H.J.Berry & Sons Limited In Administration
High Court of Justice
Chancery Division
Manchester District Registry
Case number: 416 of 2010
Joint Administrators' Report
and Statement of Proposals
H.J.Berry & Sons Limited
H.J.Berry & Sons Limited - In Administration
CONTENTS
1. Statutory Information
2. Background to the Administration
3. Administration Strategy and Objective
4. Conduct of the Administration
5. Administrators’ Receipts and Payments
6. Financial Position
7. Proposals
8. Exit Route
9. Administrators’ Remuneration
10. Estimated Outcome
11. Next Report
12. Meeting of Creditors
APPENDICES
Receipts and Payments Account for the Period from 15 February 2010 to 2
April 2010
Appendix A
Directors’ statement of affairs as at 15 February 2010
Appendix B
Time Analysis for the Period from 15 February 2010 to 2 April 2010
Appendix C
Additional information in relation to Administrators' fees pursuant to
Statement of Insolvency Practice 9
Appendix D
Estimated Outcome Statement as at 2 April 2010
Appendix E
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
1. Statutory Information
1.1
The registered number of H.J.Berry & Sons Limited (“the Company”) is
00433917 England & Wales.
1.2
The trading address of the Company is Kirk Mills, Chipping, Preston, PR3 2RA.
1.3
The registered office of the Company has been changed from Kirk Mills,
Chipping, Preston, PR3 2RA to c/o CLB Coopers, Century House, 11 St Peter's
Square, Manchester, M2 3DN for the purpose of the Administration.
1.4
Details of the Company's registered directors and secretary are as follows:
Date
appointed
Ordinary
Shares held
Andrew John Martin Berry
04.10.1991
16,170
John Berry
04.10.1991
18,380
Anne Jose Berry
04.10.1991
Nil
Director(s)
Secretary
Andrew John Martin Berry
04.10.1991
Brian White was appointed Managing Director of the Company in 2009, and acted as a
director of the Company up until February 2010 when the Company was placed into
Administration. The Company Secretary failed to file the director appointment form at
Companies House.
1.5
Security Schedule:
Funder
Type of security
Lloyds TSB Plc
All monies debenture
Date of charge
27 April 2006
16 July 2008
Positive Cash Flow Limited
All monies debenture
10 February 2009
10 January 2010
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
2. Background to the Administration
The H J Berry business has been manufacturing furniture at its factory in Chipping,
Lancashire since 1840.
The Company manufactured chairs tables and stools, predominantly for the retail trade;
with established customers in retail, contract and local authority sectors. The Company
also supplied occasional furniture and fully upholstered products.
The Company is particularly well known for its traditional Rush Seated chairs in the
traditional style of the Lancashire region. In recent years the Company developed a wider
range of furniture in contemporary styles, applying traditional quality and care in
manufacture. It also started to buy in complementary products as part of its offering.
On 29 January 2010 Mark Getliffe of CLB Coopers met the Directors of the Company to
discuss the possible restructure of the Company with a view to turning the business
around. The Company was suffering severe cash-flow difficulties and was under pressure
from many of its creditors. The Company’s directors and interim Financial Controller were
tasked with running a number of financial models to demonstrate financial viability of the
Company going forwards and control over its working capital.
The Company’s Bank, Lloyds TSB Bank Plc (“LTSB”) had withdrawn its financial support
in relation to an ever increasing overdraft and the Company was in the process of
liquidating assets in order to repay LTSB.
The Company, in order to generate cash, also had in place a confidential invoice
discounting arrangement with Positive Cash Flow Limited (”PCFL”), whereby the
Company sold its invoices to PCFL. This company was also concerned about the viability
of the Company.
The Company had been loss making for the past 10 years. The losses for the year ended
31 December 2008 were £609,299 and estimated losses for the year ended 2009 were
£900,000. Had the Company continued to trade, projected losses for the year ending 31
December 2010 were expected to be in the region of £1,000,000 on a forecasted turnover
of approximately £3,500,000.
The Company had been notified that action was being taken by HM Revenue & Customs
(“HMRC”) to force the Company into compulsory liquidation and was not in any position to
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
reach a formal time to pay arrangement in respect of a debt due to HMRC totalling
approximately £280,000.
The Company’s insurance policies had lapsed and insurance was on temporary cover
pending payment of the substantial premium.
