Grant Thornton has told creditors of Greensill Capital it expects to charge almost £21m in its first year as administrator of the collapsed lender’s UK operations.
The fee forecast, filed in a report at Companies House this week, has risen by almost a third from a previous estimate and now represents close to 5 per cent of the accountant’s entire UK annual revenues.
Grant Thornton, which was appointed in March as Greensill’s demise sparked a British political scandal, said it also expected to rack up almost £7m in other expenses, including £6m in legal fees.
The fees underline the complexity of unwinding the affairs of the company founded by Australian financier Lex Greensill and advised by former prime minister David Cameron.
The estimate includes £12.1m in fees for more than 22,000 hours of work in the first six months of the administration of Greensill Capital UK, an average of £545 per hour.
Law firm Allen & Overy, which worked on Greensill’s “pre-IPO” funding round months before the finance company’s collapse, was paid £856,000 for work before Greensill formally entered administration and has since incurred another £3.9m in fees, according to the report.
Lawyers from Herbert Smith Freehills, Kingsley Napley, Simmons & Simmons and DLA Piper have also been called in to advise.
The report did not estimate Grant Thornton’s fees and expenses beyond March 2022 but administrators expect their work to continue for at least another year after that as they try to recover money owed to creditors such as Credit Suisse, which included Greensill’s loans in funds it sold to investors.
“How does Grant Thornton justify charging that much?” said a person close to Credit Suisse. “Credit Suisse is not represented on the creditor’s committee even though their investors are funding a big chunk of the fees.”
Administrators are normally paid out of the funds of the stricken company. But to keep Greensill running in administration Credit Suisse has been paying a special fee and other investors in the supply-chain finance firm’s investment products are paying fees directly to Grant Thornton.
Grant Thornton’s appointment as administrator raised eyebrows in the financial industry as the firm was an adviser to GFG Alliance, the family-owned business empire of industrialist Sanjeev Gupta, whose default on $5bn of debt hastened Greensill’s demise.
GFG Alliance paid Grant Thornton nearly £6m in fees from 2016 to 2020. Neil Barrell, a senior partner at the accounting firm, joined GFG in 2019. He became chief operating officer the following year but died shortly afterwards.
The administrator’s report reveals that GFG owes $590m to Greensill Capital. While some of this is comprised of unpaid advisory fees, Greensill Capital also held debt from GFG on its own balance sheet, even though the entity was supposed to primarily act as a middleman between borrowers and lenders.
The report also offers insight into some of the debts being pursued by administrators, including advances of $494,000 to three Greensill employees and a $1.1m loan to an employee which is outstanding.
Executives at Credit Suisse have been frustrated by Grant Thornton’s progress in recovering debts and processing insurance claims, according to people with knowledge of the discussions.
They also have concerns over whether Grant Thornton is conflicted due to its historic ties to GFG and Greensill.
Swiss asset manager GAM previously paid the accounting firm to investigate its relationship with Greensill, which itself hired the accounting firm in 2020 for restructuring advice.
Grant Thornton declined to comment. The firm has said previously that before accepting appointment as Greensill’s administrator it had satisfied itself that there was “no threat to its independence as a result of any prior relationships”.
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