Over £7 million owed to unsecured creditors by the collapsed Midlands firm Challinors is likely to go unrecovered, according to a report in the Law Society Gazette.
Members and creditors have been issued a statement by the partnership’s administrators, Baker Tilly, outlining the reasons behind the collapse, and revealing that £7.1 million is unlikely to be recouped.
The situation appears to be an aftershock from the earlier collapse of Cobbetts, which made it significantly more difficult for Challinors to refinance.
A £2.5 million investment deal from an unnamed legal consultancy was subsequently “torpedoed” after the investors became “increasingly frustrated”.
Meanwhile, Challinors reportedly delayed the filing of paperwork in an alternative business structure licence application, contributing towards the ultimate collapse.
One secured creditor, Allied Irish Bank, is owed £4.5 million, but unsecured creditors face a shortfall of £7.1 million.
Among them are HMRC, to whom Challinors owe around £1 million, South Tyneside Borough Council Pension Fund, owed £489,000, and a food supplier and property investment firm owed around £400,000 each.
Individual voluntary arrangements currently in place with Challinors’ current partners mean claims can still be submitted, but with Allied Irish Bank also claiming in this way, it could be unlikely that creditors further down the priority list will receive much, if any, of what they are owed.
Meanwhile, Baker Tilly have earned some £250,000 for conducting the administration so far, equivalent to over £220 per hour, the Law Society Gazette report notes.