Judge criticises receivers' bill for Maxwell estate

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The Independent Online
The receivers of the late Robert Maxwell's personal estate were criticised by a High Court Judge yesterday for the "shameful" and "shocking" level of fees incurred in winding up the estate, which he said were likely to swallow up all the money recovered for creditors.

The ruling by Mr Justice Ferris, who also blocked clearance for a pounds 500,000 tranche of professional fees, will have a widespread impact on the way receivers are paid. Since Mr Maxwell's death pounds 1.4m has been recovered for the former Mirror Group Newspapers chief's personal estate, and another pounds 300,000 is expected.

But the bill from receivers Peter Phillips, David Buchler and Edward Wacey of Buchler Phillips had reached pounds 744,289 by the end of April 1997, and solicitors Nabarro Nathanson, appointed by the court to assist the insolvency firm, had produced a bill for pounds 705,283 by the end of March.

The judge said Mr Maxwell, who died in November 1991, left behind "a complex web of insolvencies, claims, cross claims and other disputes". He said there was no doubt that Mr Maxwell's estate was "massively insolvent". But he said that "if the amounts claimed are allowed in full, this receivership will have produced substantial rewards for the receivers and their lawyers and nothing at all for creditors of the estate".

The case was brought by the receivers, who wanted to establish whether they were able to keep the cash retrieved so far in payment for both the lawyers' fees and their own bills.

This followed bitter criticism of their fees by MPs on the Social Security Committee in both 1992 and 1994. The MPs concluded in 1994 that the fee levels had "rendered significant damage to the image of the insolvency profession".

Mr Phillips responded to the Court judgment yesterday, saying: "The winding up of the Maxwell estate and the affairs surrounding the business empire of the late Robert Maxwell was one of the most complex undertaken this century to identify and track down assets. Despite considerable efforts in good faith to investigate the identity and whereabouts of assets, the funds eventually left to the estate proved to be minimal."

The Society of Practitioners of Insolvency (SPI), the professional body representing UK's receivers, has recognised the public sensitivity of the fees issue. Brendan Guilfoyle, the president of the SPI and a partner with accountants Geoffrey Martin and Co, said yesterday: "Whilst we cannot comment on the details of what is an unusual and untypical case, we warmly welcome many of the principles set out in the judgment."