Administrator Begbies Traynor is considering whether to approach Close Brothers over an extension of the administration period, as the second report reveals a cash shortfall of millions
The collapse of broker Ignition Select will leave Close Brothers with a significant cash shortfall out of the £2.2m it is owed, while Open GI and other unsecured creditors are unlikely to recover any funds, latest reports show.
Ignition Select has a balance at present of just £162,682, according to the administrator’s report.
The administrator estimates that £12,130 will be realised from trade debtors, while £119,037 will become available from other debtors.
The administration period could be extended beyond 12 months, as administrator Begbies Traynor is considering whether to seek Close Brothers approval to do this.
While the administrator confirmed it has conducted investigations into the ‘affairs’ of the company and the company’s directors, it is unable to disclose whether any wrongdoing has been discovered.
The administrator’s most recent report reads: “We are currently considering our findings and therefore it is not possible to report on this currently.”
A “significant shortfall”
Ipswich-based broker Ignition Select plunged into administration on 18 July 2017 alongside sister firm Call Connection, and the administrator’s first report suggested that it was bad news for Ignition Select’s creditors, as the broker owed over £3.62m more than it had in available assets.
Now, the second report paints an equally glum picture for creditors of the failed broker.
While Close Brothers will recover some of the £2.2m owed for the loan supplied to Ignition Select, the administrator anticipates a “significant shortfall”.
As Close Brothers is the secured creditor, this means that there will “likely” be insufficient funds to pay out to preferential creditors, such as for unpaid wages, salary and holiday pay.
Preferential creditors missing out
Preferential creditors have been urged to place claims with the Redundancy Payments Office (RPO), but the administrator confirmed that it has yet to receive any claim from the RPO.
Unsecured creditors have put in claims for £404,179 of the expected £1,581,755 so far.
According to the administrator, it is expected that there will be no remaining funds left to pay unsecured creditors, which include Open GI, BTG Financial Consulting and broker Clements Europe.
Ignition Select has paid back its insurers Clements, AA and Ignition £1,189,990 from trust fund accounts.
Due to its inability to return the cash to its creditors, the administrator expects the broker to be dissolved after administration.