News Analysis: Creditors Look Back at Anglo

The fallout from Anglo?s demise continued last week as its administrator told unsecured creditors they would get no money

Unsecured creditors of defunct Anglo Corporation were formally given the frustrating news last week that they were to receive no funds for debts incurred by the distribution and retail operation.

Anglo went into administration three months ago with a total amount of debt owed to unsecured creditors of #4.5 million (PC Dealer, 19 February).

Administrator Coopers & Lybrand, which was appointed on 14 February, admitted at the creditors? meeting held on 13 May that the unsecured creditors would receive nothing. The administrator also proposed that the administration go on indefinitely ? making liquidation, and therefore any hope of an investigation, a distant prospect.

About 20 creditors attended the meeting, including Northamber, Ideal Hardware, Creative Labs, Hyundai and Philips. On the top table sat Coopers & Lybrand with Tim Harris, one of the joint administrators, chairing the event. Anglo directors Stuart Tidy, Philip Hollett and David Gosling sat in a group in the front row.

The purpose of the meeting was for Coopers & Lybrand to report its progress and to seek creditors? approval for its proposed course of action.

The stated proposal was that the administrator would ?continue to manage the business, affairs and property of the company in such a manner as they consider expedient, with a view to achieving a more advantageous realisation of the company?s assets than would be effected on a winding up.?

Harris also stated that there would be an eventual liquidation following the realisation of the rest of the assets, but could not confirm when this would happen.

One creditor told PC Dealer: ?The disappointing thing is that we?re not going to get anything when an administration is designed to maximise the returns and receipts to creditors. On top of that, we can?t get any information as to why there?s no money until we get a liquidator appointed.?

The frustration of the creditors was summed up by Nitin Joshi, a director of Pannell Kerr Forster (PKF), who represented over 50 per cent of the unsecured creditors. He declared the administration ?an unmitigated disaster?, and suggested the administrator had failed in its responsibilities.

The challenge from the floor focused on two main questions: what had the directors been doing up until the businesses went into administration? and what had Coopers & Lybrand been doing following its appointment as administrator? But Joshi?s and other creditors? attempts to extract answers proved fruitless.

When the meeting was opened to questions, Joshi?s request that the directors take the top table was refused. Hollett eventually agreed to answer some questions from where he sat, but was evasive. He avoided questions about the alleged merger of Anglo Corporation and Anglo Technology Group, saying: ?This will be investigated by the liquidator.?

According to one source, the directors had originally planned to answer questions from the top table, but decided against it following advice which suggested that if they did, their answers would be used as evidence when Anglo goes into liquidation.

From Coopers & Lybrand?s point of view, the administration had been positive. Harris listed its achievements, such as keeping the businesses trading (it traded at a loss), securing a buyer (Guardcover/Evolution Holdings), sorting out the accounts which were in a poor state and selling stock, among other things.

But the majority of creditors did not agree. When Joshi questioned the benefit to the unsecured creditors of being in administration, Harris admitted that ?the unsecured creditors have not been harmed, but it is difficult to say what benefit it has brought them?.

?I don?t believe they would have got a dividend if it had gone into liquidation. I have a responsibility to all the groups of creditors and in those circumstances have been successful,? he said.

As a result, creditors were determined to seek a quick liquidation. One creditor said that while the administration goes on ?the trail gets colder and colder. As soon as a liquidator gets in, it can follow the trail while it is still relatively hot.?

He dismissed suggestions that liquidation would jeopardise remaining realisations, as it was a difference of #160,000 ? the amount Evolution would pay for 16 retail outlets once it had negotiated each lease at #10,000 a time.

On this basis, most of the creditors wanted to reject the proposal. But following negotiations during a break in the meeting, Harris agreed an amendment whereby the administrator would appoint a creditors? committee immediately, and aim for liquidation within the next two months.

In addition, whether Anglo went into compulsory or voluntary liquidation, PKF is most likely to be joint liquidator with Coopers & Lybrand, responsible for investigating the directors? conduct.

John Alexander, a partner at PKF, said: ?The committee has now gone to work to make further enquiries which a liquidator can follow up. Now is the beginning of the long, slow haul to gather information, but at least we have got started.?