The Company operated a final salary pension scheme which has a buyout cost of
approximately £10 million and an approximate deficit of approximately £4.0 million to £5.0
million. This scheme is known as the H.J.Berry & Sons 1967 Staff Pension Scheme (”the
Pension Scheme”)
On 2 February 2010, a further meeting was held with the Directors at which it was
confirmed that the Company was unable to continue trading and that the Company was
insolvent on both a balance sheet basis and a cash flow basis.
The Company’s evident insolvency meant that it was not possible to trade out of the
position. With mounting losses, and no funding available it was not possible to attempt to
restructure the Company and there was no alternative available to the Directors other than
formal insolvency.
On 8 February 2010 a board meeting was convened with the Directors and Mr J Berry’s
legal representative. The Directors agreed and understood that the Company was
insolvent within the meaning of Section 123 of the Insolvency Act 1986 and resolved that
Mark Getliffe and Diane Hill be appointed as Joint Administrators of the Company
pursuant to Schedule B1 of the Insolvency Act 1986.
Employees’ wages and salaries could not be met and on 8 February 2010, Andrew Berry,
a director of the Company had already sent a personal letter to all of the Company’s
employees advising them of the imminent liquidation of the Company and asked them to
agree to a workers’ cooperative in order to help save the Company. In subsequent
discussions with the employees and the Union, it was agreed that the Company could not
have been saved by this type of arrangement which also included selling all of the
Company’s assets at a 50% discount without any consultation with the Pension Trustees
of the Pension Scheme.
On 9 February 2010 the Directors in the presence of Mark Getliffe addressed the
employees. It was confirmed that the Company was insolvent, that the Company had to
cease trading and that, with the exception of certain key staff their employment with the
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Company was terminated with immediate effect.
Notice was received from HMRC that a bailiff would attend the premises to collect
£120,000 on 16 February 2010.
The Company did not have the funds to meet the
demand.
On 11 February 2010 Notice of Intention of appoint Joint Administrators by the Directors
of the Company was filed in Court.
Consent to the appointment of Joint Administrators was received from LTSB and Positive
Cash Flow Limited (”PCFL”) on 12 February 2010. Mark Getliffe and Diane Hill, licensed
insolvency practitioners, were appointed Joint Administrators of the Company by the
Directors on 15 February 2010.
Mark Getliffe and Diane Hill are licensed as Insolvency Practitioners in the United
Kingdom by the Institute of Chartered Accountants in England and Wales.
The Administration is registered in the High Court of Justice, Chancery Division,
Manchester District Registry, under reference number 416 of 2010.
The EC Regulation on Insolvency Proceedings 2000 apply to the Administration. The
proceedings are main proceedings as defined by Article 3 of the Regulation.
The
Company is based in the United Kingdom.
The Joint Administrators act jointly and severally, so that all functions may be exercised
by either Administrator.
The Joint Administrators must perform their functions with the purpose of achieving one of
the following objectives:

rescuing the Company as a going concern;

achieving a better result for the Company's creditors as a whole than would be
likely if the Company were wound up (without first being in Administration); or

realising property in order to make a distribution to one or more secured or
preferential creditors.
Further information on the pursuance of the above objectives is detailed in the next
section.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
3. Administration Strategy and Objective
Prior to appointment the Company’s financiers had withdrawn finance facilities, HMRC
were threatening legal action and the Company had made the majority of its employees
redundant and was not trading. No funds were available to the Joint Administrators to
commence trading and there was considerable media interest in the Company’s affairs.
The Joint Administrators prepared an Information Memorandum which was circulated to
interested parties in early March 2010. No approach has been received to purchase the
Company or its business as a going concern; however there is ongoing interest in the
various assets of the Company on a break up basis.
In view of the above, it was clear that rescuing the Company as a going concern was not
and is not an option.
The Joint Administrators have therefore dismissed the first objective of Administration,
rescuing the Company as a going concern and have looked to achieving the second
objective, namely achieving a better result for creditors as a whole than would be likely if
the Company were wound up without first being in Administration.
Summary of Key Assets
Freehold Land and Property
The Company’s principal assets are freehold land and buildings in Chipping. The property
titles are unregistered and Forbes Solicitors, who acted for the Company in property
matters, have been engaged to define and confirm the extent of the land and property
owned by the Company by the Joint Administrators. These titles will need to be registered
at HM Land Registry before being sold.
Prior to our appointment the Company’s bank, Lloyds TSB had withdrawn support and
funding of the Company and demanded repayment of the Company’s overdraft and other
facilities totalling in excess of £470,000. The Company did not have funds to meet the
demand and had agreed a contract with a third party to sell no’s 1,2,3,4,6,7 and 10 Kirk
Cottages in the village of Chipping to Liverpool Housing Trust, a social housing provider.
