The other cost of a collapse

Poor old Nathan Tinkler. You know things are getting ugly when receivers seize control of private jet, your helicopter and indeed the entire aviation company that you set up when you had the financial muscle to play with the big boys.

It seems almost universally accepted now that Tinkler’s debt pile is greater than the value of his largest asset, his stake in coal miner Whitehaven Coal. He appears to be surviving at the whim of his lenders; how long that lasts is anyone’s guess.

Tinkler’s camp isn’t saying much and neither is the receiver of his aviation group, other than to say that their investigations are at an early stage.

It’s the standard line you get out of receivers, who don’t typically prioritise keeping the general public updated about their actions.

But a couple of recent cases highlight what they do prioritise: Making some handy fees.

The collapse of Brad Skelton’s shipping company Skelton Sherbourne has been fascinating to watch, not least because Skleton has been so open in keeping customers, suppliers, friends, family and supporters updated with long, revealing blog posts.

As we’ve seen in SmartCompany editor Cara Waters’ great reports, Skelton first published an emotional blog apologising for the collapse and detailing how his bank HSBC sent receivers from Deloitte in, seemingly with very little notice or warning.

A few days later, Skelton was handed back partial control of the business. But it was, in his words, a “hospital pass from hell”. He was unable to access the company’s main bank account or its receivables book and the appointment of receivers had basically emptied his pipeline of prospective work.

Skelton has now placed the business in liquidation, saying in a blog post that “Deloitte receivership conducted on behalf of HSBC has been catastrophic to the company’s future viability.”

But as Cara explains today, Skelton is also furious with how much Deloitte had charged – he claims the fees so far are $200,000.

Sources close to the matter suggest that the fees might be lower than that, perhaps by as much as half. Still, it suggests Deloitte is paid $20,000 to $40,000 a day for its efforts.

We’ve tried to confirm Skelton’s fee claim with Deloitte without success. The firm provided a short statement, saying that its responsibility was to creditors and it had kept up communications with them.

The Skelton Sherbourne receivership is a relatively small matter in the insolvency world. Not a patch, for example, on the receivership of West Australian fertiliser group Burrup, which crashed spectacularly in December 2010, leaving debts of $900 million.

As Fairfax journalist Michael West reported earlier this week, that matter was a big earner for the insolvency firms, lawyers and consultants involved. Over a 14 month period, total fees amounted to a staggering $56 million, or almost $1 million a week.

Receivers clearly have a difficult and frankly unpleasant job to do. It must not be easy dealing with fed-up creditors, emotional company directors, distraught staff and peeved customers. Finding out where the money went and how assets can be sold to get some of it back can be difficult and risky.

It’s dirty work – but you can’t say the pay is bad.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.


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