scm pharma limited - pwcfull name: scm pharma limited trading name: scm pharma limited registered...

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SCM Pharma Limited - in AdministrationHigh Court of Justice, Chancery DivisionNewcastle Upon Tyne District Registry

Case No. 631 of 2014

Joint Administrators’ progress report for theperiod from 6 July 2015 to 5 January 2016

5 February 2016

PricewaterhouseCoopers LLPBenson House

33 Wellington StreetLeeds

LS14JP

Telephone: +44(0)113 289 4572facsimile +44(0) 113 289 4460

www.pwc.co.uk/scmpharina

When telephoning please ask for Will Duxbury

Contents

Section Pages

1 Joint Administrators’ progress report for the period from 6 July 2015 to 5 2- 4

January 2016

2 Statutory and other information 5

3 Receipts and payments account for the period 6 July 2015 to 5 January 62016

4 Statement of expenses incurred from 6 July 2015 to 5 January 2016 7

5 Analysis of Administrators’ remuneration and Category 2 disbursements 8 - iifor the period 6 July 2015 to 5 January 2016

6 Pre-appointment costs 12

Abbreviations used in this report:

“the Company”- SCM Pharma Limited

“the Joint Administrators” — Toby Underwood and Ian David Green

“Sch.Bi 1A86” — Schedule Bi of the Insolvency Act 1986

“IR$6” — Insolvency Rules 1986

“SAUKL” — Shire Acquisitions UK Limited

“Provensis” — Provensis Limited

“ViroPharma”- ViroPharma SPRL

“Shire” — Shire Plc

“Lloyds” — Lloyds Bank PLC

1. Joint Administrators’ progress report for the period from6 July 2015 to 5 January 2016

Introduction

In accordance with Rule 2.47 of the Insolvency Rules 1986 (“1R86”), we write to provide creditors withdetails of the progress of the Administration of SCM Pharma Limited (“the Company”) in the periodfrom 6 July 2015 to 5 January 2016. We are required to provide certain statutory information pursuantto Rule 2.47(1)(a) to (d) 1R86, which is included in Section 2.

At this time we are unable to provide a reliable estimate of the likely dividend to creditors as we are stillagreeing the final level of creditor claims. These matters are discussed below.

Transfer of appointment

Andrew Ross has now left the firm. To ensure the continued pursuit of outstanding issues, anapplication was made to the Court to facilitate the removal of Andrew Ross as Joint Administrator andthe appointment of Ian Green in his place. The application vas approved and consequently Ian Greenreplaced Andrew Ross as Joint Administrator with effect from 2 September 2015.

Furthermore in the event that the Company moves to Creditors’ Voluntary Liquidation (“Liquidation”),Andrew Ross will not take up the position as Liquidator (as stated in our proposals) but instead IanGreen will become one of the Liquidators, together with myself as the existing appointee. However aswe intend to make a distribution to creditors in the Administration, we consider a move to Liquidationto be unlikely.

Progress in the period

Details regarding the sale of the business and assets, and the progress of the Administration to 5 July2015 can be found in our previous progress reports. I provide further details regarding progress in thecurrent period as follows:

• Rates refunds

We have received a further £3,355.20 in respect of rates refunds relating to the pre appointmentperiod. This refund was recovered directly from the local council, thus avoiding any agent’scommission that would otherwise be payable.

• Other assets

The position in relation to the outstanding book debts and the faulty machinery remains ongoingand any further update will be provided in our next report.

• Unsecured claims agreement

Unsecured claims received to date total 71 in the sum of £2,093,124. In the period of the report, wehave been reviewing 7 claims which required further evidence and investigation. Of these claims, 3have now been admitted for dividend purposes bringing the total admitted claims to £1,093,833.

We had previously reported a potential claim in excess of £10 million. This claim has now beenreceived in the sum of £698,281.39. The claim is currently going through the adjudication processand further enquiries will need to be made. A further 3 claims totalling £301,010 are still underreview. Once these claims have been concluded, we will be in a position to issue notice of intendeddividend. Further information regarding the outcome for creditors can be found below.