These properties were owned by the Company and rented to various employees and
former employees at social housing rates. Unconditional contracts were exchanged prior
to the Joint Administrators’ appointment and upon completion of the sale of these
properties the Company received the following funds:
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
£
Freehold Property
665,000
Less:
Lloyds TSB Bank Plc
Forbes Solicitors
Spicerhaart (energy certificates)
(460,000)
(14,186)
(814)
(475,000)
Surplus
190,000
The Company retains a substantial amount of freehold property in and around the village
of Chipping including the following:

Former trading premises known as Kirk Mills incorporating both the ‘Old Mill’
and ‘New Mill’

Kirk House

Malt Kiln House

Residential properties No’s. 1-4 The Grove, Chipping, Preston, PR3 2QP

Approximately 20 acres of land including the village cricket pitch and an area
of woodland
The Old Mill is subject to a Conservation Order and English Heritage is reviewing the site
to assess whether it ought to be listed.
A proportion of the new mill known as the
‘Windsor Building’ is owned by the Pension Scheme. Some of the residential properties
are tenanted by former employees of the Company.
The Joint Administrators have appointed an independent property specialist; Savills, to
provide (and are currently preparing) a full expert valuation and report in respect of all of
the properties owned by the Company and the Pension Scheme.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Plant, Machinery and Stock
The Company owns plant and machinery, equipment, timber stock, furniture stock and
motor vehicles. The Joint Administrators have instructed Wignall Brownlow Chartered
Surveyors LLP to advise them with regard to the sale of these assets.
Wignall Brownlow have confirmed that the most appropriate mode of sale for the furniture
stock and then the plant and machinery is via two separate on site sales. A large number
of interested parties have visited the site to view the assets. As at the date of this report,
no formal offers have been received.
Debtors
The sales ledger is subject to an Invoice Discounting agreement with Positive Cash Flow
Finance Limited (“PCFL”). At the date of the Joint Administrators appointment the amount
outstanding to PCFL was £166,135 together with termination costs and fees of £85,061.
At the date of this report the amount outstanding to PCFL is approximately £30,000.
There is likely to be a surplus on the ledger following the collect out of the book debts
estimated at £103,267. See section 4 for further information regarding the secured
creditors.
The Joint Administrators retained the Company’s Commercial Manager for 7 weeks to
ensure that the momentum in debt collection was not lost and that the potential for
recovery from the ledger was maximised. The Joint Administrators believe that the
retention of this key staff member and retention of control of the debtor ledger has
resulted in enhanced realisations and a significant reduction in queries and disputes.
If the Company had been wound up, it would have been highly likely that debt collections
would have been adversely affected.
4.
Conduct of the Administration
During the initial days and weeks of the Administration, the Joint Administrators have
taken steps to secure the site at Chipping, secure assets and sought to establish the full
extent and nature of the Company’s liabilities and maximise realisations for the benefit of
creditors as a whole.
Due to the nature of the business, lack of up to date management information, Pension
Scheme information and the unusual and historic trading premises, considerable time has
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
been spent in dealing with matters on site and matters relating to the premises and
assets.
Extensive work has been carried out in establishing the actual creditor position due to the
poor quality of the Company information and records.
Due to the considerable media interest in the Company arising out of the Company’s
appearance on a Television programme and its long trading history and influence over the
village of Chipping, the Joint Administrators hired the services of a professional Media and
Public Relations company called Paver Smith.
Secured Creditors
The Company banked with Lloyds TSB Bank plc (“LTSB”), who hold an all monies fixed
and floating charge debenture dated 27 April 2006 registered at Companies House on 4
May 2006. LTSB also hold a mortgage deed created on 18 July 2008 and registered 22
July 2008. The security held by LTSB relates to the Company’s overdraft facility, loans
and the hire purchase facilities granted to the Company.
The total due to LTSB on appointment of the Joint Administrators was in excess of
£470,000.
Positive Cash Flow Finance Ltd (“PCFL”) hold an all monies fixed and floating charge
debenture dated 10 February 2009 and registered 11 February 2009. PCFL also hold a
legal charge created 14 January 2010 and registered on 26 January 2010. In addition,
there is an invoice discounting agreement with the Company. The security held is in
respect of the Company’s sales ledger. The amount due under the charge was £166,135
(at the date of appointment, exclusive of termination costs.)
