Subocean Group Limited (in Administration) Joint Administrators’ … · 2015-06-03 · Subocean Group Limited (in Administration) Court of Session Case No. P38 of 2011 Joint Administrators’

Subocean Group Limited (in Administration)Court of SessionCase No. P38 of 2011

Joint Administrators’ progress report for the period 28 July 2011 to 27 January 2012

9 March 2012

Contact details for queriesContact Address Direct line E-mail Fax

Scott Walker PricewaterhouseCoopers LLP, 32 AlbynPlace, Aberdeen, AB10 1YLwww.pwc.co.uk/subocean

0131 524 2367 [email protected] 01224 253 329

Contents_________________________________________________________________________________________

_________________________________________________________________________________________________________________Subocean Group Limited (in Administration) 1

Section Pages

1 Joint Administrators’ progress report for the period 28 July 2011 to 27 January 2012 2 – 4

2 Statutory and other information 5

3 Receipts and payments account for the period 28 July 2011 to 27 January 2012 6

Appendix A Proposed Scheme of Division

Appendix B Analysis of the Administrators’ remuneration and disbursements for the period 28 July 2011 to 10 December2011

Appendix C A creditors’ guide to Administrators’ remuneration (Scotland)

1. Joint Administrators’ progress report for the period 28 July 2011 to 27 January 2012_________________________________________________________________________________________


Introduction

In accordance Rule 2.38 of the Insolvency (Scotland) Rules 1986(“ISR86”), the Joint Administrators (“the Administrators”) write toprovide creditors with details of the progress of the Administration ofSubocean Group Limited (“the Company”) in the period since theAdministrators’ first progress report to creditors dated 25 August 2011.

Background information and initial actions taken by theAdministrators

The position of the Company at the date of the Administrators’appointment on 28 January 2011 was summarised in the Administrators’proposals dated 23 March 2011.

Sale of business and assets

Immediately following their appointment, the Administrators sold thebusiness and assets of the Company, along with the business and assets ofthe related entities Subocean Limited (“SOL”) and Subocean Group(Holdings) Limited (“SOGHL”) to TPG (UK) Limited (“TPG”), a whollyowned subsidiary of Technip UK Limited. SOL and SOGHL were alsoplaced in Administration on 28 January 2011.

Details of the sales process undertaken by the Administrators weresummarised in the Administrators’ proposals dated 23 March 2011 and inan initial letter to creditors dated 8 February 2011.

Realisation of other assets

The only assets of the Company not sold to TPG on 28 January 2011 butshown in the directors’ Statement of Affairs were cash at bank and cash inhand. The Company’s secured creditor exercised its right of set off at thedate of the Administrators’ appointment and the cash at bank was notrecoverable. Cash in hand represented petty cash and the sum of£1,003.69 was realised shortly after the Administrator’s appointment.

As part of the sale of its business and assets to TPG, the Company grantedTPG a six-month Licence to Occupy the Company’s leasehold premises atWesthill, Aberdeen. In accordance with the Sale & Purchase Agreeement(“SPA”) between the Company and TPG, TPG was required to meet thecosts of the leasehold premises during its period of occupation. In meetingthe costs of the Company’s leasehold premises, TPG paid theAdministrators rent and related costs totalling £108,938.25 of which£93,320.61 was remitted to the Company’s landlord by the Administrators.Rent and buildings insurance totalling £15,617.64 for the quarter ended 28February 2011 was paid to the Administrators by TPG, which the Companyhad paid to its landlord prior to the Administrators’ appointment. TheAdministrators have accordingly realised a net amount of £15,617.64 forrental income.

Other issues

The Administrators have complied with their statutory obligations underthe Company Directors’ Disqualification Act 1986 to consider the conductof any director of the Company in the three years prior to the Company’sAdministration. The Administrators have submitted all relevantdocumentation to fulfill that statutory duty. The contents of thedocumentation prepared by the Administrators on the directors’ conduct islegally privileged and cannot be discussed.

Power to distribute to unsecured creditors

In terms of paragraph 65 of Schedule B1 to The Insolvency Act 1986, theAdministrators petitioned the Court of Session seeking power to makedistributions to the unsecured creditors of the Company.

