'The bills are huge' – law firms rake in £6.5m in fees on retail administrations
High Street failures such as BHS and House of Fraser generate high fees for the likes of Jones Day, Clifford Chance, DLA and Kirkland
February 20, 2019 at 06:59 AM
3 minute read
Commercial law firms have cashed in on the collapse of UK high street chains in recent years with five administrations yielding £6.5m in fees, according to Legal Week analysis.
Firms including Jones Day, DLA Piper and Clifford Chance have been among the biggest beneficiaries as businesses including House of Fraser, Toys 'R' Us and Maplin went under, administrator's documents showed.
According to a liquidators' statement of receipts and payments published last week by FRP Advisory, legal fees for work on the collapse of BHS since December 2016 have totalled more than £5m.
The firms picking up the most fees for the administration process were Jones Day, which has been paid £4.6m since the beginning of the process; DLA Piper, which billed £277,448; and Hogan Lovells, which billed £90,101.
Clifford Chance was paid £384,691 for its work on House of Fraser's restructuring, while Bryan Cave Leighton Paisner, which took a smaller role on the process, billed £6,764, according to documents from the business's administrators EY.
For its work for Poundworld, which collapsed last June, DLA Piper will receive £550,000, of which nearly £300,000 has already been paid. Pinsent Masons also received payments of £15,000 and £6,700 for its work on Poundworld.
The collapse of Toys 'R' Us last year has also incurred costs of £308,659 for Kirkland & Ellis, of which £206,165 was paid by last August when administrators Moorfields published an update on the company.
Stephenson Harwood will also receive fees from the Toys 'R' Us process of £167,405 and DLA Piper £131,777, with Shoosmiths picking up a total of £11,000.
Between electronics retailer Maplin filing for administration in February 2018 and last August, documents from administrators PwC show that legal fees paid to advisers Eversheds Sutherland and Irwin Mitchell totalled more than £100,000.
"Some of these are very complex, multijurisdictional processes, and as a consequence will cost a lot of money to do"
A restructuring partner working on one of the administrations said: "With the increasing amount of distress on the high street, there is expected to be a greater number of administrations and a proportionately increased level of scrutiny over this type of work, because every penny that goes to administrators doesn't go to the creditors.
"The bills are huge because they are proportionate to the level of complexity and the larger the number of leases to transfer, the more stock they include – these things all increase fees. Some of these are very complex, multijurisdictional processes, and as a consequence will cost a lot of money to do, as they would in the US."
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