SCM Pharma Limited — in Administration

Joint Administrators’ third progress report for the period from 6 July 2015 to 5 Janua;y 2016

2


VAT returns

The Company remains registered for VAT and we continue to prepare and submit quarterly returns.

Receipts and payments account

Ail account of the receipts and payments in the Administration for the period from 6 July 2015 to 5January 2016 is set out in Section 3.

Expenses statement

A statement of the expenses incurred by the Administrators in the period 6 July 2015 to 5 January 2016is included at Section 4.

Administrators’ remuneration

Our remuneration has been agreed on a time cost basis by both secured creditors. In the period of thisreport, we have received consent from the second ranking secured creditor to draw some of our feesfrom their fixed charge realisations.

The time cost charges incurred in the period covered by this report are £17,160. This brings the totaltime costs to date to £182,788. Total hours spent on the case is 692 at an average hourly rate of £264.41e will be drawing fees in due course.

In accordance with the requirements of Statement of Insolvency Practice 9, a full analysis of theAdministrators’ time costs and Category 2 disbursements for the period 6 July 2015 to 5 January 2016 isprovided in Section

.

Creditors’ rights

If any creditor requires further information regarding our remuneration or disbursements, any requestshould be made in 1Titing. Creditors have the right to challenge Administrators’ remuneration anddisbursements and an explanatory note on these rights and other matters relating can be found onlineat:

http: //wwwicaew.com//media/Files/Technical/Insolvency/creditors-gtñdes/creditors-guideadministrators-fees-final.pdf

A copy (free of charge) can be obtained by telephoning Will Duxbury on 0113 289 4572.

Pre-Administration costs

Information regarding the approval of the unpaid pre-administration costs previously detailed in ourproposals can be found at Section 6 of this report.

Outcome for creditors

• Secured and preferential creditors

Lloyds Bank Plc (“Lloyds”) were the first ranking floating charge holder. As explained in our previousreport, Lloyds have been paid in full.

SCM Pharma Limited — in AdministrationJoint Administrators’ third progress report for the period from 6 July 2015 to 5 January 2016

3


At the date of appointment, ViroPharma held fixed charges and a second ranking floating charge whichsecured its total lending to the Company of c. £11.42m. During the previous period, distributionstotalling £2o2k have were made to ViroPharma under its floating charge, in addition to the £5,500kpreviously distributed under it’s fixed charge. It is expected that ViroPharma will stiffer a shortfall in itslending.

We don’t think there are any preferential creditors, as all employees were transferred to SAUKL onappointment.

• Unsecured non-preferential creditors

Funds will be available for distribution to the Company’s unsecured creditors by virtue of the prescribedpart in due course and we have obtained permission from the Court to pay the dividend in theAdministration. As reported above, we are still in the process of agreeing final creditor claims.

We still anticipate the value of the prescribed part to be approximately £185,000. Factoring in the costsof dealing with the prescribed part, the claims received to date and the ongoing adjudication process, weestimate the dividend rate could be in the region of 6p to iop in £.

Once the final claims have been concluded, we will be issuing notice of intended dividend. The timing ofthe dividend payment will depend upon how quickly we can resolve the remaining unsecured claimsdetailed above, however we hope this will be within the next 6 months.

Any creditor who has not yet submitted their claim are invited to do so by return, using the formenclosed with this report.

Exit from Administration

As explained in our previous report, we had requested an extension to the period of the Administrationfrom both secured creditors of one year to enable us to conclude otitstanding matters. This extensionwas granted and the Administration will now expire on 5 August 2016. We anticipate that once our workhas been completed, we will file a notice with the Registrar of Companies to end the Administration andthe Company will be dissolved 3 months later. In the unlikely event that a further extension to theperiod of administration is required, we will make an application to Court.

Next report

The Administrators anticipate that they will circulate their next report to creditors at the earlier of theconclusion of the Administration or in approximately six months.

Toby UnderwoodJoint AdministratorSCM Pharma Limited

Toby Scott Underwood and Ian David Green have been appointed as JointAdministrators of the Company to manage itsaffairs, business and property as its agents and without personal tiability. The JointAdministrators are licensed in the UnitedKingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.

