Got a letter from Ernst & Young on Saturday, giving details of the Highbury break-up. For ex-Highbury freelances, the following clauses probably seem the most relevant – if anyone can spot any others, feel free to add comments:
Page 4, section 3, paragraph 2: “The directors, with the support of the Lenders, whilst continuing to explore restructuring options, established the New Credit Trust on 19 December 2005, with an extension amendment entered into on 12 January 2006. During the period to 19 January 2006 funds were paid into the New Credit Trust account from trading cash flow in order to provide for liabilities in respect of new credit incurred in the period 12 December 2005 – 19 January 2006 in relation to defined beneficiaries”
That would be the ring-fenced fund then. That gives clear dates for the commissioning dates for work that might get paid: 12 December 2005-19 January 2006.
Page 5, section 4: “Shortly after appointment, the Joint Administrative Receivers concluded disposals of the business and assets of Lifestyle and Entertainment as follows:
- Imagine Publishing Ltd acquired the business and assets of Entertainment on 20 January 2006
- SMD Publishing Ltd acquired the business and assets of Lifestyle on 23 January 2006, with effect from 20 January 2006
”Also on 20 January 2006 the Joint Administrators concluded the disposal of the business of Special Interests to Brush Colour Ltd (now known as Encanta Media Ltd).
“The sale agreements excluded debtors of the Companies which remained assets of the Companies.”
So that means Imagine and co have all the templates, back issues, etc of the respective magazines, but they didn’t purchase the debt of the various groups.
“The employees of Entertainment, Special Interests and Lifestyle transferred under TUPE to the relevant purchasers and, upon appointment, all staff at HHC were made redundant with the exception of a small number of head office personnel.”
TUPE regulations specify how employees should be treated when transferred to companies. What this section means is that Imagine and co were briefly the employers of the former Highbury employees and then decided whom to make redundant, rather than the Highbury employees being made redundant and then cherry-picked by the new owners.
Page 6, section 4 (continued): “The funds held in the New Credit Trust do not form part of the assets over which the Joint Administrative Receivers are appointed.”
The ring-fenced fund is indeed ring-fenced.
“Since appointment, the Joint Administrative Receivers have been working with the directors of the Companies to identify the potential beneficiaries of the New Credit Trust. In addition the Joint Administrative Receivers have been taking legal advice in relation to their role and the management and wind down of the New Credit Trust generally. This process remains ongoing and, depending on further legal advice to be received by the Joint Administrative Receivers, it may be appropriate that an independent liquidator is appointed to progress matters and deal with distributions from the New Credit Trust. Further communication will be made with the potential beneficiaries as soon as the advice referred to above is finalised.”
Basically, the receivers have been trying to work out who deserves paying from the ring-fenced fund. But they’re not that desperate to do the job, are looking for a way out and might get someone else to deal with that. Given the fees liquidators can command, we can only hope that the fund holds quite a bit more than the combined amount of all the commissions.
Anyway, they’ll let us know in time what they’ve decided.
Page 6, section 7: “Given the substantial amounts due to the Lenders, we do not envisage any distribution to non-preferential creditors of HHC, Lifestyle and Entertainment, except for any distributions to beneficiaries of the New Credit Trust.”
Only expect money for the ring-fenced fund: the banks are owed so much cash, there’s not going to be anything left over for anyone else (‘the Lenders’ are a syndicate of banks owed circa £30 million by Highbury when it went into receivership).
So there we have it: if you were commissioned for work between 12 December 2005 and 19 January 2006, you’ll probably get paid for that work. Otherwise, forget it.
As for when those commissions are going to get paid, every liquidation is different, but in my experience, you can still be hanging on for payment two years after invoicing. Hopefully, it should be quicker, if/once liquidators are appointed, because there’ll be no scrabbling to sell assets, only decisions on whom to pay and how much. But, plan for a long wait.