Goldtrail Travel Limited - in Liquidation - PwC UK · Joint Liquidators’ sixth progress report...

Goldtrail Travel

Limited - in Liquidation

Liquidators’ sixth progress report for the

period from 1 November 2015 to

31 October 2016

www.pwc.co.uk/goldtrail

22 December 2016

Our ref: LP/DC/Goldtrail/2016report

PricewaterhouseCoopers LLP

Central Square

29 Wellington Street

Leeds

LS1 4DL

http://www.pwc.co.uk/goldtrail

Joint Liquidators’ sixth progress report

Goldtrail Travel Limited - in Liquidation 2

To all known members and creditors

22 December 2016

Dear Sir/Madam

Goldtrail Travel Limited – in Creditors’ Voluntary Liquidation (“the Company”)

Formerly trading from: 152 – 178 Kingston Road, New Malden, Surrey, KT3 3ST

This is our sixth annual report to members and all known creditors in the above liquidation for the period

1 November 2015 to 31 October 2016.

If you have any queries in connection with this report, please contact Lee Panther on 0113 289 4804.

Yours faithfully

For and on behalf of the Company

Ian Oakley Smith.

Joint liquidator

Ian Christopher Oakley Smith and David Chubb have been appointed as joint liquidators of Goldtrail Travel Limited. Ian Christopher

Oakley Smith and David Chubb are licensed in the United Kingdom to act as an Insolvency Practitioner by the Institute of Chartered

Accountants in England and Wales.

The joint liquidators are bound by the Insolvency Code of Ethics which can be found at:

https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics.

The joint liquidators are Data Controllers of personal data as defined by the Data Protection Act 1998. PricewaterhouseCoopers LLP will

act as Data Processor on their instructions. Personal data will be kept secure and processed only for matters relating to the liquidation.

https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics



Definitions used in this report

Definition used Term

the Company Goldtrail Travel Limited

the Liquidators, we, our Ian Oakley-Smith and David Chubb (from 8 November 2016); and

Robert Hunt (to 8 November 2016)

the Rules Insolvency Rules 1986

the Act Insolvency Act 1986

ICAEW Institute of Chartered Accountants in England and Wales

ATT Air Travel Trust

Onur Air Onur Air Simachk AS

PwC PricewaterhouseCoopers LLP

Table of contents

1. Introduction 5

1.1. Why we’re sending you this report 5

1.2. Change of liquidator 5

1.3. Estimated dividend prospects 5

2. Progress made during the period 6

2.1. Assets realisations 6

3. Outcome for creditors 8

3.1. Preferential creditors (mainly employees) 8

3.2. Unsecured creditors 8

4. Joint Liquidators’ fees and other financial information 9

4.1. Our fees 9

4.2. Our disbursements 9

4.3. Creditors’ rights 9

4.4. Receipts and payments account 9

4.5. Statement of expenses 10

Appendix A. - Statutory and other information 11

Appendix B. - Receipts and payments account for the period 1 November 2015 to 31 October 2016 12

Appendix C. - Details of our remuneration and disbursements and other professional costs 13

Appendix D. - Statement of expenses for the period 1 November 2015 to 31 October 2016 18



1. Introduction

1.1. Why we’re sending you this report

This is our sixth annual progress report to members and creditors. It will help if you read this in conjunction

with our earlier report.

This report provides a summary of:

The steps taken during the sixth year of the Liquidation;

Outstanding matters; and

A provisional estimate of the outcome of the liquidation for unsecured creditors.

In Section 2 we provide more detailed information on what we’ve been doing during the period covered by this

report and in Section 3 we provide information as to what the outcome for creditors might be.

By law, we have to give you certain statutory information, this is included at Appendix A.

1.2. Change of liquidator

Rob Hunt, one of the previous joint liquidators, has retired from PwC. To ensure that outstanding issues in the

liquidation continue to be pursued, an application was made to the Court to remove him and appoint David

Chubb as liquidator. David Chubb is licensed in the United Kingdom to act as an insolvency practitioner by the

Institute of Chartered Accountants in England and Wales.