Malcolm Andrew Vaughan held a legal charge created on 23 September 2009 and
registered on 25 September 2009 relating to a £250,000 advance to the Company
secured over cottages owned by the Company. Prior to the date of the Joint
Administrators appointment the charge was satisfied and the loan monies repaid in full.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Employees
In addition to the practical aspects of the Administration the Joint Administrators were
aware of the impact of the closure of the business upon the local community and
employees as a whole, especially as a large number of members of staff have worked for
the Company for the entirety of their working life. The Joint Administrators used their best
endeavours to ensure that advice, assistance and information was available to those who
were affected.
Meetings were held with the GMB Union to discuss the impact on employees and what
practical assistance could be made available.
Contact was made with the Rapid Response Team from Job Centre plus and the day
following the Joint Administrator’s appointment, meetings were held with all employees at
the factory premises. The Joint Administrators’ staff assisted employees to complete the
necessary forms to enable claims to be made from the National Insurance Fund and the
Union and the Rapid Response Team members provided assistance and information with
regard to making claims for benefits, re-training and job searches.
Pension Schemes
The Joint Administrators had to assist the Trustees of the H.J.Berry & Sons 1967 Pension
Scheme in administering the pension payroll for the months of February and March 2010
as the Company provided the payroll services to the Pension Scheme and an alternative
provider would not be found in time to take the payroll over. The Pension Protection Fund
has been notified of the Company’s insolvency. It is anticipated that there will be a
shortfall in the scheme, which is a final salary pension scheme of approximately £4.0
million to £5.0 million.
The Company also operates a Group Personal Pension Scheme which was known as the
Legal & General Pension, operated by Legal & General. The Joint Administrators have
identified contributions which have been deducted from member’s salaries but not paid
over to Legal & General by the Company. Steps have been taken to assist the employees
affected to claim the sums due to them from the National Insurance fund to ensure their
contributions are complete.
Enquiries are continuing in respect of the H.J.Berry 1978 Pension Scheme which is
another pension scheme the Company operated principally for its directors.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
5.
Administrators' Receipts and Payments
A summary of receipts and payments for the Administration period from the date of
appointment to 2 April 2010 is attached as Appendix A.
6.
Financial Position
A Statement of the Company's Affairs has been received and is attached as Appendix B.
7.
Proposals
It is proposed that the Joint Administrators continue to manage the affairs of the Company
in order to achieve the objective of the Administration. In the circumstances it is proposed
that:
7.1
As the survival of the existing Company is not achievable, the Joint Administrators
will pursue the second objective.
7.2
If having realised the assets of the Company, the Joint Administrators think that a
distribution will be made to the unsecured creditors, they propose filing a notice with
the Registrar of Companies which will have the effect of bringing the appointment of
the Administrators to an end and will move the Company automatically into
Creditors’ Voluntary Liquidation (CVL) in order that the distribution can be made. In
these circumstances, it is proposed that the Joint Administrators will become the
Joint Liquidators of the CVL.
See Section 7 below on Exit Routes for further
information on this process.
7.3
If the Joint Administrators think that the Company has no property which might
permit a distribution to its creditors, they will file a notice with the Court and the
Registrar of Companies for the dissolution of the Company. See Section 7 below on
Exit Routes for further information on this process.
7.4
The Joint Administrators shall do all such other things and generally exercise all of
their powers as contained in Schedule 1 of the Insolvency Act 1986, as they
consider desirable or expedient to achieve the statutory purpose of the
Administration.
7.5
The creditors consider establishing a Creditors' Committee and that if any such
Committee is formed they be authorised to sanction the basis of the Joint
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Administrators’ remuneration and any proposed act on the part of the Joint
Administrators without the need to report back to a further meeting of creditors
generally, to include any decision regarding the most appropriate exit route from the
Administration.
7.6
Where no Creditors' Committee is appointed, the remuneration of the Joint
Administrators shall be fixed by reference to time properly spent by them and their
staff in managing the Administration.
7.7
The Joint Administrators be authorised to draw remuneration as and when funds are
available on account of their time costs.
7.8
The Joint Administrators' will be discharged from liability under Paragraph 98 of
Schedule B1 to the Insolvency Act 1986 immediately upon their appointment as
Administrators ceasing to have effect.
8. Exit Routes
Creditors Voluntary Liquidation
8.1
Based on present information, the Joint Administrators think a dividend will be paid
to the unsecured creditors. In this situation, the Administrators will file a notice with
the Registrar of Companies in order that the Administration will cease and the
Company will move automatically into Creditors' Voluntary Liquidation (CVL). It is
proposed that the Joint Administrators will also become the Joint Liquidators of the
CVL.
