Legal costs in advance of placing retail giant Wilko into administration had reached almost £130,000, new documents have revealed. A statement of administrator’s proposals, published with Companies House last week, show that national firms Shoosmiths and Pinsent Masons incurred pre-administration fees and expenses of £104,708 and £24,294 respectively.
Wilko went into administration in August, putting 12,500 jobs at risk and resulting in the closure of 400 stores.
Administrators estimate that the business owed £411m to unsecured creditors, including £218.7m in lease liabilities to landlords and a further £25.8m to HM Revenue & Customs.
The legal challenges associated with the administration are particularly complex based on the scale of the shop network, the talks over sales of parts of the business and the sheer number of staff affected by closures.
The administrators’ report states that Shoosmiths has been tasked with responding to creditors taking enforcement action and considering potential transactions with interested parties.
Lawyers have been brought in to review the store portfolio, draft and issue landlord letters requesting rent concessions, review supplier contracts and advise on stock held in transit or in warehouses and distribution centres. There are ongoing talks over the company pension scheme, issues over retention of title clauses and discussions with in-house lawyers over outstanding litigation matters.
Pinsent Masons, meanwhile, is tasked with reviewing, amending and advising on funding agreements with lenders and banks.
The legal fees and expenses are dwarfed by the £821,000 charged to date by the joint administrators from Big Four firm PwC. This is based on a total of 975 hours charged.
Several law firms appear on an extensive list of company creditors. London-based Virtual Lawyers (£34,560), Fieldfisher (£51,967), Gowlings WLG (£86,207), Kennedys Law (£35,124) are among the creditors.
Administrators estimate that unsecured creditors of the main Wilko business are likely to recover 4-8% of what they are owed, and not for at least 12 months.