The application was granted and so David Chubb replaced Rob Hunt as joint administrator with effect from

8 November 2016.

Rob Hunt will be released from all liability in respect of his conduct as liquidator with effect from 28 days from

the date of this report. Creditors have 28 days from receiving this notice to apply to Court to vary or discharge

the Court order.

1.3. Estimated dividend prospects

% Recovery Forecast Timing

For preferential creditors:

i.e. former employees (for unpaid wages up to £800 and

holiday pay only) and unpaid pension contributions in

certain circumstances:

Paid: 100 % n/a - paid

For unsecured creditors:

i.e. all other creditors who are neither secured nor

preferential:

This report: uncertain

Last report: uncertain

uncertain

uncertain



2. Progress made during the period

2.1. Assets realisations

Legal Proceedings

You may recall that we disclosed in our previous reports that we had commenced legal proceedings against a

number of parties in relation to the circumstances that resulted in the insolvency of the Company. This was

centered on the actions of the former director, Mr Aydin, who removed monies from the Company for his own

benefit via a suite of bogus transactions with two sets of parties. Those parties were the Turkish airline Onur

Air, and a number of individuals and entities known as the “BPI Defendants” who were connected with Viking

Airlines (which is now in liquidation). We argued the actions of both parties deprived the Company of a benefit

that it should have received and constituted a misapplication of the Company’s money.

The High Court found in our favour on 21 May 2014 and ruled that both sets of defendants dishonestly assisted

Mr Aydin and were liable for damages in excess of £5m. Both Onur Air and the BPI Defendants appealed to the

Court of Appeal as summarised further below.

The BPI Defendants

The High Court ruled that the BPI defendants should pay the Company a total of £1.4m (each of the BPI

Defendants were jointly and severally liable for this amount). In addition, the BPI Defendants were ordered to

pay interest and costs (which currently total approximately £1.1m).

The Court of Appeal upheld the High Court's judgment in May 2016. The BPI Defendants applied for

permission to appeal to the Supreme Court – permission was refused in December 2016.

We are now considering our enforcement options and will update creditors in the next annual report.

Onur Air

The High Court ruled that Onur Air should pay the Company £3.64m in relation to its part in the dishonest

transactions with the Company. In addition, Onur Air was ordered to pay interest and costs (which currently

total approximately £1.9m).

When Onur Air subsequently appealed to the Court of Appeal, the Company applied for and obtained an order

that Onur Air must pay into the court the original £3.64m judgment sum, before its appeal could continue.

Onur Air did not comply with this order and, as a result, the Court of Appeal dismissed Onur Air's appeal.

Subsequently, Onur Air applied to the Supreme Court appealing the decision of the Court of Appeal to dismiss

the appeal for want of satisfying the payment condition. The Supreme Court granted permission to appeal and

a hearing date has been set for 27 April 2017.

We will inform creditors of the outcome of this hearing in our next report.

Release of escrow funds

On 24 February 2016 the Court allowed the drawing of funds totaling £750,985 from the Court Funds Office

and an escrow account to pay some outstanding legal and insurance costs of the Company in relation to the

legal proceedings. These can be seen on the receipts and payments account and statement of expenses below. It

is anticipated further funds will be released in early 2017.



Other realisations

Apart from the anticipated recoveries arising from the proceedings disclosed above and the related statutory

interest applied, no further realisations are anticipated.



3. Outcome for creditors

3.1. Preferential creditors (mainly employees)

As previously disclosed, preferential creditors’ totaling £27,051 and were paid in full on the 2 August 2011.

3.2. Unsecured creditors

The prescribed part is a fund that has to be made available for unsecured creditors. It’s paid out of “net

property”. Net property is floating charge realisations after costs, and after paying - or setting aside enough to

pay - preferential creditors in full. But it only has to be made available where the floating charge was created on

or after 15 September 2003.

In this case the prescribed part doesn’t apply because there is no floating charge registered against the

Company.

