The administrator of Ince & Co is investigating the firm's internal financial controls as well as the work of the firm's auditor, KPMG, in the wake of its acquisition by listed firm Gordon Dadds, RollOnFriday understands.
Gordon Dadds completed its purchase of the troubled shipping and insurance firm on New Year's Eve. But it was subsequently revealed that Ince & Co was placed into administration immediately beforehand as part of a pre-pack deal. Pre-packs are notorious for enabling a purchaser to buy a business free of its liabilities, potentially leaving creditors in the lurch. Its use has led to accusations that Ince Gordon Dadds engaged in sharp practise.
Amongts its debts, Ince & Co, renamed Blue Co London UK in administration, has a pricey lease of premises at Aldgate Tower in London. RollOnFriday understands that it also owes Quadrant Chambers over £1 million in fees. Quadrant declined to comment.
When the purchase was announced, it also emerged that Gordon Dadds only bought the firm's UK business, along with its offices in Beijing and Shanghai, contrary to the original plans. The £27 million price, payable to Ince & Co members over four years, did not include Ince's Cologne, Dubai, Hamburg, Hong Kong, Le Havre, Marseille, Monaco, Paris, Piraeus or Singapore offices.
Insiders told RollOnFriday that IGD hopes in due course to purchase the international network, which will continue to trade as Ince & Co. But they said it has no interest in acquiring the France or Monaco offices, characterising them as a drain on profits.
Press attention has focused on the possibility that Ince & Co's creditors may lose millions of pounds. But insiders told RollOnFriday that the pre-pack was the only way to complete the deal after Ince & Co proved incapable of identifying its liabilities to the satisfaction of Gordon Dadds and its investors.
Adrian Biles, chief executive of Gordon Dadds, said, “Following our acquisition of the members’ interests of Ince & Co LLP, the advice we received was that to facilitate the transfer of its regulated business to Gordon Dadds LLP and minimise the risk to our investors, we should follow this process". He said it gave "confidence that the transaction was done at proper value and could not subsequently be challenged by a creditor in Ince & Co.”
Insiders told RollOnFriday that Ince & Co was unable to identify the size of the risk because it could not establish how much money members owed to former members, or even what balances were owed by one office to another. The mess resulted in the firm deciding to exclude most of its international network from the deal and enter a pre-pack to get Gordon Dadds over the line before 2019.
In the aftermath, questions are now being raised about Ince & Co's financial controls. A source told RollOnFriday that the most recent audit carried out by KPMG may also have failed to comprise an accurate view of what Ince & Co owed and owned. The administrator, Quantuma, is understood to be investigating the accountancy firm's role as part of its assessment.
KPMG declined to comment.
BREAKING: RollOnFriday understands that IGD has started a redundancy consultation in Ince's London office with 45 roles expected to go. What a lovely way to kick off the New Year. A spokesman for IGD responded using the dread word 'synergies': "Naturally, as with all mergers, there are synergies that can be found", he said. "However, no decisions have been made as of yet. We will work with Ince & Co to review the best approach to harmonise our teams, and we will make sure that we clearly communicate with staff every step of the way".
BREAKING AGAIN: IGD's spokesman has clarified that decisions have in fact been made: "A redundancy consultation process will begin next week", he said. "However, we are committed to exploring ways to minimise the number of employees affected and no final decision has been made as of yet".