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Ince & Co administrator reveals partners had ‘no appetite’ to rescue failing firm with £8.5m cash injection

Ince & Co partners ruled out a £8.5m capital injection that may have saved the firm from financial failure, according to a report from administrators Quantuma.

At a meeting in October 2018, Ince partners were informed that if a sale to a third party could not be hastily arranged, partners would have to agree to a three-year lock in and contribute at least £8.5m to rescue the firm.

But the report, published this week with Companies House, states that partners had ‘no appetite’ to provide the necessary additional capital, and that some salaried partners had also refused to join the equity in order to provide financial support.

Had Ince not ultimately pursued its tie-up with listed firm Gordon Dadds, which materialised later in October, Quantuma’s report insists the firm’s situation would have become ‘unmanageable’ by January 2019. It says ‘it would have led to the uncontrolled break-up of the firm with a heightened risk of an intervention by the SRA.’

Jan Hungar, managing partner of Ince & Co in Germany, said: ‘This demonstrates what we said at the time of the acquisition, that the deal with Gordon Dadds was essential to ensure that Ince continued to operate and to enable us to grow.’

As part of a contingency plan should no merger be agreed, the firm decided that retired partners would not be paid any outstanding capital repayments due on 31 December 2018 in order to manage cash-flow.

According to the document, Ince’s three subsidiaries (the London LLP, the international LLP and the Ince & Co Services subsidiary) collectively owe around £34m to unsecured creditors. The London LLP owes £19.8m to creditors, of which they will recoup 21.8p in the pound.

Creditors of the international LLP, which are owed £7.2m, will only receive less than 1p in the pound. Meanwhile, creditors of the Services branch, which are owed £7.1m, are in line to recoup 3.5p in the pound.

The report also charts the lead-up to the height of financial instability, detailing a sharp reduction in partner headcount: In December 2017 there were 37 equity partners in Ince’s London LLP, by December 2019 the number dwindled to 22.  The costs of repaying capital to the former partners who left during this period was estimated to be around £4m.

For the six month period to October 2018, compared to the same period during the previous year, revenues at the London LLP plummeted 26% to £16.7m.

For its part, Quantuma is expecting to take home just over £800,000 in fees as a result of the administration process.

Macfarlanes advised Ince and the administrator, accruing £134,164 in the process while Pinsent Masons advised the firm on the sale of the business, earning fees totalling £123,717.