Over 90 per cent of 2e2 IOUs still unpaid

Reports reveal administrators make little further headway in clearing £257m debt but employees still expected to get paid in full

More than a year on from its collapse, in excess of 90 per cent of the £250m-plus debt pile left by 2e2 remains unpaid, an administrator's progress report has revealed.

The report for 2e2 UK Limited, recently filed with Companies House by insolvency practitioner FTI Consulting, reveals that, across the 2e2 Group, a total of £19.8m in fixed charge distributions has been paid to secured creditors. The fallen integrator had a total of about £257.2m in secured debt when it collapsed and FTI stated in the report that much of this is likely to remain unsettled.

"Further distributions will be paid in due course and will be dependent upon the total net fixed and floating charge realisations," adds the report. "There is expected to be a significant shortfall to secured creditors."

There appears to have been little major progress since the update filed by FTI late last summer, which revealed that, at that time, £19m in fixed charge distributions had been paid back to secured creditors.

A report for 2e2 Group Limited reveals even slower progress during the six-month period to 27 January 2014.

"The only realisation during the period for 2e2 Limited is the receipt of a refund of [about £2,000] in respect of certain expenses that were prepaid prior to the administration," the report states.

Employee update
In the 2e2 UK Limited report there was better news for 2e2's employees, who are the only people classed as "preferential creditors". FTI reiterated in the report that it believes it can realise sufficient cash to fulfil the VAR's wage, holiday pay, and pension contribution obligations to its former employees.

"We currently anticipate that there will be sufficient net floating charge realisations to permit a full dividend to preferential creditors of 2e2 UK," says the report. "[Although] we are not yet in a position to declare a preferential dividend pending finalisation of total preferential claims."

Unsecured creditors will be paid from any funds raised from the "prescribed part", a floating charge related to how much money can be raised from property sales. A total of 50 per cent of money raised on net property sales of less than £10,000 - after realisation costs - will go in the prescribed part pot. For property sales worth upwards of £10,000, 20 per cent or £600,000 - whichever amount is lower - will go towards paying back unsecured creditors.

Administrators' remuneration
A total of £8.1m of the £43m owed to 2e2 Group companies has thus far been collected, with a further £300,000 to £500,000 expected to come in. This compares with the 2e2 directors' initial projection that just £5m would be recoverable.

Remuneration paid so far to the administrators totals about £3.2m, the reports reveal, including £1.5m of payments to various companies working with FTI as professional advisers. Chief among these is law firm Hogan Lovells, which has been paid £896,157, and debt collection company JP Associates, which has trousered £384,293.

The services of FTI do not come cheap either, with the report revealing the hourly charge for the time of its employees can be as high as £725 for a senior managing director - an increase from the £695 fee it charged last year. At the bottom the time of a consultant is somewhat cheaper at £400 an hour (up from £385 in 2013), while an associate's services can be procured for anything from £130 to £250 per hour.