£12.5m returns for creditors as work by Smith & Williamson pays off

Greg Palfrey, who heads up Smith & Williamson's restructuring and recovery services in the UK.

More than £12.5 million has been paid out to hundreds of creditors of companies which failed as a result of financial difficulties or unforeseen circumstances.

The returns, unexpected by many people owed money, came from asset-realisation work by recovery experts at the South Coast office of Smith & Williamson, the accountancy, investment management and tax group.

Led by Greg Palfrey, his Southampton-based team worked on a number of cases where businesses failed, realising funds from different types of assets, from property, fixtures and fittings to stock and machinery and even goodwill.

A total of £12,549,529.11 has been paid out to preferential, secured and unsecured creditors over the past 24 months.

Mr Palfrey,  who heads up Smith & Williamson’s restructuring and recovery services in the UK, said: “We’ve been giving a lot of good news to hundreds of creditors in recent months, many of whom had written off what they thought were bad debts.

“To be able to deliver more than £12.5m through painstakingly detailed case work by our recovery team experts, and often in financially complex situations, is professionally satisfying.”

Preferential creditors received all their money back. This relates to money owed to employees in respect of wages and holiday pay. Total paid out: £210,486.93.

On average, secured creditors, who lent money secured against assets in the business, had 95p in the £1 returned. Total paid out: £4,285,311.03.

On average, unsecured creditors, such as suppliers, were given nearly 28p in the £1. Total paid out: £8,053,731.15.

Mr Palfrey said: “Unsecured creditors often resign themselves to losing all the money they are legitimately owed, a situation tens of thousands of suppliers across the UK will unfortunately be familiar with from their own trading experiences.

“However, we were happy to be able to pay out an average 27.9p in the £1 to hundreds of unsecured creditors.”

Smith & Williamson’s cases included a geophysical contractor which carried out seismic data surveys in the search for hidden reserves of gas and oil under the world’s seas.

Other Smith & Williamson appointments, where creditors also saw positive results, related to the retail motor trade, civil and electronic engineering, printing, independent schools and retail (stores and e-commerce).

Mr Palfrey said: “It is a sobering thought – a lot of seemingly well-run businesses collapse because they lack basic management information over finances, forecasting models and strategy, although not usually a lack of drive and commitment, which needs to be more focused in some cases.

“If in doubt, always call in restructuring and recovery experts because the costs will be more than justified if your business is pulled back from the brink and goes on to trade profitably. We are now doing much more work on the advisory side where saving the business remains the priority.”