KPMG administrators rack up £2.4m fees for JJB

KPMG ADMINISTRATORS have racked up £2.4m in time costs for their work on the pre-pack administration of JJB Sports.

Brian Green, David Costley-Wood and Richard Fleming, partners at KPMG, were appointed joint administrators on 1 October 2012.

The administrators are claiming £2.4m in fees for 6,993.41 hours of work for time spent on JJB for the period 1 October 2012 to 31 March 2013, according to a post-administration report.

They are also still outstanding £180,000 for pre-administration work. The solicitor firm Herbert Smith Freehills also has outstanding £188,848.70 from a total of £276,747.86 for their pre-administration work.

Although the administration is due to end on 30 September, the administrators are applying to court to extend that timeframe by 24 months to allow them to distribute funds to unsecured creditors.

Unsecured creditors are owed about £212.2m; the report claims that “unfortunately” just £600,000 is available for repayment to them. Unsecured creditors that are owed money include £29.9m to stock suppliers and £9.1m to landlords. It is expected that the £20.6m owed to secured creditors will be paid in full.

The expense of the administration has come to £2.1m and includes legal fees of £440,743, valuers fees of £49,770, equipment rental of £23,260 and trading costs of £48,332.

The joint administrators claimed in the report that they looked into other options to rescue the company and secure repayment to creditors including: seeking further funding to avoid an insolvency process; winding down the company; a sale while trading in administration; and a pre-pack sale.

A pre-pack is where a company is marketed and a buyer lined up prior to a business entering an insolvency process and sold immediately on appointment of administrators.

On appointment the administrators were able to sell about 20 stores and the brand to Sports Direct International for about £23.77m.

However, the remaining 133 stores were closed resulting in about 2,200 redundancies.

This is the second insolvency process the company has entered into in as many years after KPMG insolvency practitioners arranged a CVA for the sportswear retailer in March 2011.