Worldspreads special administrators publish first creditors’ report

The special administrators of Worldspreads have today published the first creditors’ report, in accordance with their statutory obligations. 

Jane Moriarty, restructuring partner at KPMG and joint special administrator, said: “Our priority has been to analyse the company’s records so that we can agree the balances, which is an important first step in starting to return money to clients.  We have now issued around 18,000 statements to clients, and to date have agreed approximately two thirds of the client creditors’ balances.

“We have commenced our review into the reasons for the company’s failure and have, to date, taken possession of around 24 terabytes of data (this is equivalent to 10 billion A4 pages and is larger than The Library of Congress which has 20TB).  While we are able to indicate high level data around funds collected and funds owed, it will be some time before an exact position on the return can be given.  A broad guide at the moment suggests a return to client creditors of 30-35p in the £1.”

Key facts from the creditors’ report:

• Overall financials: the special administrators have identified approximately £30m in client claims and have found around £5m in segregated accounts and £11m in house accounts; 

• All Worldspreads’ retail clients are currently thought to hold segregated status and are therefore able to claim against the segregated pool.  As there will be a shortfall in money owed, the clients will then have an unsecured claim against the estate;

• The special administrators are working closely with the Financial Services Compensation Scheme (FSCS) to establish eligibility for compensation and confirm client statements so the FSCS can finalise its claims process and pay compensation to eligible customers under its rules. The FSCS will only use agreed balances to determine compensation amounts;

• All, but approximately 90 Worldspreads’ clients, had accounts worth less than £50,000;

• Once the FSCS has agreed to compensate a client, they will then take on that client’s claim against the estate;

• While the Special Administration Regime stipulates that individual client addresses should be redacted from the creditors’ report, the special administrators were granted an order by the court to redact all client details (including names) because the company’s records did not distinguish between corporate and individual clients and the administrative burden of distinguishing the two from thousands of records would have proved disproportionately expensive;

• Non-client, creditor details are available in the report (as set out in the legislation);

• In accordance with their statutory obligations, the special administrators are also investigating the conduct of the directors in the run up to the collapse of Worldspreads.  The report on this investigation is confidential and will be filed with the Department for Business, Innovation and Skills;

• Special administrators’ fees to date are approximately £900,000;

• The next update on the special administrators’ progress will be made at the creditors’ meeting on 23rd May 2012.