COLLAPSED law firm McClure Naismith could leave debts of more than £5 million in its wake after it went into administration earlier this year.
The 189-year-old Glasgow firm went under in August although around 80 jobs were saved after deals with rival firms saw partners and staff transfer to Harper Macleod, Maclay Murray & Spens, Burness Paull, Morton Fraser and HBJ Gateley.
According to an estimate of the company’s finances produced by administrators at insolvency practice FRP Advisory, creditors include the landlord of its premises, HMRC and former partners of the practice with an estimated total deficiency of around £4.5m. Estimated claims from the landlord of its premises represent the largest portion at £1.35m.
Its bankers, Bank of Scotland, are also expected to be left with a deficiency of between £548,000 and £1.05m on its £1.65m floating charge on the company’s assets.
The assets, including work in progress, office and IT equipment, are expected to realise between £729,000 and £1.36m.
But the administrators said at this stage it is unlikely that a distribution will be made to ordinary creditors apart from a small dividend of around £149,000 in total.
It will be some time before the exact shortfall is known and it is expected that it will take at least a year to finalise the company’s affairs.
Detailing the background to their appointment, the administrators’ report said that historically a significant proportion of the firm’s workload had come from the financial services sector and the downturn in the economy had impacted both turnover and profits.
Latest management accounts for the firm for the year to 30 April showed turnover had fallen to under £10m from £12m two years earlier.
Profits before partner drawings were £1.8m, down from £2.3m. The firm had also lost a number of partners and teams to rival firms over the years.
Attempts were made to reduce overheads by sub-letting excess office space but the firm continue to struggle financially.
Although approaches were made to a number of potential merger partners, discussions were unsuccessful.
No alternative finance could be secured and the partners were not in a position to fund the business.
The administrators said that the deals which saw partners and staff move to other firms meant that the value of work in progress could be realised and that the overall return to creditors was greater.
The work in progress of each partner was sold to the acquiring firms. It is not yet known how much the sale of work in progress will realise but the administrators have estimated it to be between £196,000 and £356,000.
At the time of the deals with other firms, the administrators said it was with “great regret” that the remaining 42 partners and staff at McClure Naismith had to be made redundant.