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".
hmm - GD not interested in France and Monaco? That doesn’t have the ring of truth about it; they were over at least twice on bended knees, the Steptoes.
France, Germany and Monaco have been shovelling profit towards London for years.
That is pretty bad. How could the firm not know what it owed within the firm? That should have been clear so I am not surprised they did not want to take it on lock stock and barrel on that basis.
Please. France & Monaco so the takeover for what it was. A small regional firm with no understanding of the workings of an international firm and an aggressive and cut throat culture. Monaco and France got out whilst they could.
Is is such a surprise that post-merger the entity is looking for cost-savings? I'm a heartless so-and-so and no Corp Law/M&A expert ... but surely...?
More like France and Monaco were too profitable to accept joining the Biles show.
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The [out-going] managing partner used to stand up in front of the whole London office every quarter and preach about how healthy the Firm's financials were, and how we didn't have any debt. Well he is enjoying a nice jolly in one of the international offices not affected by the merger-come-takeover having got a nice payoff and [removed by ROF]. Still, 27M for a Firm's name, three offices, 25 largely unprofitable equity partners and a continued exodus of fee earners seems like a great deal to me... Such a shame for a Firm which was genuinely an excellent law firm with high quality people and a great culture back in the day. Sold up the creek without so much of a tug boat.
It's 27m of the firm's own current and future earnings, naturally. They are charging 8m to collect 14m of Ince's WIP and AR ...
WTF thought this was a good idea?
Shame indeed for a firm which once upon a time not so long ago had a decent reputation. Reality suggests that was supported by little more than hot air, or worse.
Agree with Ex Ince Fee Earner - hadn't expected another case of mis-management a la Halliwells, but some interesting parallels. Ultimately a failure to adapt to changing business environment (comparable firms like HFW and WFW are doing fairly well), with bolt-on poor decision making at and around the top. Feel sorry for all those who not unreasonably expected a decent career there and either no longer or will soon not have one anymore.
Pricey lease? GD have moved in there, so where’s the risk? Don’t see a problem losing support staff roles that are doubled up, that’s pretty standard. France and Monaco too profitable? Since when? You guys are sounding like Trump. So who’s going to pay for the wall?? ?
heh - GD only buys firms that are desperate so they don't have to pay anything. If you aren't desperate - you tell them to beat it. Quite obvious, really.
What is the SRA doing about those responsible for running the firm in this way?
The SRA? Indeed ...
It seems to say to creditors out there, if you hear the "exciting news" of GD being interested in firm X, get your insolvency experts in - fast.
They also stopped paying 3rd party invoices months before the pre-pack. Leaving small recruiters and similar tens of thousands out of pocket.
This would suggest a planned move and highly cynical.
Lost touch, lost business, lost their staff, lost their moral compass, fat cats walked away flush. Poor form.