by The PMA Team
The chances of SFI Group's small shareholders getting any money back depend on whether a legal claim against its former auditor is successful, administrator PricewaterhouseCoopers has stated.
The Slug & Lettuce operator was placed in administration at the end of June after its directors failed to secure additional funding pledges.
PWC sold 98 sites to Laurel Pub Company for £80m money that will go to secured creditors such as the banks. The remaining 52 sites were put on the market, with Laurel running those kept open for a fixed weekly fee. A total of 20 offers are being considered for specific or combined sites with just 21 sites still open.
PWC has told unsecured creditors that in March this year a 'professional negligence pre-action protocol was issued against SFI's former auditor Horwath Clark Whitehill.
David Chubb, of PWC, said: 'It is too early to predict whether or not there will be a future dividend to unsecured creditors. To a large extent this will almost certainly depend upon the size of any amount received as a consequence of action being taken against the former auditors.
On the reasons for administration, Chubb told shareholders: 'Whilst the restructuring in 2004 improved the group's financial position, it remained financially weak and lacked funds for substantial capital expenditure or investment. The group's cost base remained predominantly fixed by virtue of its leasehold portfolio and the group's financial gearing re-mained relatively high.
He added: 'Overdraft facilities had been withdrawn and there were no funds available to pay significant rent and salary payments that fell due on the day following my appointment.
'I was unable to undertake a major marketing exercise without the risk of significant trading difficulties, erosion of further value for the creditors and the potential loss of the offer made by Laurel.