Upon the application of the directors the High Court appointed Jane Moriarty and Samantha Bewick of KPMG as Joint Special Administrators of Worldspreads Ltd, a UK based spread betting business, late on Sunday 18th March 2012. Worldspreads Limited is a wholly owned subsidiary of Worldspreads plc, a company incorporated in Dublin, Ireland.
Jane Moriarty, Restructuring Partner at KPMG and Joint Special Administrator, said:
“The administration follows the discovery of accounting irregularities, which the company became aware of during the course of Friday 16th March 2012. It soon became apparent that there was a shortfall in client monies and, in order to mitigate losses for clients, the directors applied to court for the appointment of special administrators. Clients with any open positions will have their position closed out as at the close of the markets on Friday 16th March 2012. We will then commence an orderly wind down of the business.”
Due to the accounting irregularities that have been discovered, it is likely that there will be a shortfall to clients. One of the immediate priorities of the special administrators will be to investigate and attempt to reconcile all client positions in order to establish the extent of the shortfall. The special administrators will make their first report on the likely outcome for creditors within 10 weeks from their appointment, in line with statutory requirements.
The business has approximately 15,000 client accounts and employs 66 staff. Staff will be retained by the special administrators to support the orderly wind down of the business but, unfortunately, redundancies are likely. The special administrators will provide updates as soon as possible.
More information on the special administration is available at www.worldspreads.co.uk and a helpline number has been set up: 020 3284 8829. Both of these will be available by noon, Monday 19th March 2012.
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Notes to Editors:
The Special Administration Regulations brought in following the administration of Lehman’s European business. In many respects a special administration is very similar to an ordinary administration. As such, it is subject to the supervision of the English High Court in London. However, some of the differences are set out below:
A) The special administrators have to pursue three objectives (although the order in which they appear is not important):
B) If there are insufficient securities in a particular stock line in an omnibus account to meet all valid proprietary claims to that stock line, clients will bear the shortfall pro rata and have an unsecured claim for the balance. Due to the accounting irregularities that have been discovered, it is likely that there will be a shortfall to clients. One of the immediate priorities of the special administrators will be to investigate and attempt to reconcile all client positions in order to establish the extent of the shortfall.
As in an ordinary administration where sufficient realisations are made to enable dividends to be paid, in due course, the special administrators expect to pay dividends to unsecured creditors who submit proofs of claim by the last date for proving (which has not yet been set).
C) A creditors’ committee can be established to assist the special administrators to fulfill their functions. Membership may include both creditors and clients with proprietary claims only. A committee of between 3 and 5 members will be formed at an initial meeting of creditors to be held as soon as is reasonably practicable and, in any event (absent an order of the Court extending time), within 10 weeks of the date on which Worldspreads Limited went into special administration.
D) The costs and expenses of dealing with and distributing client assets are paid out of client assets. Other costs and expenses are paid out of the company’s assets.
The appointment of special administrators to Worldspreads Ltd is the third use of the new regime. The first use of the regime was MF Global UK: Richard Fleming, Richard Heis and Mike Pink of KPMG were appointed special administrators of MF Global UK on 31st October 2011. The second use of the regime was the appointment of special administrators from Mazars to Pritchard Stockbrokers Ltd on 9th March 2012.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.