No Catch creditors angry as accountants cream off cash
By JOHN ROBERTSON
THE ACCOUNTANTS in charge of disposing of the collapsed No Catch fish farming business have been charging up to £443 an hour each for their services.
London-based Daniel Smith and Rob Caven in Glasgow are partners in Grant Thornton who were appointed administrators by No Catch’s investment bank, Kaupthing Singer & Friedlander (KSF). Their average hourly rate has been £417 each. Mr Smith defended the rates yesterday, describing them as “very reasonable”.
In contrast, most of the companies due money from No Catch have been told there will be just £600,000 to share between them once the company has been placed in liquidation, meaning they will receive just 4.7p from each pound owed.
Secured creditors, such as the bank and feed companies, are likely to have already received substantial payments, although Mr Smith said such information was private.
The main Shetland-based creditor is the public purse in the shape of Shetland Development Trust which was owed £1.08m from a string of investments, including in big workboats. The trust confirmed yesterday it had yet to receive payment for the vast bulk of the debt from Grant Thornton, getting only a small interim payment months ago.
This week, seven months after the company crashed with £40 million of debt, the last of the cages of organic cod were being harvested for processing and sale. The No Catch factory in Scalloway will then close and up to 25 workers there and at the fish farm will cease being No Catch employees. The factory will be sold and Grant Thornton will proceed with liquidation after which the unsecured creditors will be paid.
Businesses in Shetland still owed money have been shocked to discover the level of fees being charged, prompting one businessman to leak the recent confidential progress report recently received from Grant Thornton.
It reveals that the administrators’ team has been charging an average of £199 an hour for its work, totalling £419,000 for the first six months. The bill has been paid from the sale of No Catch assets which, the report states, has brought in £7.45 million of which £6.43m has been spent.
Mr Smith’s and Mr Caven’s hourly rate rose in July from £355 to £375 an hour but nearly half their time on the No Catch case was spent on administration and planning tasks at £443 an hour. The lowest rate charged was £75 an hour for support staff.
The fees were condemned yesterday by the former managing director of No Catch, Karol Rzepkowski. He said: “I think they’re absolutely extortionate. They’ve not done anything for those fees. I now understand why Grant Thornton were so keen for administration.”
But Mr Smith said the charges were actually less than market rates for top UK accountancy firms. “I think those rates are very reasonable,” he told The Shetland Times. Grant Thornton is rated fifth behind the likes of Ernst & Young and top dogs PricewaterhouseCoopers. “It’s the higher end of the profession,” Mr Smith said. “I think the big four would be more expensive than that by a considerable margin. You want to get the best people. Obviously it’s not so much the hourly rates it’s what’s been achieved that people need to look at.”
Grant Thornton’s fees would have been a fraction of that amount had a proposed deal to buy the whole No Catch business gone through in the first few weeks after it went into administration in February. At the time Mr Smith had been optimistic a deal was going to be pulled off. But the negotiations failed. The prospective buyers included one which had been poised to rescue No Catch days before it was forced into administration. According to Mr Rzepkowski that deal would have netted a down-payment of at least £10m for the bank while keeping No Catch cod and its 150 workers in business. He is still angry that the rug was pulled from under him. “We had a deal on the table – and the development trust are party to this information and so are Grant Thornton.”
The No Catch Group and four of its five subsidiaries failed in February, losing at least £21m of their city investors’ funds. At the time Mr Smith blamed the spectacular implosion on over-ambition, excessive costs and refusing to supply cod to big supermarkets to sell under their own labels. The cost of producing organic cod was twice what wild cod was selling for.
Once in administration and with no buyer agreeing to do a deal, the bank and Grant Thornton decided the best option to “maximise realisations” was to continue to trade the business in order to sell it, or bits of it, as a going concern.
Early fears that the organic cod operation would be lost in favour of turning the farms over to salmon proved correct, as did the identity of the suitors, Norwegian giants Scottish Sea Farms and Hjaltland Seafarms, who combined in April in a £7.2 million deal, splitting the sites between them.
The cod hatchery in Sandwick closed in June and its equipment was sold off with around 1.8 million cod juveniles going to a company called Villa in northern Norway. The organic sea trout business was bought by one of No Catch’s former leading lights, Gordon Johnson, along with Robert Williamson who formed a new company, QA Fish.
The successful salmon-grading equipment manufacturing company Grading Systems was bought by Johnny Johnson of Vidlin and Viking Atlantic AS of Norway. The Norwegian company was the main distributor for the innovative flexipanels designed by Grading Systems, which was originally owned by the Johnson family. The mussel farms were bought by a local mussel farmer.
Mr Smith specialises in advising banks and their customers about business, management and financial risk. Mr Caven is a chartered accountant with a legal degree who has been involved in corporate recovery and restructuring for many years and before joining Grant Thornton four years ago worked for a “restructuring and turnaround boutique” in London.