The Joint Administrators are bound by the Insolvency Code ofEthics which can be found at:https://www.gov.uk/government/publications/insotvency-practitioner-code-ofethics

The Joint Administrators are Data Controllers ofpersonal data as defined by the Data Protection Act 1998.PricewaterhouseCoopers LLP will act as Data Processor on their instructions. Personal data wilt be kept secure and processedonlyfor matters relating to the Administration.


4

2. Statutory and other information

Court details for the Administration: High Court of Justice, Chancery Division,Newcastle Upon-Tyne District RegistryCounty Court Case: 631 of 2014

Full name: SCM Pharma Limited

Trading name: SCM Pharma Limited

Registered number: 06641808

Registered address: Benson House, 33 Wellington Street, Leeds, LSi4JP

Company directors: Mr Mark John EdwardsMr Grant Harley

Company secretary: Mr Grant Harley

Shareholdings held by the directors and Nonesecretary:Date of the Administration appointment: 6 August 2014

Administrators’ names and addresses: Mr Toby Underwood, PricewaterhouseCoopersLLP, Benson House 33 Wellington Street, Leeds151 4JPMr Ian Green, PricewaterhouseCoopers LLP, 7More London Riverside, London, SEi 2RT

Appointor’s / applicant’s name and address: The Directors of the Company, Unit 6 RegentsDrive, Low Prudhoe Industrial Estate, LowPrudhoe, Northumberland NE42 6PX

Objective being pursued by the Objective (b); achieving a better result for theadministrators: Company’s creditors as a whole than would be

likely if the Company were wound up (withoutfirst being in Administration)

Division of the administrators’ In relation to paragraph 100(2) Sch.Bi 1A86,responsibilities: during the period for which the Company is in

Administration, the administrators may act jointlyor severally so that all their functions, powers andduties may be executed by all or any of them

The European Regulation on Insolvency The European Regulation on InsolvencyProceedings (Council Regulation (EC) No. Proceedings applies to this Administration and1346/2000 of 29 May 2000): the proceedings are main proceedings

Proposed end 10 the Administration DissolutionEstimated dividend for unsecured creditors: Current estimate: 6p-;op in £ (o.o6-Lo.io)

Estimated values of the prescribed part and £185,000 prescribed part and £911,000 netthe Company’s net property: property


5

3. Receipts and payments account for the period 6 July 2015to 5 January 2016

SCM Pharnia Limited - in Administration

Statement ofAffairs

Payments

Bank ChargesLegal Fees and ExpensesDistribution to Charge Holder

6 February 2015

to 5 July 2015

5,628,267.63

(5,543,171.50)

6July2o15to5Januaty 2016

5,628.000.00

257.63

5,628,267.63

85,096.13

Floating Charge

Receipts

Leasehold Property / Rent Deposit DeedPlant and MachineryFixtures & FittingsStockPre appointnlent VAT refundBook DebtsBank Interest GrossCa all in HandRates RefundsRefunds

Payments

Legal fees and ExpensesAgent FeesAgent Disbursements

Statutory AdvertisingInsuranceBank Charges

Distribution to floating cha rgeholdera

73536.88

840,000.00

78,000.00

66,000.oo

18,107.98

4,877.40

1,770.10

770.83

853.31

2,215.80

1.086,132.30

(26,989.00)

(11,750.00)

(295.00)

(75.82)(424.00)

(30.00)

(725,915.55)

73.53688

840,000.00

78,000.00

66,ooo.oo

18,107.98

4,877.40

2,376.64

770.83

4,208.51

2,215.80

3,961.74 1.090,094.04

(33,620.28)

(11.750.00)

(295.00)

(75.82)(424.00)

(30. oo)

(725,915.55)

Floating charge balance

(765,479.37)

320,652.93

(6,631.28)

(2,669.54)

(772,110.65)