8.2
Creditors have the right to nominate an alternative liquidator of their choice. To do
this, creditors must make their nomination in writing to the Administrators prior to
these proposals being approved. Where this occurs, the Administrators will advise
creditors and provide the opportunity to vote. In the absence of a nomination, the
Joint Administrators will automatically become the Joint Liquidators of the
subsequent CVL.
Dissolution of the Company
8.3
If the Joint Administrators think that the Company has no property which might
permit a distribution to its creditors, we propose filing a notice together with our final
progress report at Court and with the Registrar of Companies for the dissolution of
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
the Company. We shall send copies of these documents to the Company and its
creditors. The appointment will end following the registration of the notice by the
Registrar of Companies.
9. Administrators' Remuneration
9.1
The Joint Administrators' post appointment time costs at 2 April 2010 are
£131,987.65. This represents 568.70 hours at an average rate of £232.09 per hour.
A copy of “A Creditors’ Guide to Administrators’ fees” is available on request or can
be downloaded from the www.icaew.co.uk/insolvency. Attached as Appendix C is
a Time Analysis which provides details of the activity costs incurred by staff grade to
the above date.
We propose drawing fees in accordance with the proposals
outlined above.
9.2
Attached as Appendix D is additional information in relation to our policy on staffing,
the use of sub-contractors, disbursements and details of our current charge-out
rates by staff grade.
9.3
In addition to the information already produced in this report in respect of the
progress of the Administration, further details of how these time costs have been
incurred are as follows:
Administration and Planning
9.4
As at 2 April 2010, the Joint Administrators and their staff have incurred time costs
of £28,641.15 on account of Administration and Planning, which represents 121.65
hours at an average rate of £235.44 per hour.
9.5
Time posted to Administration and Planning includes work such as strategic case
planning, administrative set-up, appointment notification, maintenance of records
and statutory reporting and compliance.
9.6
In particular, the production and filing of all forms necessary for appointment
notification have been produced and filed in accordance with statute. This includes,
amongst others, placing advertisements in relevant press and notifying the Registrar
of Companies.
9.7
The Joint Administrators are required to review the progress of the Administration at
a minimum of six-month intervals commencing with the date of their appointment; as
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H.J.Berry & Sons Limited - In Administration
well as a one-off review one month after appointment. This is in accordance with
industry guidelines for best practice.
Realisation of Assets
9.8
As at 2 April 2010, the Joint Administrators and their staff have incurred time costs
of £61,035.50 on account of Realisation of Assets, which represents 229.10 hours at
an average rate of £266.41 per hour.
9.9
Time costs posted to Realisation of Assets includes work carried out in identifying,
securing and insuring assets; dealing with retention of title claims; realising the
Company’s trade debts; and the sale of the Company’s property, business and
assets.
9.10 We circulated a summary of the Company’s business and assets to possible
interested parties on our database together with parties which had contacted the
Joint Administrators. Further details were forwarded to approximately 40 interested
parties after receipt of a signed non-disclosure agreement. Discussions with
interested parties regarding sales of the Company’s assets are ongoing.
9.11 On appointment the Joint Administrators engaged Wignall Brownlow to advise and
assist in securing and preserving the Company’s assets. Steps have been taken to
insure the assets and to meet the requirements of the insurers on site including
maintenance of the Company’s sprinkler and heating systems. Waste timber which
was considered to be a fire hazard has been removed from site. The Joint
Administrators have liaised with various agencies regarding the site on matters such
as waste permits, health and safety, preservation of historical records, pest control,
endangered species and operator licences.
9.12 Savills have now been engaged to assist the Joint Administrators in the formulation
of a disposal strategy for the land and buildings. Meetings are being arranged with
local planners regarding the site to assess its potential uses.
9.13 Customer orders which were complete were delivered in the initial stages of the
Administration however there have been considerable numbers of enquiries from
customers in respect of part or incomplete orders and outstanding orders.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
9.14 A number of suppliers have also claimed Retention of Title (“ROT”) and their
enquiries have now been, or are in the final stages of being resolved including
identifying goods on site and establishing the extent and validity of the ROT claims.
9.15 Significant work was carried out onsite at the Company’s former trading premises
gathering all records relevant to the Company’s outstanding book debt ledger. This
was to ensure the realisation process in respect of the Company’s remaining
debtors runs efficiently and all relevant information is on hand to enforce payment of
trade debts if necessary.