There may be a distribution to unsecured creditors in the future, but this is dependent on the level of recovery

from the ongoing court proceedings. As mentioned above, it is hoped that the recoveries that may be expected

from the legal proceedings will be known by the time the next annual report is due in late 2017.

In any case, the amount of any dividend will depend not just on the final costs awarded, but also on the final

level of submitted claims and the liquidators costs, and for these reasons it is not possible to predict the level of

any dividend at this stage.

However, as previously reported, as a consequence of legal proceedings the potential claims of certain

unsecured creditors have been mitigated, resulting in a reduction of £6.8m. Similarly, the claim from ATT, the

Company’s largest creditor who had submitted an interim claim of c. £25m, may be significantly amended once

final recoveries from the legal proceedings are known.



4. Joint Liquidators’ fees and other

financial information

4.1. Our fees

At the first meeting of creditors held on held on the 9 December 2010 a resolution was passed to enable the

joint liquidators to draw remuneration by reference to the time properly given by us and our staff in dealing

with the liquidation. We’ve drawn fees in line with this resolution.

From 1 November 2015 to 31 October 2016, we have incurred time costs of £88,410 for 154 hours work, which

works out at an average hourly rate of £574.84. The average hourly rate in our last progress report was £508.15

We include details of the time costs incurred from 1 November 2015 to 31 October 2016 by work type, at

Appendix C.

Of our total fees of £2,245,558 we have drawn £1,519,383 in respect of our remuneration to date. This includes

£29,511 drawn in respect of PwC Turkey.

The balance will be drawn in due course if sufficient funds are recovered from the legal proceedings detailed

above.

In addition, further fees payable to PwC Turkey in the sum of £7,419 have been paid by PwC and will be

recovered as an expense of the liquidation should the legal proceedings be successful.

Further details of our fees are included in Appendix C, together with details of work that we would normally do

but has been subcontracted in the period.

In addition, the Joint Liquidators have drawn a statement of affairs fee of £38,846 in accordance with a

resolution also passed at the initial meeting of creditors.

4.2. Our disbursements

We’ve incurred disbursements of £4,364 during the period 1 November 2015 to 31 October 2016 and we’ve not

drawn any funds in relation to these. Further details are provided in Appendix C.

4.3. Creditors’ rights

Creditors have the right to ask for more information within 21 days of receiving this report as set out in Rule

4.49E of the Rules. Any request must be in writing. Creditors can also challenge the liquidators’ fees and

expenses within eight weeks of receiving this report as set out in Rule 4.131 of the Rules. This information can

also be found in the guide to fees at:

http://www.icaew.com/~/media/corporate/files/technical/insolvency/creditors%20guides/creditors%20guide

%20liquidators%20fees%20final.ashx

You can ask for a copy free of charge by calling Lee Panther on 0113 289 4804 or by emailing

[email protected].

4.4. Receipts and payments account

A receipts and payments account for the period 1 November 2015 to 31 October 2016 is provided at Appendix B.

http://www.icaew.com/~/media/corporate/files/technical/insolvency/creditors%20guides/creditors%20guide%20liquidators%20fees%20final.ashx

http://www.icaew.com/~/media/corporate/files/technical/insolvency/creditors%20guides/creditors%20guide%20liquidators%20fees%20final.ashx

mailto:[email protected]



4.5. Statement of expenses

A statement of expenses for the period 1 November 2015 to 31 October 2016 is provided at Appendix D.

This statement doesn’t include any tax liabilities that may be payable for the period of this report as this will

depend on the position at the end of the accounting period.



