Cream cakes and conflicts
Regular observers of the UK Insolvency world will have read with interest the fact that KPMG are no longer in office as the administrators of Patisserie Valerie. Rather two insolvency practitioners from FRP Advisory LLP have been appointed. It seems from the press reports that the reason for that is because KPMG were unable to pursue the necessary investigations and court action arising from the insolvency. It seems that was because of a conflict of interest in relation to Grant Thornton, who were the auditors of Patisserie Valerie and also of KPMG.
Technically it might be argued this shows the flexibility of the insolvency regime that a replacement administrator can be identified. There seems to have been no attempt to simply have a conflict administrator investigating the claims (which has been a fashionable option in some cases). It may be the potential claim against Grant Thornton was too central to the whole case for that. It may also be representative of recent culture shift that the big four accountants particularly are very wary of being seen anywhere near a conflict situation. However, whether the change shows flexibility or not, the fact is there will be duplication in work and potentially a dilution of dividends to creditors.
Lenders and creditors should try to foresee as far as possible who potential claims in an insolvency may be against. That being the case efforts should be made to ensure the choice of Insolvency Practitioner to be appointed, and indeed choice of Solicitors to be utilised in investigations and prosecuting a litigation, are those likely to be conflict free. BBM Solicitors, like many other boutique firms have the advantage of having more conflict freedom; particularly in relation to the financial services industry and larger UK corporates.