On 10 November 2011 the Court of Session authorised the Administratorsto make distributions of the prescribed part of the Company’s net propertythat is to be made available to the Company’s unsecured creditors in termsof section 176A of The Insolvency Act 1986.

Extension of the period of Administration

It took considerable time and effort to collate information in support ofSOL’s Rhyl Flats insurance claim and to obtain a settlement of £825k from

1. Joint Administrators’ progress report for the period 28 July 2011 to 27 January 2012_________________________________________________________________________________________


the relevant insurer. Whilst not entitled to any proceeds from thatinsurance claim, the Company was named in certain of the underlyinginsurance documents and the Administrators did not wish to prejudiceSOL’s position by preparing to close the Company’s Administration whilstSOL’s insurer had not remitted settlement proceeds to SOL.

On 22 December 2011, the Administrators requested and obtained theconsent of the Company’s secured and preferential creditors to extend theperiod of the Administration by six months to 27 July 2012.

Receipts and payments account

An account of the receipts and payments in the Administration for theperiod 28 July 2011 to 27 January 2012 is set out in section 3 to this report.

Receipts in the period comprise:

£7,145.61 received from TPG in relation to service charges for theCompany’s former leasehold premises;

a legal settlement of £30.00 due to the Company in relation to a formeremployee; and

a refund of £16.91 in relation to pre-paid postage.

Payments in the period comprise:

£7,145.61 was paid to the Company’s landlord in relation to rent andservice charges;

office holder’s fees of £126,972.25 and disbursements of £2,720.98relating to time costs and out of pocket expenses incurred during theAdministration;

legal fees (£14,852.14) and legal expenses (£24.00) totalling£14,876.14;

bank charges totalling £52.72; and

distributions to preferential creditors totalling £1,321.75.

Outcome for creditors

The Company’s preferential creditors totalling £1,321.75 have been paid infull.

It is anticipated that the Company’s first and second ranking floatingchargeholders will be repaid in full. It is estimated that the Company’sthird ranking floating charge holder will suffer a shortfall under itssecurity. There will be no funds available to the Company’s fourth rankingfloating chargeholder.

The Administrators expect there to be funds available for distribution tothe Company’s ordinary unsecured creditors by virtue of the prescribedpart. The timing and level of that dividend is subject to the final quantumof unsecured creditors’ claims admitted to rank for dividend purposes andthe costs of making the prescribed part distribution. As shown in theProposed Scheme of Division at Appendix A, we presently estimate thatthe prescribed part dividend available to ordinary unsecured creditors willbe in the region of 0.17p in the £.

The Administrators wrote to all of the Company’s creditors on 27 January2012 setting a final date for the submission of creditors’ claims of 13February 2012. All claims will be subject to adjudication before dividendsare paid. The Administration will be brought to an end through thedissolution of the Company as soon as possible after final dividends havebeen paid to creditors.

Administrators’ remuneration

The Administrators’ remuneration is approved by the Company’s securedand preferential creditors.

At the meeting of the Company’s creditors held on 18 April 2011 it wasresolved that the Administrators’ remuneration be fixed by reference to thetime properly given by the Administrators and the various grades of theirstaff according to their firm’s usual charge out rates for work of this natureand that the Administrators be authorised to draw such fees from time totime.

2. Statutory and other information_________________________________________________________________________________________


Court details for the Administration: Court of Session P38 of 2011Full name: Subocean Group LimitedTrading name: Subocean Group LimitedRegistered number: SC285269Registered address: 32 Albyn Place, Aberdeen, AB10 1YL (formerly Sixth Floor, Union Plaza, 1

Union Wynd, Aberdeen, AB10 1DQ).Company directors: Michael John Daniel, William Docherty and John George Sinclair.Company secretary: Sylvia SinclairShareholdings held by the directors and secretary: NoneDate of the Administration appointment: 28 January 2011Administrators’ names and addresses: J Bruce Cartwright, Ian D Green and Toby S Underwood of

PricewaterhouseCoopers LLP, 32 Albyn Place, Aberdeen, AB10 1YL.Changes in office holder: NoneAppointor’s / applicant’s name and address: The directors, Sixth Floor, Union Plaza, 1 Union Wynd, Aberdeen, AB10 1DQObjective being pursued by the Administrators: Objective (b), 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 inAdministration). Failing that, the Administrators consider that objective (c)will be achieved.