317,983.39

Vat Control Account (5.397.80) 5,397.80

Balance held in high interest a/c 400,351.26 2,728.26 403,079.52

Fixed charge

Receipts

2.181.799 Plant and machinery

Bank Interest

Total

5,628,000.00

267.63

(i.oo)(40.156.50)

(5,503.000.00)

Fixed charge balance 85,096.13

(15. oo)

(40,156.50)

(5,503.000.00)

(5,543,171.50)

606.54

3,355.20

(6,631.28)


6

4. Statement of expenses incurred from 6 July 2015 to 5January 2016

The expenses inctirred in the period 6 July 2015 to 5 January 2016 are as below:

Unpaid Expenses Expenses paid UnpaidExpenses incurred expenses as 5 incurred in in period expenses as at

July2015 period 5January2OlS£ £ £

Pie-appointment agents fees and disbursements- - - -

Pie-appointment legal fees and expenses- - - -

Bank charges- - - -

Statuator advertising- - - -

Insurance- - - -

Pie-appointment Administrators fees 27,179.25 - - 27,179.25Post-appointment Administrators’ fees 165,627.90 17,159.95 - 182,787.85Post-appointment Administrators’ expenses 1,723.98 501.08 - 2,225.06Legal fees and expenses 6,941.28

- 6,631.28 310.00

Total 201,472.41 17,661.03 6,631.28 212,502.16


7

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8

5. Analysis of the Administrators’ remuneration andCategory 2 disbursements for the period 6 July 2015 to 5January 2016

Time charging policy

The time charged to the Administration is by reference to the time spent by us in dealing with mattersarising. It is our policy to delegate tasks to appropriate members of staff. We take into account theirlevel of experience and any specialist knowledge needed to maximise cost effectiveness. Where thereare complex or important matters which need more responsibility, these are dealt with by senior staffor the administrators themselves.

Hourly rates

Set out below are the relevant maximum charge-out rates per hour worked for the grades of theAdministrators’ staff actually or likely to be involved on this assignment. Time is charged by referenceto actual work carried out on the assignment. There has been no allocation of any general costs oroverhead costs.

Grade Charge out rate1 July 2015 onwards

£_/ hourPartner 590Director 490Senior manager 425Manager 340Senior associate 255Associate 165Support staff 87

Specialist departments within the Administrators’ firm such as Tax, VAT, Property and Pensions maycharge a small number of hours if and when the Administrators require their expert advice. Suchspecialists’ rates do vary but the figures below provide an indication of the maximum rate per hour.

Grade Charge out ratei July 2015 onwards

£ / hourPartner 1,190Director 1,095Senior manager 920Manager 665Senior associate 490Associate 240Support staff 140

In common with all professional firms, the scale rates used by the Administrators may periodicallyarise (for example to cover annual inflationary cost increase) over the period of Administration. Anymaterial amendments to these rates will be advised to the creditors and / or the creditors committeein the next statutory report.

All staff who work on this assignment (including cashiers, stipport and secretarial staff) charge timedirectly to the assignment and are included within any analysis of time charged. Each grade of staff isallocated an hourly charge out rate which is reviewed from time to time. Work undertaken bycashiers, support and secretarial staff is charged for separately and is not included in the hourly ratescharged by partners or other members of staff. Time is charged by reference to actual work carriedout on the assignment in six minute units. The minimum time chargeable is three minutes (i.e. 0.05units).


9


Narrative of work carried out for the period 6 July 2015 to 5 January 2016

Area ofwork Tork undertaken in the periods includes:

. Team meetings to consider claims agreement strategy andprogression of the adjudication process

. Maintenance of claims files and updating the internal databaseCreditors • Claims handling and agreement of claims

• Investigations into claims requiring further evidence, plus liaisonwith HMRC regarding claims agreement

• Dealing with general enquiries and correspondence from creditors

• Appointee and Manager reviews of case progression• Progress reporting: preparation, review, sign off and publication

Statutory and • Review of incoming postcompliance • filing and maintenance of internal systems/diary prompts

• Maintenance of books & records/archive charges• Considering the adequacy of the bonding level: calculation and review

• Quarterly VAT returns: calculating, drafting, signing and submittingTax/VAT • Liaising with internal VAT and tax specialists

• Liaising with HMRC

• Meetings and internal conference calls to consider ongoing strategyStrategy & Planning • Preparing cost budgets, ongoing review of costs, expenses and

estimated outcome statements.


