in use across the business,’ the report said.
Management had implemented an aggressive cost reduction programme in response to the downturn in profitability, the report said, removing £13m in costs in the 2014 financial year.
The administrators said they will conduct investigations into the conduct of the directors and partners and their transactions entered into prior to the insolvency process.
In November, a buyout team comprising Parabis’ founders formally acquired its defendant insurance firm Plexus Law, in a deal for over 900 staff, supported by a £4.2m loan.