Pwc write-downs

12 weeks ago by
Can anyone advise if the £300 million write-downs in respect of illiquid and nil value assets will affect clients who do not own these assets?

Are Pwc proposing to calculate their fees as a %age of the £500 million revised valuation, thereby resulting in clients who do not own these assets having a bigger deduction due to this issue?

Replies appreciated
Community: Beaufort Clients

2 Answers

12 weeks ago by
Hi Daniel,

The write-downs should not affect anyone, as long as PwC don't have to liquidate assets, which they are trying to avoid.

The fee basis remains to be negotiated by the creditor' committee. IMO it should be based solely on the amount of work entirely necessary to return your assets - not on a % of assets. Any work not relating to returning assets correctly should not be chargeable to clients.

The law says: "Rule 135 sets out that client assets may be used only to pay the expenses which administrators have properly incurred as a result of the work undertaken to ensure that client assets are returned as quickly as possible."

These are key issues for the creditors' committee to negotiate and nail PwC down on. The CC will also have to agree the basis for apportionment of costs between clients, but the first priority is to get those costs down!

Mark B
Thanks Mark for your very informative advice.

I hope the CC will be recognizing/placing much emphasis on the fact that clients with substantial holdings will already be losing far greater amounts than smaller clients and will be fighting against Pwc's unfair proposals to impose bigger deductions on these clients.
written 12 weeks ago by Daniel Parr  
Once the costs are driven down, ShareSoc will be focused on apportioning them fairly, so that large accounts do not suffer disproportionate costs. This apportionment has to be agreed by the creditors' committee, as part of the "distribution plan", which also has to be approved by the FCA and the Court.
written 12 weeks ago by Mark Bentley  
12 weeks ago by
Hi Daniel,

At this point, information is scarce, but it appears that the original purchase price of the assets in aggregate was 800 mio, and PWC appear to have made certain assumptions as to the value of assets in a fire sale situation to arrive at their 500 mio number. So these are not write downs per se, as if the assets are passed on in an orderly way - as we expect them to be - the fire sale would never happen.

Where this becomes relevant for holders of other assets is that it impacts the size of the pool from which the expenses are taken (and the methodology will be key here as well). As Mark B says,  the first priority is to get the absolute level of costs down. Then it will be important to determine how the costs are allocated - but your concern about allocation between written down / non  written down assets should be addressed.


Mark L.
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