Documents published by Deloitte have revealed that five law firms were instructed to advise the administrators of high-street electricals chain Comet, with legal fees since the company filed for administration on 2 November hitting £100,000.
Eversheds, Macfarlanes, SNR Denton and US firms Bingham McCutchen and Mayer Brown were all instructed to prepare documentation and provide legal advice on separate matters to administrators Neville Kahn, Nicholas Edwards and Christopher Farrington at Deloitte.
The filings, made public on Monday (17 November), also state that legal fees totalling £100,000 plus VAT have been paid so far since the troubled retailer filed for administration just over six weeks ago.
The joint administrators, all partners at the accountancy firm, are liaising with each law firm over their costs to ensure they are regularly reviewed and in line with estimates provided, according to the statement of proposals.
The filings also list pre-administration time costs of £159,436, counsel fees of £44,665 and other disbursements of £927 all incurred by Bingham, as well as time costs of £79,427 incurred by Mayer Brown.
The amounts have not yet been approved, with approval still required from the secured creditor and a majority of preferential creditors.
They included the cost of advice given by Bingham in relation to the validity of the administrators’ appointment, preparation of appointment documentation, retention of title and review of company agreements on matters such as extended warranties.
Mayer Brown’s responsibilities included employment issues, advice on the validity of the administrators’ appointment and preparation of draft letters and document review in relation to retention of title matters.
Mayer Brown restructuring partner Ashley Katz and Bingham financial restructuring partner Liz Osborne have been leading the respective teams advising the administrators, while Macfarlanes had previously been acting for the company (5 November 2012).
Eversheds carried out a small amount of real estate advice. The firm’s relationship with Comet is through relationship partner and financial services disputes head Paul Worth, although the make-up of the current team on the Comet wind-down is unclear.
The secured creditor is Hailey Acquisitions, an investment vehicle of private equity group OpCapita, which bought Comet for £2 last year. Hailey is expected to pick up close to £50m despite the collapse because OpCapita and its backers structured the acquisition as a secured loan, making it a secured creditor.
The Government this week launched an inquiry into the collapse of the high-profile chain after its demise resulted in a possible cost of nearly £50m to the taxpayer, comprising £23m in redundancy pay for its 7,000 staff and £26m in tax unpaid to HMRC. Meanwhile, unsecured creditors will lose out on £233m they are owed. Over 200 shops will have closed by the time the last branches shut down.
Total fees to the administrators, lawyers and agents have been estimated at £10.4m.
Background to this deal:
OpCapita, advised by Macfarlanes partners Stephen Drewitt and Ian Martin, bought Comet roughly a year ago in a so-called ‘dowry’ deal in which it paid a nominal £2 and picked up a £50m sweetener as an incentive to take the company on. The seller was Kesa Electricals, which was advised by Slaughter and May partner Simon Robinson. SJ Berwin associate Andrew Wingfield and tax partner Stephen Pevsner acted for the Comet management after a competitive tender process (9 November 2011).