Creditor claims far exceed assets at failed broker
Failed Ipswich-based broker Ignition Select owes creditors £3.62m more than it has in available assets, the administrators’ statement of affairs shows.
Ignition Select called in the administrators – Kirstie Provan and Gary Shankland of corporate restructuring firm Begbies Traynor – on 18 July this year, putting 70 jobs at risk.
The administrators’ statement of affairs shows that the failed broker owes creditors a total of £3.87m.
Of this, £81,050 is owed to preferential creditors, £2.2m is owed to banking group Close Brothers – a secured creditor – and £1.58m is owed to a range of unsecured creditors.
The company only has estimated assets of £252,431 to pay what it owes creditors, leaving a deficit of £3.62m.
The £252,431 of assets covers the full £81,050 owed to preferential creditors, who get paid first, but this only leaves £171,381 to pay Close Brothers, so Close Brothers will only get a fraction of its money back and unsecured creditors stand to get nothing.
One of Ignition Select’s biggest unsecured creditors is broker software house Open GI, which Ignition Select owes £85,208. It also owes BTG Financial Consulting £52,444 and broker Clements Europe £50,791.
Clements Europe outsourced its UK personal insurance book to Ignition Select in September 2016.
The administrators’ report shows that the book value of Ignition Select’s assets is £2.78m, but the administrators only expect to realise £252,431 of this to pay creditors.
For example £406,788 of the book value is held in Ignition Select’s non-statutory trust client money account, which is ringfenced and intended to pay insurer premiums, so cannot be used to pay creditors.
Also included in the book value assets is £739,805 due from related companies. One of these companies is sister firm Call Connection, which called in the administrators four days before Ignition Select itself went into administration.
Ignition Select’s administrators do not expect to recover any of the money owed from related companies.
Call Connection’s administrators are Colin Haig and Martha Thompson of BDO.