Unsecured creditors to the collapsed south east firm McMillan Williams are owed more than £15m in total, administrators have revealed.
An update on the administration of the firm – an almost ubiquitous presence on high streets in London and the south east until its pre-pack sale – estimates that 156 parties with claims can expect to recoup just 3.1% from the proceeds.
The list of unsecured creditors includes £4.6m owed to directors, £6.7m to banks and £2m to landlords. Trade and expense creditors – many of them in the legal sector – are owed around £1.8m.
The update sets out that a significant regular source of revenue was high-volume residential conveyancing: this service line declined in volume in late 2019 and the onset of Covid-19 severely restricted this revenue stream. Working capital was also affected by delayed settlements for clinical negligence and personal cases, for which the firm had made significant upfront investment.
McMillan Williams was highly-geared, operating WIP and disbursement funding lines with lenders VFS and Doorway as well as a term loan and overdraft facility with Barclays. At the appointment of administrators, VFS and Doorway were each owed around £2m and are classed as preferential creditors, likely to claw back monies owed in full.
The report states that in order to continue trading, the firm needed extra funding, and neither the business, its directors or its investors were in a position to help.
The sale to Taylor Rose TTKW Limited was completed in May. The buyer has already paid £450,000 and is expected to pay a further £950,000 based on 75% recovery of the total value of PI and clinical negligence claims. Specialists assessing work in progress found personal injury and clinical negligence cases worth £10.7m, although much of this is tied up in agreements with funders.
In total, 414 employees were transferred to Taylor Rose. Negotiations are ongoing with landlords for the 20 leasehold properties held in the McMillan Williams name.
The firm had already started to make spending cuts in 2018/19, reducing its staff costs by more than £2m through shedding around 10% of its headcount in the previous 12 months. Remuneration of the highest paid director also fell, from £350,000 to £250,000.
But despite apparent financial pressures, the firm continued to expand. By last year, it had grown to 26 offices across London and the south east and was still talking about growing the firm’s reach. As recently as last September, the firm qualified 23 trainee solicitors, claiming to be one of the largest providers of training contracts in England.