Saturday 20 January 2018

Quinn advisers racked up €30m fees before Anglo seized group

'Runaway' expense claims shown on internal documents include $13,000 first-class flight

Laura Noonan

PROFESSIONAL advisers enjoyed fees of well over €30m for work on the Quinn Group's finances before Anglo Irish Bank and other lenders seized control of the conglomerate in April.

The sizable fees are detailed in internal Quinn Group documents, which also reveal that former chief executive Liam McCaffrey told colleagues the costs were a "runaway train" and payments should be halted until the group's finances improved.

Mr McCaffrey and Quinn family representative David Mackey took particular issue with a $13,000 (€10,000) claim for a "one-way first class flight", which the Quinn Group refused to pay because it was not a "reasonable expense".

The news comes as the Quinn Group's restructuring enters its final stage, with Anglo Irish Bank and lenders set to take ownership of the companies in mid-October. Talks between the bank and lenders on the final terms are ongoing in London.

The Quinn Group began making efforts to restructure its debt pile in late 2009 ahead of the 2010 maturity of a five-year €1.27bn bond.

Activity intensified from late March 2010 after the courts appointed an administrator to prime asset Quinn Insurance, and the outlook for the Quinn Group's refinancing materially worsened.

Documents prepared by the Quinn Group show that adviser fees of almost €31m had already been racked up by January 27, 2011; the bulk of these are understood to have been incurred after the insurer went into administration.

Separate documents show that professional fees "increased significantly" between from over January and March -- despite a December decision that the group should be put on a "care and maintenance basis" with work frozen unless requested by the group.

The Quinn Group yesterday declined to make any comment on the level of fees incurred since new management have taken over in April and declined to directly address the issue of whether the group had gotten good value for money.

In a brief statement, the group said that "significant costs" were incurred because of the "complex nature" of the restructuring work.

"Management and its advisers are working hard to complete the restructuring as quickly as possible and with a view to minimising these costs," the statement added.

The terms of the Quinn Group's original deal with its lenders meant that the group had to bear the cost of both its advisers and the lenders' advisers in the event of a restructuring event.

The January 27 tally included almost €17.5m of fees paid for lenders' advisers plus €13.6m of fees paid for the Quinn Group's own advice.

UK restructuring firm FTI, which earned fees of €5.2m for advising lenders, declined to comment last night, as did Talbot Hughes McKillop, a UK restructuring firm that had earned almost €3.8m for advising the Quinn Group.

Notes of a meeting between senior Quinn Group figures and advisers on March 7 show that an executive of Talbot Hughes McKillop said there was a "silver lining" to the costs because negotiations taking place would lead to a better debt position for the Quinn Group.

At the same meeting, Mr Mackey "expressed grave concerns" about the level of fees, while Mr McCaffrey described the fees as a "runaway train" and recommended they be paid when the group was in a "stronger liquidity position" so that the Quinn Group didn't run short of cash.

Peter Quinn, brother of Quinn Group founder Sean Quinn, suggested that advisers "be requested to stand down all workstreams" until there was "clarity" around the future of Quinn Insurance.

The meeting also discussed a $13,000 claim for a "one-way, first-class flight". It is not clear which adviser invoiced for the flight. The Quinn Group refused to pay it on the basis that it was only required to pay "reasonable" costs.

Irish Independent

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