BDO in the News

There are not three Jarndyces left upon the earth perhaps since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless. (Bleak House)

In Dicken's Bleak House, the case in the Court of Chancery, Jarndyce and Jarndyce, about inheritance of an estate, rumbles on unceasingly, until finally it comes to an end - when the lawyers run out of money, and there is nothing left in the pot to pay them.

Reading the story about Farepak, I am inclined to see some similarities. Farepak had run a Christmas club and hamper business since 1968, and collapsed in 2006. Like a Thrift Club, it allowed people to spread the cost of Christmas food and presents over the cost of the year. When it when bust, about 116,000 people lost almost £37m in total. They were told in October 2011 that they will get back just 15p in the pound.

The latest report in the saga is that the cost to date of the winding up of the company stands at £8.2m.

The fees for dealing with the administration of Christmas hamper firm Farepak have exceeded any potential compensation for its victims. The potential money back comes to around £5.53m. But the cost to date of winding up the company now stands at £8.2m. As the Telegraph notes, the £8.2m has been

earned by lawyers, administrators, insurers and media relation executives during both the administration and liquidation of the company, according to fresh documents filed at Companies House. BDO, as administrator and now liquidator, has already earned fees equating to £3.8m, excluding VAT. (1)

On the local scene, it should be noted that the local branch of BDO Alto, when participating in a Scrutiny review, initially attempted to ask for money before being interviewed. As the Chairman, Trevor Pitman, noted:

I also feel that I must comment upon the company's unprecedented attempt (as far as I am aware) to bill Scrutiny for its participation in the review to the sum of approximately £14000 (discounted from £26000!). That included in this huge sum was a charge for attending a meeting set up by Scrutiny as a courtesy to the company to try and talk through and alleviate their initial concerns about the review only further compounds this feeling of disbelief.

BDO appear to have have what is termed, in the jargon, "a track record" for record fees. I wonder how much their review in the Jersey case of the financial management of the Historic Child Abuse enquiry represented "value for money"?

In the case of Dickens, it was the legal profession which remorselessly swallowed up money; in today's world, it seems it is just as likely to be a large accountancy practice.

Links
(1) http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8919297/Farepak-fees-reach-8.2m.html