Billing Big: Grant Thornton Charges £21 Million as Administrator

​
By Curtley Bale​


The Story

UK accounting firm Grant Thornton has announced its bill for the first year of fees whilst acting as administrator to Greensill Capital. The firm estimates that it will charge £21 million for the first 12 months, having been appointed in March following the spectacular failure of Greensill. Greensill Capital was the eponymous supply chain financing firm founded by Australian businessman, Lex Greensill, and advised by former UK Prime Minister, David Cameron.

What It Means For Businesses and Law Firms

Following a filing at Companies House, Grant Thornton looks set to earn £12 million from its first six months as Greensill’s administrator. The filing shows claims for £6 million in legal fees, with the £12 million comprised of 22,000+ hours’ worth of work since the company’s collapse. This works out at around £545 per hour (Financial Times). The fee is up 33% on the initial estimate, and now represents nearly 5% of the accounting firm’s entire UK revenue.

This filing has led to concerns about the level of cash being paid out to the administrators, something which will drain the capital available to repay the company creditors. To put the fees into perspective, law firm Allen & Overy advised Greensill on a pre-IPO funding round prior to the collapse, charging £856,000 for the work. They have since incurred a further £3.9 million in legal fees. Additional law firms have also been called in to help with the unwinding process, with Herbert Smith Freehills, DLA Piper, Kingsley Napley, and Simmons & Simmons all winning mandates (Bloomberg).

Creditors, such as Credit Suisse, are reportedly unhappy with the high level of fees being charged in relation to the slow progress that Grant Thornton is making. Credit Suisse was one of Greensill’s largest creditors, and has still been paying to keep the company operational during administration. The Financial Times also reports that the Swiss investment bank is concerned over the potential conflict of interest that Grant Thornton has, after being the advisor to Sanjeev Gupta’s failed industrial empire. Gupta’s $5 billion debt default contributed to Greensill’s spiral into administration. Grant Thornton and Gupta also shared senior executives.

This wouldn't be the first time a member of the Big Four has come under fire. The Financial Reporting Council recently fined Grant Thornton £2.3 million for its role in the accounting fraud that led to the collapse of high street chain Patisserie Valerie (FRC).

With the high fees and apparent lack of progress, the Greensill saga is set to continue long into 2022.