IPs as profit wealth maximisers - the pursuit of profit from insolvent entities
We have seen how IPs must eat. I have recently happened across some rhetoric which talks to their appetites for something else, namely, profit. In her contribution to Professor Rajak's WG Hart Workshop on insolvency law (Wheeler, S. Disqualification of Directors: A Broader View, in: Rajak, H (Ed). Insolvency Law: Theory and Practice. Sweet and Maxwell Ltd, London, 1991, at page 193) Professor Sally Wheeler notes, "...This is not intended to give the impression that all IPs care about is fees, but they are in business and the object of the exercise from their view point is not only to pursue assets but also to earn a living." In the same volume Mr David Henry, then of the Insolvency Service, noted in relation to IPs, "He is a money-making animal and disqualification proceedings are not commercial proceedings." (Henry, D. Disqualification of Directors: A View from the Inside, in: Rajak, H (Ed). Insolvency Law: Theory and Practice. Sweet and Maxwell Ltd, London, 1991, at page 184). The tension between profiting from insolvent estates and public perception is grist to the mill for the press and has made for some very lazy copy in the past. Previous IP remuneration levels from large high profile insolvencies perhaps makes this task easier. A few examples can be provided here
- Re Cabletel - IPs claimed at £237,770, together with legal fees of £90,000 - They were allowed £86,052 – less than half!!
- Lehman - £262 million (so far) for the IPs according to 15 October 2010 Guardian story.
- BCCI - £169.2m for the IPs.
- Polly Peck - £25m for the IPs.
- Maxwell – £1.628 million fees for the IPs for £1.672 million recovered. Ferris, J called this: “profoundly shocking” as it left £44,000 for creditors
On a profit related theme the fee earners at Begbies Traynor are only to aware of the above quest and tensions as shares in the firm have recently dropped by 17%. According to The Guardian they are currently battling with profit levels and may issue a second profit warning.
"BPIR is an excellent series, of interest to both corporate and personal insolvency lawyers,...