It has been more than 19 months since the bankruptcy of FCA-regulated retail forex broker Alpari UK, and things aren’t totally unwound quite yet.
Special Administrator KPMG has issued a further update on its work on the Alpari UK case. Alpari UK entered bankruptcy proceedings following heavy losses the company took on the Swiss Franc spike of January 15, 2015.
KPMG confirmed that it indeed accounted for and recovered virtually all $98.2 million of client money at Alpari UK, including monies held at the four e-Wallet providers used by Alpari UK which were not subject to client money segregation rules. Among asset sales, the only real item of note was $1.22 million brought in from the sale of Alpari UK’s client list to ETX Capital.
However KPMG also reported that it now expects Alpari clients to eventually receive back 78.3 to 79.7 cents on the dollar when all is said and done from the Estate, or about $77 million.
To date (through to July 18), $51.3 million had already been returned.
So what happened to all the other money?
In one word – fees.
The largest individual fee will be paid to KPMG itself, making up more than half of the overall total. KPMG has charged to the case to date £11.9 million (through to July 18), calculated as 28,093 hours at an average rate of £423 per hour. However as a result of discussions with the Creditors’ Committee, KPMG has agreed to a cap on its fees of £10.5 million, or about USD $15 million.
The remainder of the fees include Legal fees of about $2.5 million, and salaries paid to retained staff (all of whom were terminated as of last September 30) of $2.4 million.
In summary, it looks like Alpari UK clients will get back close to 80 cents on the dollar from the Bankruptcy Estate, with the whole process taking close to two years to complete. Those clients who had less than £50,000 in their accounts at Alpari UK should be able to get back most if not all of the rest from the FSCS.
The KPMG update report can be downloaded here.