Appendix A. - Statutory and other

information

Name of company: Goldtrail Travel Limited – in Creditors’ Voluntary

Liquidation

Registered number: 03090844

Registered office: Central Square, 8th Floor,

29 Wellington Street,

Leeds,

West Yorkshire,

LS1 4DL

Former company names: n/a

Trading names: Goldtrail

Trading address: 152 – 178 Kingston Road, New Malden, Surrey, KT3 3ST

Names of liquidators and their

address(es):

Ian Oakley Smith and David Chubb, both of

PricewaterhouseCoopers LLP, 7 More London, Riverside, London,

SE1 2RT

Date of liquidators appointment: 1 November 2010

Details of change in liquidators: David Chubb replaced Rob Hunt as joint liquidator with effect from

8 November 2016

Estimated dividend for preferential

creditors:

100 pence in the £ (paid on 2 August 2011)

Estimated dividend for unsecured

creditors:

Uncertain



Appendix B. - Receipts and payments

account for the period 1 November

2015 to 31 October 2016

Carried forward at 31/10/2015

From 1/11/2015 to 31/10/2016

Total Estimated Outcome

Receipts £ £ £ £

Administration surplus 570,597.21 - 570,597.21 570,597

Book debts 1,502,637.57 - 1,502,637.57 1,502,638

Cash at bank 96,776.11 - 96,776.11 96,776

Dividends received 1,441.94 - 1,441.94 1,442

Interest 6,691.67 19.35 6,711.02 8,500

Release of funds from Court escrow account - 750,984.98 750,984.98 uncertain

Refunds - business rates 524.04 - 524.04 524

Refunds - PAYE/NIC 11,771.71 - 11,771.71 11,772

Sale of office equipment 370.00 - 370.00 370

Tax refund - terminal loss relief 283,580.24 - 283,580.24 283,580

VAT refund - administration period 102,071.14 - 102,071.14 102,071

Total 2,576,461.63 751,004.33 3,327,465.96 uncertain

Payments - general liquidation costs £ £ £ £

Agents fees and disbursements (3,209.01) - (3,209.01) (4,209)

Bank charges (52.75) - (52.75) (153)

Corporation tax (1,355.28) - (1,355.28) (1,355)

Creditors meeting costs (242.00) - (242.00) (242)

Insurance (68,687.00) (159,662.50) (228,349.50) (228,350)

Legal fees and disbursements (778,462.35) (499,828.37) (1,278,290.72) uncertain

Legal settlement to cover potential costs (35,000.00) - (35,000.00) (35,000)

Liquidators' disbursements (35,021.27) - (35,021.27) (80,000)

Liquidators' remuneration (1,489,872.10) - (1,489,872.10) uncertain

Liquidators' remuneration - PwC Turkey (29,511.00) - (29,511.00) (36,930)

Pre-appointment remuneration (38,845.75) - (38,845.75) (38,846)

Professional fees (46,244.32) - (46,244.32) (50,244)

Statutory advertising (220.86) - (220.86) (295)

Storage (4,773.25) (530.00) (5,303.25) (9,393)

Total (2,531,496.94) (660,020.87) (3,191,517.81) uncertain

Net realisations 44,964.69 90,983.46 135,948.15 uncertain

VAT control account (10,325.48) (91,600.11) (101,925.59) -

Less amount paid to preferential creditors (100p/£ paid 02/08/11) (27,051.27) - (27,051.27) (27,051)

Funds in hand 7,587.94 (616.65) 6,971.29 uncertain



Appendix C. - Details of our

remuneration and disbursements and

other professional costs

Background

This section sets out the process that was established for setting and monitoring the Liquidators’ remuneration.

The basis of our fees and certain disbursements was agreed at the meeting of creditors on 9 December 2010.

The basis of our fees is by reference to time properly given. Details of the amount we have drawn can be found

in Section 4.

Liquidators’ charging policy

The time charged to the liquidation is by reference to the time properly given by our staff and us in attending to

matters arising.

It is our policy to delegate tasks in the Liquidation to appropriate members of staff, considering their level of

experience and any requisite specialist knowledge needed and they are supervised accordingly to maximise the

cost effectiveness of the work performed.

Our junior people have done the routine work in the liquidation to keep the costs down. But we and our senior

staff have supervised them and we have dealt with any complex or significant matters ourselves.

Matters of particular complexity or significance requiring more exceptional responsibility are undertaken by

senior staff or the Liquidators themselves.

