Donns administration extended as final terms of Irwin Mitchell deal emerge

The administrators of a collapsed Manchester firm whose personal injury cases were sold to Irwin Mitchell have extended the administration period by six months to ensure there is time to pay dividends to creditors.

Donns folded in March 2012 and appointed a PricewaterhouseCoopers (PwC) team as administrators. They sold the firm’s personal injury work-in-progress to Irwin Mitchell on the day of the filing for just under £1m (23 March 2012).

The administration was due to end automatically on 22 March, but PwC partners Robert Hebenton and Toby Underwood have received consent from creditors to push the date back to 22 September 2013.

The administrators estimated that unsecured creditors will only receive 2p to 3p in the pound, with the amount available to them stated as £132,000 before costs. The payout is planned for May.

Meanwhile, secured creditor the Co-operative Bank had already been paid £375,000 at the time of the latest report to creditors in February this year, with two additional distributions to the bank of £100,000 and £37,000 expected at the time. The bank was owed roughly £2.4m when Donns went into administration.

The PwC pair argued in favour of the extension in a report to creditors in February this year, saying the extension would “allow sufficient time for the claims agreement process to be completed and dividends paid to unsecured creditors” and enable creditors to bank dividend cheques before the administration account is closed.

Irwin Mitchell’s consideration for its acquisition was initially estimated by the administrators at up to £1m, with £500,000 paid on completion and an additional £1,000 for each client’s consent it obtained, up to a maximum of £500,000. It received more than 500 client instructions.

However, Irwin Mitchell used its entitlement to cut up to £200,000 off the fee in respect of TUPE claims from employees and reduced the consideration by £80,000 to £920,000 as a result of claims from two staff members. At the time of the administrators’ report, Irwin Mitchell was set to pay a further £17,500 to the estate after the TUPE claims were agreed.

Donns’ book of financial mis-selling claims was sold to Blackburn’s C Turner Solicitors for £1, which included a requirement for the buyer to take on the costs of storing archived files.

Prior to the administration 99 per cent of Donns was owned by sole equity partner Raymond Donn, with the rest held by fixed-share partners Gillian Lakes and Amanda Anson. It turned over £8.2m in the 2009/10 financial year.

PwC’s fees were £232,88.59 to 25 January, with expenses at £3,332.04.