Division of the Administrators’ responsibilities: Pursuant to paragraph 100(2) of Schedule B1 to the Insolvency Act 1986, anyact required or authorised under any enactment to be done by anyAdministrator may be done by any of the Administrators acting jointly oralone.

Details of any extensions to the initial period of appointment: Extended with the consent of the Company’s secured and preferentialcreditors to 27 July 2012

Proposed end of the Administration: DissolutionEstimated dividend for unsecured creditors: 0.17p in the £Estimated values of the prescribed part and the Company’s netproperty:

Estimated value of prescribed part is £59,329 and estimated value of netproperty is £281,645

Whether and why the Administrators intend to apply to courtunder Section 176A(5) IA86:

The Administrators do not currently intend to make an application to Courtunder Section 176A(5) of IA86 to disapply the prescribed part.

The European Regulation on Insolvency Proceedings (CouncilRegulation (EC) No. 1346/2000 of 29 May 2000):

The European Regulation on Insolvency Proceedings applies to thisAdministration and the proceedings are main proceedings.

3. Receipts and payment account for the period 28 July 2011 to 27 January 2012


Appendix A – Proposed Scheme of Division

_________________________________________________________________________________________________________________Subocean Group Limited (in Administration)

Notes:

1. All figures are exclusive of VAT.

2. Creditors’ claims are subject to adjudication. The amount of creditors’ claims actually admitted to rank for a dividend may be different to those shownas received above. Any change will affect the amount of the dividend payable to creditors.

Subocean Group Limited (in Administration)

Proposed Scheme of Division as at 27 January 2012£

Funds held as at 27 January 2012 257,909.30

Input VAT reclaim 29,039.7 3

Estim ated future gross bank interest incom e 1 00.00

Estimated total realisations [A] 287,049.03

Legal fees (2,000.00)

Agents disbursem ents (1 ,000.00)

Adm inistrators' estim ated rem uneration to case closure (1 0,000.00)

Adm inistrators' estim ated disbursem ents to case closure (500.00)

Corporation Tax (500.00)

Bank charges (500.00)

Estimated future costs of realisation [B] (14,500.00)

Add back: Adm inistrators' tim e costs already paid in relation to prescribed part 9,096.45

Funds available to preferential creditors [A +B] 281,645.48

Preferential creditor claim s still to pay -

Net property [C] 281,645.48

Summary of estimated dividends

Prescribed part

50% of first £1 0,000 (5,000.00) Preferential creditors' claim s per Statem ent of Affairs: (£63,607 )

20% of am ount av ailable abov e £1 0,000 (54,329.1 0) Preferential creditors' claim s receiv ed [E]: (£1 ,322)

Prescribed part available to ordinary unsecured creditors c/f [D] (59,329.10) Funds av ailable for preferential creditors [F]: £281 ,645

Preferential dividend pence in £ [F/E]: 100p

Funds available to floating charge holders [C + D] 222,316.38

HSBC Equipment Finance (UK) Lim ited (1 00,000.00) Floating charge creditors' claim s per Statement of Affairs: (£25,7 48,1 7 5)

HSBC Asset Finance (UK) Lim ited - Floating charge creditors' claim s receiv ed [G]: (£25,642,527 )

HSBC Bank plc (1 22,31 6.38) Funds av ailable to floating charge holders [H]: £222,31 6

Lloy ds TSB Dev elopm ent Capital Lim ited - Secured creditor dividend pence in £ [H/G]: n/a

Surplus available to ordinary unsecured creditors -

Prescribed part for ordinary unsecured creditors b/f [D] 59,329.1 0 Ordinary unsecured creditors' claim s per Statem ent of Affairs: (£1 2,01 8,563)

