Following the collapse of a company involved in the manufacture, sale and hire of plant (the Company), its Administrators spent hundreds of hours investigating its affairs to determine how it entered administration owing almost £10m to secured creditors despite its audited accounts recording a profitable, asset rich business year on year.
The Administrators’ investigations and attempts to realise the assets of the Company revealed that a substantial number of its assets were not locatable, and many of those that were held at the Company’s various sites were in a poor state of repair and worth significantly less than recorded in the books and records. Having identified that these issues gave rise to potential claims against the Company’s directors (the Directors) and auditor (the Auditor), the Administrators assigned those claims to H&J to investigate and pursue in September 2023.
Following the assignment, H&J’s legal team quickly identified a potential limitation date in early 2024 in relation to the claims against the Auditor. The team therefore promptly began reviewing the available documents (totalling in excess of 200,000), working tirelessly to review and analyse the Auditor’s files and the correspondence that passed between the Auditor and the Directors over a period of some 7 years.
Those investigations revealed fundamental failings and inadequacies in both the record keeping by the Directors and the audits carried out by the Auditor.
The various and numerous issues identified were set out by H&J in letters of claim addressed to the Auditor and the Directors. H&J subsequently engaged external lawyers, and following a relatively brief exchange of correspondence, a mediation was convened in September 2025 which resulted in a substantial settlement being reached shortly thereafter. The settlement represents an excellent result for H&J and the Company - with significant sums being returned to creditors.
This fantastic result demonstrates H&J’s expertise in audit negligence matters and the value that H&J can add. By using its internal team to do the heavy lifting at the investigation stage, significant cost savings were achieved while also ensuring the available documents were closely scrutinised. This revealed the widespread failings of the Directors and the Auditor, allowing robust and comprehensive letters of claim to be prepared - which ultimately paved the way for a very positive outcome at an early stage.