Narrative of key areas of work carried out for the period 1 November 2015 to 31 October 2016

There remain a number of distinct work streams within the work we have done. It should be noted that

individuals will have worked in more than one area. The activities of these work streams are summarised below:

Area of work Activities completed

Accounting and treasury Processing payments and funds received; and

Undertaking bank reconciliations.

Assets and litigation

Appointees attendance at court;

Investigations and completing witness statements;

Reviewing court documents and submissions;

Liaising and meeting with solicitors; and

Meetings and correspondence with various stakeholders.

Creditors Responding to creditor’s enquiries.

Statutory and compliance

Completing and distributing fifth annual report;

Companies House filings;

Filing of ongoing case work;

Dealing with the books and records of the Company; and

Dealing with post received.

Strategy & Planning Case progression meetings;



Area of work Activities completed

Review of case by appointment taker; and

Handover of case from one case administrator to another.

Tax Preparation and submission of corporation tax return for year ending 31

October 2015.

VAT Review of VAT position and preparing backing for future VAT reclaim.

Our future work We still need to do the following work in order to conclude the liquidation:

Area of work Work we need to do

Accounting and treasury Continued operation of Company’s bank account facilitating payments and

receipts; and

Periodic reconciliation of bank accounts.

Assets and litigation Concluding the on-going litigation;

Seeking enforcement of court orders to recover the amounts outstanding; and

Settling all outstanding costs associated with the legal proceedings.

Closure Completing and distributing final report;

Holding final meeting; and

Filing the necessary dissolution filings at Companies House.

Creditors Inviting unsecured creditor claims;

Issuing a notice of intended dividend;

Adjudicating unsecured creditor claims received; and

Declaring and paying an unsecured dividend.

Statutory and compliance Completion and submission of annual progress reports;

Filing the appropriate paperwork at Companies House;

Maintaining the records of the Company; and

Complying with ongoing legal and statutory obligations.

Strategy and Planning Continuing team strategy meetings;

Review by appointees of case progression; and

Tax and VAT Submit ongoing annual corporation tax returns;

Request tax clearance from Her Majesty’s Revenue & Customs; and

Reclaim VAT payable from Her Majesty’s Revenue & Customs.



Hourly rates

In common with all professional firms, scale rates increase from time to time over the period of the

administration of each insolvency case. PricewaterhouseCoopers LLP, or any successor firm, reserves the right

to change the rates and grade structures. During the period covered by this report, the charge out rates were

increased on 1 July 2016.

Set out below are the relevant maximum charge-out rates per hour worked for the grades of staff actually

involved on this assignment. All staff who work on this assignment (including cashiers, support and secretarial

staff) charge time directly to the assignment and are included within any analysis of time charged. Time is

charged by reference to actual work carried out on the assignment in six minute units. The minimum time

charged is three minutes (i.e. 0.5 units). There was no allocation of any general costs or overhead costs.

Specialist departments with our firm, such Tax, VAT, Property and Pensions were also used where expert advice

was required. Such specialist rates do vary but the figures below provide an indication of the maximum rate per

hour:

Grade Maximum rate per

hour

(to 31 June 2016)

(£)

Maximum rate per

hour

(from 1 July 2016)

(£)

Specialist maximum

rate per hour

(£)

Partner 825 840 1,250

Director 725 740 1,175

Senior Manager 550 560 970

Manager 470 480 700

Senior Associate (qualified) 390 400 515

Senior Associate (unqualified) 290 295 295

Associate 245 250 255

Support staff 123 125 150

Our relationships

We have had no business or personal relationships with the parties who approve our fees or who provide

services to the liquidation where the relationship could give rise to a conflict of interest.

Payments to associates

We have made no payments to associates in the period.

As previously disclosed, a payment of £7,419 was made to PwC Turkey in the previous period which remains as

an undrawn category 2 expense. Depending on the outcome of the legal proceedings this may be drawn in a

future period.



