A Hong Kong judge has attacked Clifford Chance, Deacons Graham & James and Price Waterhouse for the “alarming” fees they are charging creditors in the liquidation of investment bank Peregrine and for a relationship which she believes seems “too cosy”.
Clifford Chance billed HK$16.9m and Hong Kong firm Deacons billed HK$21.5m in the liquidation of Hong Kong-based Peregrine. The bill of the appointed liquidator, Price Waterhouse, came to $37.8m making a total bill of $76m for nine weeks' work.
However, Clifford Chance spokesman Tom Rose said: “We are disappointed we were not allowed to respond to the judge's criticisms at the time of the hearing.” He added the firm would be writing to the judge to explain what she had assumed were two discrepancies in its bill.
Justice Doreen Le Pichon said she was “greatly troubled by the amount involved” and criticised Price Waterhouse for accepting the two law firms' bills without “critical scrutiny”. “The review undertaken appeared to be…cursory, superficial and lacking in particularity,” she said.
“The impression given is it is altogether too cosy an arrangement.”
She ordered that only one third of the total bill be paid and said “to proceed further with their application of their own fees, the provisional liquidators will have to file evidence to justify their claim”.
She warned that liquidators and other office holders should give full details of why work was done. “They are expected to deploy commercial judgement not act regardless of expense,” she said.
Le Pichon, who gave her judgment in public because of the “recent spate of large insolvencies”, said a forthcoming working party report about the fees of English liquidators and their lawyers might hold recommendations Hong Kong could adopt.
Clifford Chance partner Mark Hyde was sent to Hong Kong this spring to lead the liquidation for the firm, taking over from Roger Best who returned to London. Partners billed between £300 (HK$3,800) and £350 (HK$4,500) an hour .
A Price Waterhouse spokesman said: “We have realised US$360m for creditors from Peregrine and there is a further US$1.5bn to be realised. That needs to be put in perspective with our fees of US$5m.” He added the bill was presented in line with usual practice and judges had never questioned it before. “Creditors voted to keep us as liquidators; there were no questions raised about the size of the bill.”