10


Disbursements

Our finn’s expenses policy allows for all properly incurred expenses to be recharged to the case(excluding VAT) as set out in the tables below, covering the period of this report.

Category Policy Costs

1 All disbursements not falling under category 2 are recharged at cost £409.95

2Photocopying is charged at 5 pence per sheet copies - only charged for

£ 1 1circulars to creditors and other bulk copying . 3

2Mileage is charged at a maximum of 71 pence per mile (up to 2,000cc) -

or 93 pence per mile (over 2,000cc)

Total to 5 January 2016 £501.08

Category 2 disbursements for the period 6 July 2015105 January 2016

There is no statutory requirement for the Administrators to seek approval to draw expenses ordisbursements. However, professional guidance issued to insolvency practitioners requires that,where the Administrators propose to recover costs which, whilst being in the nature of expenses ordisbursements, may include an element of shared or allocated costs (such as room hire, documentstorage or communication facilities provided by the Administrators’ rnvn firm), they must be disclosedand be atithorised by those responsible for approving their remuneration. Such expenses are known as“Category 2” disbursements and they must be directly incurred on the case and subject to a reasonablemethod of calculation and allocation.

The Administrators’ expenses policy allows for all properly incurred expenses to be recharged to thecase. Category 2 disbursements are likely to only comprise printing for circulars to creditors andexceptional amounts of copying.

Category 2 disbursements in the period under review comprise of £91 relating to printing.

The Administrators have no business or personal relationships with parties responsible for approvingremuneration or who provide services to the Administrators in respect of the appointment where therelationship could give rise to a conflict of interest.

Summary of legal and other professional firms instructed in the period 6 July 2015 to 5January 2016

Service provided Name of firm / Reason Basis of fees Amount paidorganisation selected in period £

Legal advice Bond Dickinson Legal knowledge Time costs 6,631.28


11

6. Pre-appointment costs

The following unpaid costs which were incurred prior to the appointment of the Administrators, butwith a view to the Company entering Administration were approved for payment as an expense of theAdministration on 6 January 2015.

. . . Paid amountPre-Admmistration Expenses yetcosts payable as an as a

to be paidJanuary 2016expense () () (I)

fees charged by the Administrators 27,179.25 - 27,179.25

Expenses incurred by the - - -

Administratorsfees charged by third partiesinstructed by the Administrators (Net)

- -

- BondDickinson LLP 66,989.00 66,989.00 -

- GVA Grimley Ltd 11,400.00 11,400.00 -

- Johnson Tucker 350.00 350.00 -

Expenses incurred by third partiesinstructed by the Administrators (Net)- GVA Grimley Ltd 295.00 295.00 -

- BondDickinson LLP 156.50 156.50 -

Total 106,369.75 79,190.50 27,179.25

The outstanding payment of £27,179.25 will be paid in due course during the Administration.


12

Rule 2.47 form 2.248The Insolvency Act 1986

Administrator’s progress report 2.24BCompany Number

0664180$

Court case number

631 of 2014

(a) Insert kill name(s) andaddress(e.s) 01

admini strator(s

(h) Insert dates

We (a) Mr Toby Scott Underwood of PricewaterhouseCoopers LLP. Benson House. 33 Wellington Street,Leeds. LS 1 4JP and Mr Ian Green of PricewaterhouseCoopers LLP, More London Riverside, London. SE!2RT, administrator(s) of the above company attach a progress report for the period

from to

(b) 6 July 2015

SignJoint I Administrator(s)

(b) 5 January 2016

Name of Company

SCM Pharma Limited

In the High Cotirt ofjustice. Newcastle upon Tyne DistrictRegistry

(In II name ol court)

Dated 05/02/16

scm pharma limited - pwcfull name: scm pharma limited trading name: scm pharma limited registered...

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