Maxwell liquidators cry 'foul' over drubbing by committee: John Willcock hears the case for the receivers whose costs are under fire by MPs

LIQUIDATORS are competing in the unpopularity stakes with bank managers and estate agents. Last Monday's report by Frank Field's social security committee on the work of the Maxwell insolvency practitioners dealt the most savage blow yet to the beleaguered profession.

The committee's main criticism was that 'the current cost of the Maxwell case of over pounds 50m and a likely total cost of up to pounds 100m cannot be justified'.

This has stung the liquidators into a counter-attack. They are convinced that their role has been misunderstood and that if they can only get their message across then the public, and more importantly the Maxwell pensioners, will accept that fees of up to pounds 174 an hour are fully justified.

The four teams of accountants winding up the Maxwell empire believe that the MPs had at best downplayed the hard work down by the administrators, and the sheer complexity of sorting out more than 800 businesses strewn over a dozen countries. At worst, MPs had 'abused' the assistance given to them by the receivers they had questioned.

One of those questioned by the committee, Mark Homan, is not only Price Waterhouse's senior corporate reconstruction partner and joint administrator of Maxwell Communication Corporation, but also the president of the Society of Practitioners of Insolvency (SPI), the liquidators' licensing body.

Three of the other figures criticised in the report, Neil Cooper of Robson Rhodes, John Talbot of Arthur Andersen, and David Buchler of Buchler Phillips, are also council members of the SPI. So Mr Field's attack goes to the very heart and soul of the British insolvency profession.

Mr Homan is incensed at the general attack on the profession and the perceived reluctance of the media to report his side of the case. When his team took charge of MCC in late 1991 they were faced with 400-odd companies with a combined turnover of pounds 1bn and 14,000 employees, based mostly in the US but with assets spread around 12 other countries.

'We were faced with a double-whammy. We had to install top accountants to run the head office in London, and our own management to run the operations in the US, with all the expense that involved. The MPs said we delayed selling the businesses. We could have thrown them straight on the market, but what price would we have got?'

As for the vexed area of fraud, Mr Homan said: 'We started with thousands of boxes of documents. None of them were marked 'find fraud here'. We have had to go back over pounds 18bn-worth of deals.'

Mr Talbot, the administrator of Maxwell's private companies, made the most telling response to the MPs' attack. He said: 'You have to look at the costs in terms of what has been achieved. We have raised pounds 154m through asset sales at a cost of pounds 16.5m.'

This ratio of raising pounds 10 for creditors for every pounds 1 spent went down well with the MPs - perhaps too well. Because Mr Talbot was one of the first accountants to give evidence to the committee, this ratio became in their minds a standard by which to judge the others. This led the MPs to savage Buchler Phillips, the receivers of Robert Maxwell's private estate.

The report said the MPs had 'particular misgivings' about the work of Buchler Phillips and some of the information it had provided, and that they planned to issue a special report on the firm later in the year.

Peter Phillips, senior partner of Buchler Phillips, is incensed that the committee has picked his receivership activities for such a drubbing, particularly because they have 'least significance to the pensioners of the four sets of practitioners'.

The problem started when Mr Phillips said in his first evidence to the committee last year that his firm and its lawyers had run up fees totalling pounds 1.1m - more than they had then recovered for creditors. Mr Phillips then stressed that the legal nature of reclaiming the assets meant that costs would be 'up front' while recoveries would be longer in coming.

The MPs got the impression that Mr Phillips was suggesting he would eventually conform to the Talbot 1:10 ratio and raise more than pounds 10m. Mr Phillips countered that he had originally given only pounds 8.7m as the 'potential optimum realisation' and that he had secured nearly pounds 6m to date.

'Mr Field seems to have deliberately ignored the true nature of these figures. He has also applied the benefit of hindsight.

'When we embarked on our receivership of the Maxwell estate it was widely assumed that Robert Maxwell was one of the wealthiest men in the world. It was only after a great deal of investigation and time was expended that it became evident that his apparent wealth was a house of cards. My original figure, however close I come to it, was only ever a potential optimum realisation.'

This row is, however, a sideshow as far as the pensioners are concerned. The pounds 440m hole in the pension fund managed by Bishopsgate Investment Management is their biggest worry, and BIM's liquidator, Neil Cooper of Robson Rhodes, is therefore under most pressure from the politicians.

The MPs criticised him for 'dragging his feet' in taking legal action against institutions holding pounds 180m of disputed pension assets, as well as against Maxwell's auditors, Coopers & Lybrand, and institutions that traded shares for Maxwell such as Goldman Sachs.

Mr Cooper's response is that he would be irresponsible if he did not use his special investigative powers under the 1986 Insolvency Act to the full before resorting to litigation, that would inevitably be time-consuming and costly. Even the MPs accepted on Monday that legal fees could eventually dwarf the accountant's fees if litigation goes ahead.

The amount Mr Cooper recovers for the pensioners in turn relies on how much he can claim from Mr Talbot's private companies, where much of the pension fund money ended up.

Mr Talbot in turn is biding his time to get the best possible price for his 54 per cent stake in Mirror Group Newspapers, the jewel in the crown of the private companies. He is coy on when he will sell, saying simply: 'I have never been a long-term holder.'

Again, he insists that critics must look at what administrators have raised before attacking their fees.

(Photograph omitted)