Provence lets down unsecured creditors

Unsecured creditors of failed pub company Provence will not receive any of the money they are owed by the firm, a report to creditors by receiver Kroll has indicated. Provence, founded by Paul Kiely, raised about £80m by selling pub freeholds at public auctions with a lease back to itself.

Kroll, which was appointed as receiver on 1 November 2006, has told creditors that Provence was owed about £3.4m at the point of receivership, the majority of which related to rental arrears. Debt collection agency Avance Group has been instructed to assist in the collection of rents but has only managed to realise £5,748.

The report to creditors states: "The debtor's ledger includes outstanding invoices for pubs which are no longer trading. The forfeiture and surrender of the leases will also make collections

difficult."

The Royal Bank of Scotland looks likely to suffer a

shortfall of more than £2m - it was owed £7.2m by Provence with a sale of 22 freehold pubs likely to raise less than £5m.

Kroll has, however, told creditors that it expects to receive a £750,000 stamp duty refund because Provence has "incorrectly accounted" for duty on a number of transactions. The administrator has also told creditors that the company had a new profit of £2.9m on a turnover of £19.5m in the 10 months to 31 August 2006.

But Kroll added: "This was essentially masking losses in one of the other group companies which collected rents from the properties. From information we received it appears that Provence Leisure, a trading name used by the directors, has invoiced tenants for rents. These rents were paid to group company Provence Limited's bank account with HSBC. We are investigating these transactions."

An unsecured creditor's meeting is due on 8 January.