Less: Adm inistrators' tim e costs in relation to prescribed part already paid (9,096.45) Ordinary unsecured creditors' claim s receiv ed [I]: (£23,551 ,896)

Adm inistrators' estim ated rem uneration to finalise and m ake prescribed part distribution (1 0,000.00) Funds av ailable for ordinary unsecured creditors [J]: £39,7 32.65

Adm inistrators' estim ated disbursem ents to m ake prescribed part distribution (500.00) Ordinary dividend pence in £ [J/I]: 0.17p

Funds available for distribution to ordinary unsecured creditors 39,732.65

Appendix B – Analysis of the Administrators’ remuneration and disbursements for the period28 January 2011 to 10 December 2011


Narrative of work carried out for the period 28 January 2011 to 10 December 2011

To assist creditors in interpreting the above analysis of our time costs, we summarise the areas of work referred to in the time analysis above. Our charging

policy was to charge all grades of staff working on the case to the Administration directly.

Administration and planning comprises case planning, administrative set-up and strategy matters. It was primarily the Administrators and seniorstaff who were involved in setting case strategy, although more junior staff were involved in meetings to ensure that the Administrators’ strategy waseffectively implemented.



Creditors – Enquiries relates to time spent responding to creditor enquiries following the Administrators’ appointment and to periodic requests forupdates. As a result of the immediate sale of the Company’s business and assets on the appointment of the Administrators, we dealt with anunusually high volume of creditor enquiries. A number of creditors claiming Retention of Title to goods and ownership of leased assets were attendedto and referred to TPG, the purchaser of the Company’s business and assets. We assigned experienced but more junior members of our team torespond to creditor enquiries to minimise time costs.

Creditors – Reporting relates to formal reports to creditors, including the Company’s secured creditors to establish their views in relation to agreeingcase strategy and budgeting for work to investigate potential asset realisations. Reporting was generally conducted by manager grades.

Employment matters comprise work conducted in relation to the 54 redundancies and the transfer of 246 employees to TPG (employees numbersreferred to relate to both employees of the Company and SOGL). We wrote to all employees, dealt with a number of queries, and collateddocumentation for submission to the Redundancy Payments Office.

Leasehold property work relates to time spent dealing with the Company’s landlord and TPG. TPG was granted a six-month licence to occupy theCompany’s former leasehold premises until it could either negotiate a new lease or find new premises.

Statutory and Compliance time costs comprise the initial statutory notifications of the Administrators’ appointment and the Administrators’ statutoryduties and responsibilities. Such duties involved preparing the initial letter to creditors, including the detailed disclosures required by Statement ofInsolvency Practice 16 (Scotland), calling and holding the initial meeting of creditors and an adjourned meeting, preparing and issuing theAdministrators’ proposals for achieving the purpose of Administration and dealing with all internal risk and compliance matters.

Tax and VAT time costs relate to both corporation tax and VAT compliance, the Company being the representative member of a VAT group of whichSOL and SOGHL were the other members. In addition to the preparation and submission of corporation tax and VAT returns, we have correspondedwith HM Revenue & Customs about the tax status of the Company’s leasehold premises.

Trading was not conducted by the Administrators, the Company’s business and assets having been sold immediately upon the Administrators’appointment.

Unsecured claims agreement refers to our time costs in dealing with unsecured creditor claims. We have separately recorded our time costs inrelation to this work as it is specific to the funds available for ordinary unsecured creditors and, accordingly, will be applied against the prescribedpart, prior to the funds being distributed. It will not be applied against the total funds available to all creditors, including those available to theCompany’s floating charge holders. We have allocated experienced but more junior members of our team to conduct this work, subject to appropriatesupervision, to minimise time costs.



Disbursements for the period 28 January 2011 to 10 December 2011

Category 1 disbursements, exclusive of VAT, which relate to actual payments made by the Administrators’ firm, PricewaterhouseCoopers LLP, are set outbelow.

Appendix C – A Creditors’ Guide to Administrators’ Remuneration (Scotland)






Subocean Group Limited (in Administration) Joint Administrators’ … · 2015-06-03 · Subocean Group Limited (in Administration) Court of Session Case No. P38 of 2011 Joint Administrators’

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