Big Four firm Deloitte has reaped the benefits of Comet’s downfall for the last six years, making a total of £15m in fees.
This is despite the investigation into Deloitte’s conduct which may end in disciplinary action.
According to The Times, the professional services business has made millions over the six years that it has been dealing with Comet’s liquidation, which occurred in 2012.
It charged £10.2m to be administrator and £5m to be liquidator. The business then made an additional £1.4m when advising Opcapita, which backed Comet’s parent company, Hailey Acquisitions, before Comet went bust.
Separately, Deloitte has been under investigation for four years over their liquidation of the now collapsed electronics giant.
The Insolvency Service asked the ICAEW to investigate a possible conflict of interest. Insolvency partners Neville Khan, Christopher Farrington, and Nicholas Edwards were conflicted as administrators because of previous work advising the business.
A spokesperson from The Insolvency Service commented: “Following our own investigations into Comet, we concluded that the conduct of the appointed administrators required further investigation by their professional body.”
ICAEW have now submitted their report with all their evidence to the investigations committee. A source close to the process told The Times that they will review the report and decide whether charges should be pressed against Deloitte.
Deloitte’s latest liquidator report also showed it paid law firm, Freshfields Bruckhaus Deringer, £1.6m last year for advice on a court application searching for guidance and support on the liquidation.
This application has led to appointing another independent liquidator, FRP Advisory, which will look into the circumstances surrounding Comet’s sale to Hailey Acquisitions by Kesa Electricals only nine months before Comet went under.
FRP Advisory’s next step is analysing whether the security given to Hailey Acquisitions over Comet’s assets during the sales process was valid.
What happened?
Comet went into liquidation back in 2012 after it suffered a cash drought ahead of the Christmas season when it was trying to stock its shelves for frantic buyers.
At total of 7,000 people lost their jobs after its collapse. Plus, the taxpayer was forced to pay the £50m it left behind in unpaid taxes as well as redundancy payouts.
Hailey Acquisitions did much better from the whole affair. As the only secured creditor of Comet, it received £59m from the business after it went under and could still get up to £81m by the end of the liquidation process.
Combined, Comet’s unsecured creditors, such as HMRC (which is owed £26m), as well as its customers, landlords, and suppliers have a received a total of £500,000 to date.