Disbursements for services provided by our firm (Category 2 disbursements)

Our firm’s expenses policy allows for all properly incurred expenses to be recharged to the case. Disbursements

were charged to the assignment as follows:

Photocopying At 5 pence per sheet copied, only charged for circulars to creditors and other bulk copying.

Mileage At a maximum of 64 pence per mile (up to 2,000cc) or 81 pence per mile (over 2,000cc).

Our disbursements in the period 1 November 2015 to 31 October 2016

We have incurred the following disbursements (excluding VAT) in the period 1 November 2015 to 31 October

2016.

Category 1: £ Category 2: £

Archiving 1,136.44 Mileage: -

Insurance 2,950.00 Printing -

Postage 277.20 Total: -

Total: 4,363.64

The statement of expenses at Appendix D show what we have drawn in total in relation to our disbursements.

Other professional advisors we’ve used

A summary of legal and other professional firms and subcontractors instructed in the period covered by this

report is below:

Name of firm /

organisation

Service

provided

Reason selected Basis of fees Amount paid in

period (£)

Field Fisher

Waterhouse LLP

Legal advisors Complex matter

experience

Time cost basis -

Our choice was based on the advisers’ experience, the complexity and type of work and nature of the

assignments and the basis of the fee arrangement. We’re satisfied that the fees charged are reasonable in the

circumstances of the case.



Analysis of our time costs by grade and work area from 1 November 2015 to 31 October 2016

Aspect of assignment Partner

(Hrs)

Director

(Hrs)

Senior

Manager

(Hrs)

Manager

(Hrs)

Senior

Associate

(Hrs)

Associate

(Hrs)

Support

(Hrs)

Total

(Hrs)

Time cost

£

Average

hourly rate

£

Accounting and treasury - - 0.05 0.30 5.30 1.75 - 7.40 2,545.25 343.95

Assets and litigation - 84.00 - 1.00 3.30 0.10 - 88.40 62,786.00 710.25

Creditors - - - - 1.50 0.30 - 1.80 649.00 360.56

Statutory and compliance - 0.80 1.80 0.95 26.05 2.70 - 32.30 12,706.25 393.38

Strategy & Planning - 1.00 0.35 6.90 5.05 0.20 - 13.50 6,153.50 455.81

Tax - - - 0.80 3.25 2.75 - 6.80 2,136.00 314.12

VAT - - - - 3.60 - - 3.60 1,434.00 398.33

Total for the period - 85.80 2.20 9.95 48.05 7.80 - 153.80 88,410.00 574.84

Brought forward at 31 October 2015

6,245.46 2,157,148.21

Total

6,399.26 2,245,558.21



Appendix D. - Statement of expenses

for the period 1 November 2015 to

31 October 2016

The Rules requires this progress report to include a statement of expenses incurred by the Liquidators

during the period of the report, irrespective of whether payment has been made or not. This relates to all

costs incurred, and not just the Liquidators’ disbursements. Such a summary of expenses is found below:

Category

Unpaid expenses

as at 31-Oct-2016

£

Incurred in this

period

£

Paid in this

period

£

Unpaid expenses

as at 31-Oct-2016

£

Liquidators' remuneration 669,228.05 88,410.00 - 757,638.05

Liquidators' disbursements 38,150.73 4,363.64 - 42,514.37

Storage of computer equipment - 530.00 (530.00) -

Legal fees and disbursements¹ 1,196,185.15 478,648.26 (499,828.37) 1,175,005.04

ATE insurance - 159,662.50 (159,662.50) -

Total 1,903,563.93 731,614.40 (660,080.87) 1,975,157.46

Please note that this schedule provides an estimate of expenses incurred. Any balance that remains unpaid

as at the date of this report is yet to be finalised and may therefore be subject to adjustments before final

payment.

¹ Our legal advisers are operating on a conditional fee agreement and the full extent of these fees will

only become known upon the conclusion of the legal proceedings.

Goldtrail Travel Limited - in Liquidation - PwC UK · Joint Liquidators’ sixth progress report...

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