Only five months after their appointment, the Joint Special Administrators are pleased to announce the payment of an initial interim distribution of 50p in the £, to all clients who have agreed their client cash balances. Approximately 3,300 claims have been agreed to date with claims for cash totalling approximately £13.7 million. The first tranche of these interim distribution payments was issued on 31 July 2012.
Further tranches of first interim distributions will be made as Pooled Client Monies claims continue to be received and agreed.
Pritchard Stockbrokers Limited (“Pritchard”) was a long established business with a national network of agency offices with headquarters in Bournemouth. On 10 February 2012, Pritchard’s bank accounts were frozen by a Financial Services Authority (“FSA”) notice and, following a sale of certain Pritchard assets (excluding client cash in hand) to another stockbroker, an application was made (with FSA consent) for the appointment of Joint Special Administrators by the High Court.
The Special Administration Regime (’SAR’) was introduced in February 2011, following the demise of Lehman Brothers in 2008, to prioritise the recovery of identifiable client monies and assets. At the time of appointment, Pritchard was only the second Special Administration ever undertaken, the first having been made in October 2011.
Following their appointment, the Joint Special Administrators have had various tasks to deal with, including the physical transfer of the client stocks to the new stockbroker, which involved the transfer of an estimated 6,400 clients with £380 million of assets (mainly stocks and shares) under management and with the consent of the FSA. This process is well advanced with the vast majority of client stocks having been identified, reconciled where necessary, and transferred. The remainder are in the process of being transferred.
Regarding the Pritchard client cash balances, known as ‘Pooled Client Monies’, which had not been sold prior to the appointment, the mainly UK client base comprised over 11,300 client accounts which have claims of in excess of £26.5 million. Extensive work has been carried out on Pooled Client Monies, with considerable difficulty being encountered in the reconciliation process. The work agreeing these client cash balances is well advanced and the current estimate is that there may be a shortfall in Pooled Client Monies of approximately £2.8 million.
The Joint Special Administrators also opened dialogue with the Financial Services Compensation Scheme (‘FSCS’) regarding shortfalls in client monies. The FSCS will shortly be in contact with clients with regard to client entitlements for compensation; a process which is not under the control of the Joint Special Administrators. The FSCS website contains information on the Pritchard case and on how clients can claim for their client cash shortfalls.
In addition, the Joint Special Administrators have had to deal with client monies received after 10 February, known as ‘Post Pooled Monies’, mainly in respect of dividends and interest. Payments totalling £1.4 million of Post Pooled Monies have already been made to approximately 2,800 clients. A further £400,000 has been received and will be paid to clients in the near future, once reconciled.
Aside from the application of the new SAR procedure, Pritchard attracted broader public and media attention because of the involvement in the Company of Craig Whyte, the former owner of Rangers Football Club, and other companies he was also associated with. Craig Whyte was Pritchard’s Company Secretary until 14 February 2012 and Rangers Football Club is a client creditor.
Tim Ball, the lead Joint Special Administrator, commented: “Pritchard has been challenging and complex and has required an intensive team effort with input from various sources, including: specialist expertise, from within Mazars, working with the local insolvency team; the successful retention of key Pritchard staff; and the input from the various regulatory authorities – all with the aim of getting client monies identified and paid back to them as soon as possible. To have worked towards getting to a position in Pritchard whereby the bulk of the clients have now had their stock successfully transferred to the new stockbroker; and the Joint Special Administrators paying out such a large first interim dividend to clients as regards their cash claims, within five months of the appointment, is testament to the skill and commitment of all involved in what is only the second such example of this new procedure”
The Joint Special Administrators also continue to deal with additional client claims against Pritchard, such as for shortfalls in stock assets, and general creditor claims and the dividend prospects for such creditors remains, at present, uncertain.
For media enquiries please contact:
Christian Ball (Head of Communications, Mazars)
020 7063 4547