KPMG’s Special Joint Administrator to Alpari UK speaks to FinanceFeeds, disputes reports of $15 million fee, says correct figure is nearer $7 million

Some thirteen months have passed since Alpari UK became insolvent as a result of exposure to negative client balances which ensued following a day of unprecedented market volatility caused by the Swiss National Bank’s removal of the 1.20 peg on the EURCHF pair on January 15, 2015.

Today, a document has been released by Joint Special Administrator KPMG which provided a second progress report on the bankruptcy proceedings of Alpari UK, showing that 13,590 client claims have been covered by the Financial Services Compensation Scheme (FSCS), incluing the distribution of $48.3 million between 10,444 clients.

Total client liabilities remain at just short of $98 million, however it has been widely reported that KPMG has charged a total of $15.1 million for its administration services, equating to 24,370 hours at an hourly rate of £430, a figure which KPMG has explained to FinanceFeeds is double the actual amount charged by KPMG.

Today, FinanceFeeds CEO Andrew Saks-McLeod spoke to Samantha Bewick, who is the Director at KPMG responsible for the administration procedure of Alpari UK.

Ms. Bewick has worked on the public cases of Barings plc, Marconi plc, TXU (Europe), and was Joint Supervisor of the CVA of Schefenacker plc, as well as being Joint Special Administrator of British spread betting company Worldspreads after its demise in 2012.

She is a Fellow of the Institute of Chartered Accountants in England and Wales and a Licensed Insolvency Practitioner in England and Wales.

With regard to the current situation of the insolvency of Alpari UK, Ms. Bewick explained “The dividend paid to date represents 55c in the dollar on the agreed claims of clients, allowing a provision for those clients who have not yet agreed their claim or who have disagreed with their balance as reflected in Alpari UK’s records.”

Back in October last year, Ms. Bewick explained that the interim unsecured dividend would be paid by the end of 2015.

“We are working with the Authorities to ensure that all parties are satisfied that clients have had sufficient opportunities to make their claims, and once this is complete we will be in a position to seek the closure of the client money pool” she said.

With regard to the transfer of clients and sale of the existing customer book to ETX Capital, Ms. Bewick explained “We have achieved significant realizations from the client list and from the sale of a subsidiary, and have streamlined the client claim agreement process for over 100,000 clients by converting Alpari’s trading platform into a Claims Portal in which clients can go on-line to agree their claim and then choose whether to remain a claimant, assign the claim to FSCS and be compensated or transfer it to a new account at ETX Capital.”

Interestingly, there has been a great deal of discourse over the amount which has been allegedly charged for administration services by KMPG. Many reports, including publicly available information from reputable sources on the internet, have stated that KPMG has charged $15.1 million for its services to Alpari so far, however KPMG refutes this, with Ms. Bewick stating to FinanceFeeds that only half of that figure has been charged.

“The fees which have been paid to us to date, as detailed in our second report to creditors, are approximately half of the number you state.  This difference arises because we are required to disclose all time spent on the case, calculated at our normal charge out rates, which appears to be the figure you mention; as well as the amounts which we have been paid” – Samantha Bewick, KPMG.

Ms. Bewick concluded by explaining “The fees which we are permitted to charge must be agreed by the creditors’ committee.  The creditors’ committee has agreed a fee structure in which the amount of our fees is linked to, and determined by, our achievement of certain milestones (set by the committee) in relation to the level of dividend paid to clients and creditors, the timing of those dividends, and the level of realisations which we achieve.  In this way the fees which we are paid are aligned with the interests of clients and creditors.”