The administration of the large-scale law firm failure at Axiom Ince will last until at least 2028, it has emerged.
A progress report published this week revealed that joint administrators handling the firm’s affairs had successfully applied to the county court to extend the period of administration by four years.
Axiom Ince was subject to intervention by the SRA in October 2023 and administrators from insolvency firm Leonard Curtis were appointed the same month. The joint administrators’ total time costs to date are around £819,000, based on 2,189 hours at an average rate of £374 per hour. It is now estimated the administration will cost more than £3m in total. The initial fees estimate was £1m.
The administrators said considerably more work is required on a number of matters, including realising assets, overseeing the Solicitors Regulation Authority intervention and investigating the company’s affairs and pursuing potential claims against the insurance.
The report reveals that the joint administrators reached a confidential agreement with the SRA to use a certain amount of asset realisations to cover some of their expenses.
As part of the agreement, £100,000 was advanced to the administration estate by the SRA: this has not yet been repaid but will be once there are sufficient assets.
The progress report does not give details of the amounts owed to unsecured creditors but includes previously unknown details about the handling of the business over the last year.
When the firm was finally closed down, it was owed £32.5m and its WIP ledgers were valued at £19m. By the end of October, almost £3m had been recovered from debtors. The amount of unbilled WIP that had been reconciled and invoiced reached £153,000 in the first year of administration.
The joint administrators expect they will recover between £5m and £8m in total from the administration estate.
Law firm Devonshires has been instructed to advise and assist in ongoing proceedings against former managing partner Pragnesh Modhwadia. The company continues to hold a freezing injunction against Modhwadia and several related businesses up to the value of £64m.
The company is the majority creditor in the bankruptcy of Modhwadia but it is currently estimated it will take at least three years to realise his personal assets.
Axiom Ince held two professional indemnity insurance policies: legal advice is being sought about the ability to make claims under these policies in relation to the company’s client account shortfall.
The amount owed to former employees is still uncertain at this stage whilst various employment tribunal claims against the company remain ongoing. At present, it is not known whether there will be sufficient assets to pay anything to staff, even though they are classed as preferential creditors.
The progress report reveals that HM Revenue & Customs believes it is owed almost £4.5m by Axiom Ince, although that figure has yet to be adjudicated by the administrators. There is no list yet of unsecured creditors, but it is uncertain in any case whether there will be any more left to make a distribution to them.
The Axiom Ince closure has been subject to an investigation into the actions of the SRA. An independent report published last month criticised the regulator, but the SRA said it disagreed with the headline findings. An announcement on potential further action by the Legal Services Board is expected before the end of the year.