9.16 As noted above, the Joint Administrators have assisted PCFL in the collection of the
Company’s trade debts as it is in the interest of all parties that they are paid in full to
enable reassignment of the ledger and for cash collection to continue,
Creditors
9.17 Time costs relating to dealing with creditors total £36,406.70 as at 7 April 2010,
representing 199.50 hours at an average hourly rate of £182.47. Time costs posted
to Creditors includes work carried out in communicating with all classes of creditors
and dealing with creditors’ claims; the majority of which has been conducted at
manager and administrator level.
9.18 We have held meetings with employees, Union representatives and Job Centre Plus
representatives to assist the employees.
9.19 The Joint Administrators and their staff then assisted in the submission of the
Company’s employee claims to the Redundancy Payments Service (“RPS”) and are
monitoring progress.
9.20 We have spent considerable time dealing with the Company’s pension issues
including liaison with the Pension Fund’s brokers; UBS in London, the Pension
Regulator, the Trustees’ legal representative and the Pension Fund advisers.
9.21 We have taken a large number of phone calls and received emails and letter
enquiries from many creditors which have required resolution.
9.22 We have also dealt with queries from customers who’s orders remained outstanding
following insolvency.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Pre-Appointment
9.23 Our pre-appointment time costs amount to £25,406.70. We will not seek payment of
this amount and the time costs will be written off.
9.24 £5,000 was billed to the Company on 28 January 2010 in respect of a review of the
Company’s options undertaken by CLB Coopers.
10. Estimated Outcome
10.1 An estimate of the outcome of the Administration as at 2 April 2010 is attached as
Appendix E. This indicates that the secured and preferential creditors will be paid in
full and that subject to the payment of any corporation tax liability payable on the
disposal of the assets and any additional costs incurred, there will be a dividend
payable to unsecured creditors.
10.2 It is important to note that the level of final distribution to creditors is dependent upon
two variables namely net asset realisations and the level of claims received and
agreed.
11. Next Report
11.1 The Joint Administrators are required to provide a progress report within one month
of the end of the first six months of the Administration.
12. Meeting of Creditors
12.1 An initial meeting of the Company's creditors is being convened to approve the
Administrators' proposals. The meeting will be held on 23 April 2010 at 12 noon at
The Marriott Hotel, Garstang Road, Broughton, Preston, PR3 5JB.
12.2 Further information on the meeting is contained in the letter accompanying this
report.
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Mark Getliffe
Joint Administrator
H.J.Berry & Sons Limited
Enc
Joint Administrators’ Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Receipts and Payments Account for the Period from 15 February 2010
to 2 April 2010
RECEIPTS
Total (£)
Freehold Land & Property
Book Debts
Rent
665,000.00
64,054.15
437.16
729,491.31
PAYMENTS
Forbes Solicitors
Legal Disbursements
SpicerHaart
Positive Cashflow Finance
Lloyds TSB Bank plc
Maintenance Cost
PR Agency
Pension Services
Legal Fees
Statutory Advertising
Other Property Expenses
Wages & Salaries
PAYE & NI
Bank Charges
11,681.97
850
693
64,054.15
460,000.00
7,896.25
3,200.00
136.85
5,326.00
67.5
1,800.67
9,842.25
2,938.70
823.37
569,310.71
Balance
160,180.60
MADE UP AS FOLLOWS
VAT Receivable
Current Account
4,999.79
155,180.81
160,180.60
Joint Administrators' Report and Statement of Proposals
Appendix A
H.J.Berry & Sons Limited - In Administration
Directors Statement of Affairs as at 15 February 2010
Joint Administrators' Report and Statement of Proposals
Appendix B
H.J.Berry & Sons Limited - In Administration
Time Analysis for the Period from 15 February 2010 to 2 April 2010
Appendix C
HOURS
Classification Of Work Function
Administration & Planning
Partner
Manager
Senior
Assistants/ Total Hours Time Cost
Professional Support
£
Average
Hourly Rate£
57.80
15.60
48.25
-
121.65
28,641.15
235.44
-
-
1.60
-
1.60
211.20
132.00
126.30
44.65
58.15
-
229.10
61,035.50
266.41
-
-
-
1.00
311.00
311.00
47.15
40.25
112.10
-
199.50
36,402.70
182.47
Other Case Matters
7.60
-
-
-
7.60
2,363.60
311.00
Pre-Appointment Time
42.90
-
107.25
25,406.70
236.89
Investigations
Realisation of Assets
Trading
Creditors
Shareholder Issues
1.00
7.25
VAT/Tax Compliance
1.00
Total Fees Claimed £
100,562.10
Total Hours
Average Rate
291.00
345.57
31.65
32.70
-
-
-
7.25
2,711.50
374.00
-
-
-
1.00
311.00
311.00
27,222.90
132.15
206.00
29,609.35
252.80
117.13
-
-
-
Joint Administrators' Report and Statement of Proposals
157,394.35
675.95
H.J.Berry & Sons Limited - In Administration
Additional Information in Relation to Administrators' Fees Pursuant to
Statement of Insolvency Practice 9
1
Appendix D
Policy
Detailed below is CLB Coopers policy in relation to:
1.1

staff allocation and the use of sub-contractors;

professional advisors; and

disbursements.
