Business News HMV Timeline Retail Top Stories

Advisors in HMV plc administration earn millions while creditors will receive little

By | Published on Friday 13 February 2015

HMV

Just in case there was any doubt whatsoever (there wasn’t), next time a major entertainment retailer goes bust, try your best to be one of the accountants dealing with the resulting mess, rather that someone working there or, even worse, one of the firm’s creditors.

According to The Times, two years on from the collapse of HMV, the latest update on the administration of the now defunct publicly listed company that ran the entertainment retailer sets out the fees run up by the accountants and lawyers who worked on debacle.

Bean counters Deloitte, who were appointed administrators of HMV, will invoice for a total of £11.7 million, though the accountancy firm says it is likely to only see about £8 million of that sum being paid. Meanwhile two legal companies who advised on the administration, particularly on employment law matters, will receive more than £3 million between them, Linklaters getting £2.3 million and Simmons & Simmons £1.1 million.

Though perhaps most interesting is the £2.7 million invoiced by Retail Agents 260, a retail industry consultancy that provided advice to the accountants. It’s interesting because Retail Agents 260 is a wholly owned subsidiary of Hilco, which, of course, then bought the HMV business and took a streamlined version of the company out of administration.

It’s worth noting that none of this is particularly out of the ordinary when it comes to winding up big companies. And of the decision to hire a Hilco subsidiary to advise, an insolvency expert told The Times: “It is not unusual for an administrator to hire expert retail consultants on a large retail administration as it is cheaper than using its own staff”.

But the size of all these fees will be depressing to HMV’s unpaid creditors, who are likely to see nominal payments, if anything at all. Amongst creditors owed about £230 million are the tax man, one-time HMV owner EMI (now a Universal subsidiary of course), and the HMV pension scheme, which may have to rely on the government-backed Pension Protection Fund to plug the gap.

Yesterday, Melanie Leech, chief exec of the British Property Federation, which represents some of the UK’s biggest landlords (some of whom are also amongst of HMV’s biggest creditors) criticised the fees charged by the accountants.

“Without a proper system of checks and balances in place it is impossible to know if fees could have been priced more competitively”, she told The Times. “At present the fees charged seem to be entirely unconstrained”.

HMV, of course, lives on as a new company owned by Hilco and is, by all accounts, doing pretty well in its streamlined form, regaining market share in music and DVD, and benefiting from the fact that CDs sales, while still in decline, are actually holding up pretty well in the UK at the moment.



READ MORE ABOUT: | | | | | |

SIGN UP GO PREMIUM CMU NEWS CMU DAILY CMU DIGEST CMU TRENDS SETLIST