FRP ADVISORY GROUP PLC

Legal Proceedings Report • Dec 23, 2010

To All Known Creditors of the Company

23 December 2010

Our ref: SJH/DebtAdvisor/Final

Dear Sirs

The Debt Advisor Group plc (formerly Compass Finance Group plc) - in Administration ("the Company")

In accordance with Rules 2.47 and 2.110 of the Insolvency Rules 1986 ("IR86"), the Joint Administrators ("the Administrators") write to provide creditors with a final report on the progress and conclusion of the administration of the Company since the Administrators' previous progress report dated 20 July 2010.

As confirmed in my previous report, Craig Anthony Livesey and Robert Jonathan Hunt replaced Michael Horrocks and Russell Cash as Joint Administrators with effect from 22 April 2009.

Statutory and financial information

We enclose the following for your information:

• Appendix A Statutory information:
• Administrators' final receipts and payments account; Appendix B
• Appendix C Extract from the Joint Administrators' Proposals dated 21 August 2007;
• Form $2.24B$ Administrator's Progress Report: and
• Form 2.35B Notice of move from administration to dissolution

Overview of the administration

The purpose of the administration, as detailed in the Proposals, was to fulfil objective (b) achieving a better result for the Company's creditors as a whole than would be likely if the Company were wound up (without first being in administration). The Proposals were deemed approved in accordance with Rule 2.33(5), a meeting of creditors not having been requisitioned.

For the reasons outlined below the Administrators believe that the object of the administration has been achieved.

PricewaterhouseCoopers LLP, Benson House, 33 Wellington Street, Leeds LS1 4JP $T: +44(0)$ 113 289 4000, $F: +44(0)$ 113 289 4580, www.pwc.co.uk

Realisation of outstanding assets

The position regarding the Company's assets was set out in the report to the period 28 June 2008 and is not repeated in this report. All assets had been realised by the date of the aforementioned progress report.

Extension to the administration

The Administrators considered it necessary that the administration was extended to allow the outstanding matters in the administration to be completed, principally the agreement of the unsecured creditors' claims and the distribution of funds to those creditors by virtue of the Prescribed Part. As confirmed in my previous progress report, a third extension of the administration was granted until 27 December 2010.

All outstanding matters have now been completed.

Distributions to Bank of Scotland Plc

Bank of Scotland Plc ("BoS") holds a fixed and floating charge over the Company's assets which was created on 8 March 2004. The total amount of funds distributed to BoS is £140,000.

Distribution to preferential creditors

A dividend has been paid to all admitted preferential creditors of the Company. The total amount of funds distributed was $E_{40,434,11}$ , representing a dividend of 100p in the $E$ .

Distribution to the unsecured creditors

As previously stated, there was no dividend to non-preferential unsecured creditors of the Company other than by virtue of the Prescribed Part as provided for by Section 176A of the Insolvency Act 1986 $("I A 86").$

On 22 December 2010 a distribution via the Prescribed Part of £23,642, being 0.0102p in the £ was paid to all non-preferential unsecured creditors whose submitted claims had been agreed.

Receipts & payments account

Attached at Appendix B is an abstract of the receipts and payments of the Company.

Administrators' remuneration

The basis of the Administrators' remuneration has been approved by the secured and preferential creditors of the Company. To date, the Administrators have drawn remuneration of £111,739. No fees have been drawn since 15 November 2007 and no further fees will be drawn.

pwc

Ending the administration

The Administrators enclose a notice under paragraph 84(1) Sch.B1 IA86 following registration of which the Company will be dissolved three months later.

Pursuant to a resolution passed by the secured creditor and majority in value of the voting preferential creditors, the Administrators will be discharged from liability in respect of any action of theirs as Administrators when their appointment as Administrators ceases to have effect.

Yours faithfully for and on behalf of the Company

Mures

C A Livesey Joint Administrator

CA Livesey and R J Hunt were appointed Joint Administrators of the Company to manage its affairs, business and property as its agents and without personal liability. Both are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales.

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sarah.j.helyer@uk.pwc.com Telephone: +44 (0) 113 289 4014 Facsimile: +44 (0) 113 289 4460