Staff Allocation and the use of Sub-contractors
Our general approach to resourcing our assignments is to allocate staff with the
skills and experience to meet the specific requirements of the case.
The constitution of the case team will usually consist of a Partner, a Manager, an
Administrator and an Assistant. The exact constitution of the case team will depend
on the anticipated size and complexity of the assignment and the experience
requirements of the assignment. On larger, more complex cases, several staff at all
grades may be allocated to meet the demands of the case. Our charge out rate
schedule below provides details of all grades of staff and their experience level.
With regard to support staff, we would advise that time spent by cashiers in relation
to specific tasks on an assignment is charged. Only if there is a large block of time
incurred by a member of the secretarial team, eg, report compilation and
distribution, do we seek to charge and recover our time in this regard.
We have not utilised the services of any sub-contractors in this case.
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
1.2
Professional Advisers
On this assignment we have used the professional advisors listed below. We have
also indicated alongside, the basis of our fee arrangement with them, which is
subject to review on a regular basis.
Name of Professional Adviser
Basis of Fee Arrangement
Addleshaw Goddard (legal advice)
Hourly rate and disbursements
Forbes Solicitors (Property disposal)
Hourly rate & disbursements
AUA Insolvency Risk Services Ltd
(insurance)
Risk based premium
Wignal Brownlow (valuation and disposal
Percentage of realisations and time
advice. Property, Plant and Machinery &
costs in relation to all other matters
Chattel assets)
Savills (Property survey and expert
valuation and advice)
Paver Smith, PR & Press Services
Fixed Fee and hourly rate and
disbursements by agreement
Hourly rate & disbursements
Our choice of professional advisers was based on our perception of their experience
and ability to perform this type of work, the complexity and nature of the assignment
and the basis of our fee arrangement with them.
1.3
Disbursements
Category 1 disbursements do not require approval by creditors.
The type of
disbursements that may be charged as a Category 1 disbursement to a case
generally comprise of external supplies of incidental services specifically identifiable
to the case, such as postage, case advertising, invoiced travel and external printing,
room hire and document storage. Also chargeable will be any properly reimbursed
expenses incurred by personnel in connection with the case.
Category 2 disbursements do require prior approval by creditors before they are
paid and whilst it is unlikely that any Category 2 disbursements will be incurred on
the case, appropriate approval will be sought before any such expenses are paid.
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
2
Charge-out Rates
A schedule of CLB Coopers charge-out rates (exclusive of VAT) for this assignment
effective from 1 May 2009 is detailed below:
Grade of Staff
3
Rate £
Partner 1
374
Partner 2
311
Manager
206
Administrator
132
Junior Administrator & Support
86
Activities Undertaken
The standard activities – administration and planning, Investigations, realisation of
assets, trading, creditors and other case matters which make up the classification of
work function, provide creditors with a summary of the work carried out by the Joint
Administrators and their staff. Full details of the time and charge out summary are
set out in the Time Analysis table attached at Appendix C. The classification of
work with further examples of work carried out is as follows:-
Standard Activity
Examples of Work
Administration & Planning
Case strategy
Case planning
Administrative set up
Appointment notification and formalities
Maintenance of records
General accounting
Statutory reporting & meetings
Bonding and bordereau
Fees and WIP
General cashiering
Reconciliations
Periodic reviews
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Standard Activity
Investigations
Examples of Work
CDDA reports
Questionnaires and checklists
Antecedent transactions
Realisation of Assets
Identifying, securing, insuring assets
Retention of Title
Debt collection
Property, business and assets sales
Leasehold property issues
Stock and WIP issues
Sale of Goodwill / business
Health and safety
Trading
Management of operations
Accounting for trading
On-going Employee issues
