KEY POINTS:
Accountancy firm PricewaterhouseCoopers' insolvency practice, headed by high-profile receiver John Waller, has picked up more than $6 million in fees from its work on the string of finance company receiverships, Companies Office filings show.
That's more than two-thirds of the $9.2 million or so in receivers'
fees charged so far on about 30 finance companies that have failed over the past three years.
But those figures don't include hundreds of thousands, if not millions, of dollars more in legal and advisory fees associated with receivers' work.
While mindful of investor concerns about the cost of receiverships, Waller defends his team's charges, saying they are in most cases little more than might be expected under a moratorium and often don't fully reflect the amount of work done.
He says he is well aware many investors regard receivers with suspicion and may resent the fact receivers make money dealing with the fallout of a collapse that has cost them their savings.
"That's a natural response and we're very mindful of that. But these jobs are difficult. We often work very long hours every day. We often don't charge all the hours and we discount the rate for these jobs because we're conscious of the impact on investors.
"Whatever number we put out there, people are going to say that's a lot of money, which it is, but these are complex jobs with big asset values and a lot riding on them."
Although another receiver told the Business Herald the way different receivers reported their fees to the Companies Office varied significantly, making comparisons difficult, Waller said PwC was "very public and transparent" in this regard.
"I think frankly investors have the right to know."
Receivers must file reports to the Companies Office every six months containing a receipts and payments statement that is accessible to the public through its website.
In considering recent finance company restructuring proposals, many investors have shown what seems to be a reluctance to see companies placed in receivership, with at least some commentators observing this is likely because of a belief that receiverships are expensive and enrich insolvency practitioners at the expense of creditors.
But Waller says that apart from the initial stages of a receivership where a company's assets and records are being secured, which can be a costly process, the ongoing costs of receivership are probably on a par with a restructuring or work-out.
A significant factor that determines the overall cost of any receivership is the amount of litigation or other legal work required.
Some recent finance company collapses have been preceded by some murky and legally complex transactions which are costly to both unravel and to seek remedies for in the courts.
While some may regard the current glut of work for insolvency practices as a bonanza for the large accountancy firms such as PwC and Deloitte, Deloitte partner Richard Kirkland points out this aspect of their business is only sporadically profitable.
Kirkland said Deloitte was increasingly focused on its insolvency practice and was redirecting staff and resources from other areas including corporate finance and merger and acquisition advisory services.
Deloitte's insolvency practice was greatly enlarged this year when it merged with insolvency specialist McCallum Peterson.
Kirkland said the switch of resources into insolvency corresponded with the particular part of the business cycle now being experienced and Deloitte's insolvency practice had been "doing dough" for the past few years.
"We carry that as an investment. In fair weather times those guys sit twiddling their thumbs as there are not enough receiverships."
The other major accountancy firms would be the same.
RICH PICKINGS
Finance company receiverships and fees as at most recent Companies Office filings:
PRICEWATERHOUSECOOPERS
* Capital+Merchant Business Investments Ltd - $111,347
* Lombard Finance - $621,000
* LDC Finance - $143,645
* Five Star Consumer Finance - $1.24m
* Nathans Finance - $598,000
* Bridgecorp - $836,000
* Provincial Finance - $2.44m
* National Finance 2000 - $401,000
KORDAMENTHA
* Western Bay Finance - $932,000
* Property Finance Securities - $370,000
* Numeria Finance - $192,492
BDO SPICERS
* Clegg & Co - $377,444
GRANT THORNTON
* Capital + Merchant Investments - $210,000
* Capital + Merchant Finance - $723,000
DELOITTE
* Dominion Finance Group - Not available