Creditors
Creditor queries
Creditor correspondence
Reporting
Legal claims
Creditor claims (all categories)
Employees
Pre Appointment VAT/PAYE/CT
Other Case Matters
Non specific items not included in other categories
VAT & Tax Compliance
Post appointment VAT, PAYE and Tax issues
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Estimated Outcome Statement as at 2 April 2010
Book
Value
of
Assets
Appendix E
Notes
Estimated
Outcome in
Administration
£'000
£'000
ASSETS
Assets Specifically Pledged
Freehold Land and Buildings Sold to
2,960 Date
1
665
Freehold Land and Buildings
2,165
Less: Estimated holding and Disposal
costs
(150)
Less: Due to Lloyds TSB (LTSB)
(470)
Estimated Surplus as regards LTSB c/d
2,210
2
427 Trade Debts
Less: Due to Positive Cash Flow
Finance Ltd (PCFL)
383
(251)
Less: Collection Costs
(20)
Estimated Surplus/(Deficiency) as
regards PCFL c/d
112
40 Motor Vehicles Subject to HP
3
Less: Due to Alliance & Leicester
Commercial Finance (A & L)
Estimated Surplus/(Deficiency) as
regards A & L c/d
Joint Administrators' Report and Statement of Proposals
40
(40)
-
H.J.Berry & Sons Limited - In Administration
Assets Not Specifically Pledged
500 Plant & Machinery
4
140
250 Stock
5
10
3
21
21 Owned Motor Vehicles
Total Assets Not Specifically Pledged
Total Estimated Assets
171
2,493
ESTIMATED COSTS
Agents and Valuers Fees (P&M,
disposal and site costs)
(80)
Legal Costs
(40)
Administrators Fees
Administrators Disbursements
(200)
(5)
Liquidators Fees
0
Liquidators Disbursements
0
Total Estimated Costs
(325)
Estimated Balance of Funds available
for Creditors
2,168
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Book
Value
of
Assets
Notes
Estimated
Outcome in
Administration
£
£
Estimated Funds available for
Preferential creditors b/d
2,168
LIABILITES
Preferential creditors
Employee Claims
Estimated Surplus funds available
(21)
2,147
Unsecured Creditors are estimated
as follows:
Trade and Expense Creditors
(539)
H M Revenue & Customs VAT
(68)
H M Revenue & Customs PAYE / NIC
(248)
Employee Claims
(660)
Pension Fund Deficit
(4,000)
Total Unsecured Claims
(5,515)
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
Notes to Estimated Outcome Statement
1. Freehold Land and Property
The sale of the 7 cottages owned by the Company legally completed after the appointment of
the Joint Administrators for £665,000. The Unconditional contract was agreed and signed by
the Company prior to the Joint Administrator’ appointment.
The estimated to realise figure from the Statement of Affairs has been used for the purposes
of this report. A full valuation and realisation strategy is currently being discussed with our
agents.
Please note that no provision for Capital Gains Tax arising on the disposal of land and
buildings has been made to date. Specialist tax advice will be required in respect of this.
2. Trade Debtors
£
0’000
Outstanding at appointment
427
Paid to PCFL to date
(251)
Outstanding to PCFL as at 02.04.10
(30)
Balance of debtors
146
Less: general provision (30% of balance)
(Not admitted)
44
Balance collectable
102
Joint Administrators' Report and Statement of Proposals
H.J.Berry & Sons Limited - In Administration
The anticipated total collections from debtors are therefore believed to be £383,000.
Inter-Company Debt
The Company had both sales and purchase ledger balances with Forton Wood Turning Co
Ltd (“Forton Wood”). The net balance due to the Company is approximately £75,000. Forton
Wood has agreed to pay this balance once the final reconciliation and adjustments for joint
employee obligations has been finalised.
3. Motor Vehicles
There is one vehicle subject to hire purchase. The vehicle is valued at £40,000 by our agent;
Wignall Brownlow, however, there are 4 years remaining on the finance agreement and
therefore no equity is available from this vehicle.
A number of vehicles were subject to finance from Lloyds TSB (“LTSB”) however, the finance
outstanding of approximately £32,827 was paid to LTSB under their charge over the
Company’s property.
The market value of the non HP vehicles is £21,500 per our agent’s report.
4. Plant and Machinery
Plant and machinery is estimated by our agents as having an open market value of £140,000
and a restricted marketing value of £90,000.
5. Stock
Stock consists of raw materials, timber furniture components, finished tables and chairs and
various other components. A value of £10,000 is assumed for reporting purposes.
Joint Administrators' Report and Statement of Proposals