Court details for the Administration:	High Court of Justice, Chancery Division, Manchester District
	Registry
	2764 of 2007
Full name:	The Debt Advisor Group plc
Trading name:	Compass Finance
Registered number:	04728183
Registered address:	PricewaterhouseCoopers LLP, Benson House, 33 Wellington
	Street, Leeds, LS1 4JP
	(formerly 2 nd Floor, Warwick House, Hollins Brook Way,
	Pilsworth, Bury, BL9 8RR)
Company directors:	Richard Hughes, Grenville Folwell, Michael Fort, Mike Sutcliffe,
	Simon Cotterill
Company secretary:	Simon Cotterill
Shareholdings held by the directors and secretary:	Richard Hughes - Ordinary 0.5p - 6,011,010
	Grenville Folwell - Ordinary 0.5p - 441,667
	Michael Fort - Ordinary $0.5p - 3,025,019$
	Mike Sutcliffe - Ordinary $0.5p - 25,000$
	Simon Cotterill - No shares held
Date of the Administration appointment:	29 June 2007
Administrators' names and addresses:	Craig Anthony Livesey
	PricewaterhouseCoopers LLP, 101 Barbirolli Square, Lower
	Mosley Street, Manchester, M2 3PW.
	Robert Jonathan Hunt
	PricewaterhouseCoopers LLP, Cornwall Court, 19 Cornwall
	Street, Birmingham, B3 2DT
Appointor's / applicant's name and address:	Directors appointment.
Objective being pursued by the Administrators:	Objective (b) - Achieving a better result for the Company's
	creditors as a whole than would be likely if the Company were
	wound up (without first being in Administration).
Division of the Administrators' responsibilities:	In relation to paragraph 100(2) Sch.B1 IA86, during the period
	for which the Administration is in force, any act required or
	authorised under any enactment to be done by an Administrator
	may be done by either or both of the Administrators acting jointly or alone.
Proposed end of the Administration:	The Administrators have made a distribution by virtue of the
	Prescribed Part to the unsecured creditors in the Administration
	and the Administrators hereby file notice under Paragraph 84(1)
	Sch.B1 IA86 with the Registrar of Companies to end the
	Administration. Following this registration, the Company will
	be dissolved three months later.
Estimated dividend for unsecured creditors:	0.0102 in the £, only by virtue of the Prescribed Part as
	provided for by Section 176A IA86.
Estimated values of the Prescribed Part and the	Prescribed Part was£38,675 before costs from net property of
Company's net property:	£178,379.
Whether and why the Administrators intend to apply to	The Administrators did not think that the cost of making a
court under Section 176A(5) IA86:	distribution to unsecured creditors would be disproportionate to
	the benefits, therefore, they did not apply to the court for
	consent that the Prescribed Part shall not apply. Instead, an
	order was granted on 26 October 2007 permitting the Joint
	Administrators to make a payment by way of distribution to
	creditors who are neither secured nor preferential pursuant to
	paragraph 65(3) of Schedule B1 to the Insolvency Act 1986.
The European Regulation on Insolvency Proceedings	The European Regulation on Insolvency Proceedings applies to
(Council Regulation(EC) No. 1346/2000 of 29 May	this Administration and the proceedings are main proceedings.
2000):

The Debt Advisor Group Pic
(in Administration)
Administrator's abstract of receipts and payments

£
		£	£	£
	FLOATING CHARGE REALISATIONS
	Administrators' Trading receipts	167,989.07
	Balance at Bank	16,598.27		167,989.07
	Cash in hand	216.46		16,598.27 216.46
	Sale of office equipment	33.968.27		33,968.27
	Sale of database	150,000.00		150,000.00
	Interest received	9,252.55		9,252.55
	Refunds	81,937.24		81,937.24
81,000.00	Franking machine
41,000.00	Book debts	40,711.53		40,711.53
	Distributions received	35,000.00		35,000.00
	VAT Payable
122,000.00	TOTAL REALISATIONS	535,673.39	۰	535,673.39
	COST OF REALISATION / PAYMENTS
	Trading payments *	89,872.88		89,872.88
	Landlord distraint	11,612.00		11,612.00
	Agents' fees and expenses	21,359.32		21,359.32
	Bank charges	210.00		210.00
	Payment Protection Plan insurance	19,299.73		19,299.73
	Statutory advertising	113.58	282.60	396.18
	Legal fees & expenses	21,132.71	4,235.00	25,367.71
	Storage	9,231.63	6,863.24	16,094.87
	General expenses	752.58		752.58
	Secretary of State fees Office holder's expenses	25.00		25.00
	Office holder's fees	1,861.00		1,861.00
	Corporation Tax	111,739.06		111,739.06
	London Stock Exchange fees	1,644.33		1,644.33
	Irrecoverable VAT (not VAT registered)	600.00		600.00
122,000.00		28,905.89 318,359.71	1,856.30	30,762.19
	SECURED CREDITORS		13,237.14	331,596.85
(1,699,000)	Bank of Scotland	140,000.00		140,000.00
	PREFERENTIAL CREDITORS
(40,000)	Employee wages & holiday pay	37,931.03	2,503.08	40,434.11
	UNSECURED CREDITORS
(1,927,000)	Trade creditors		23,642.43	23,642.43
(3,544,000.00)	BALANCE (high interest current account)	39,382.65	(39, 382.65)	(0.00)

. Proposals for achieving the purpose of the Administration

The Administrators make the following proposals for achieving the purpose of administration.

• The Administrators will continue to manage the Company's affairs and property in such manner as they $i)$ consider expedient with a view to achieving a better result for the Company's creditors as a whole than would be likely if the Company were wound up, without first being in Administration.
• The Administrators may investigate and, if appropriate, pursue any claims that the Company may have ii). under the Companies Act 1985 or IA86 or otherwise. In addition, the Administrators shall do all such other things and generally exercise all their powers as Administrators as they in their discretion consider desirable in order to achieve the purpose of the Administration or to protect and preserve the assets of the Company or to maximise their realisations or for any other purpose incidental to these proposals.
• iii) If the Administrators think that funds will become available for unsecured creditors, the Administrators may at their discretion establish in principle the claims of unsecured creditors for adjudication by the Administrators or a subsequent liquidator and the costs of so doing can be met as a cost of the Administration out of the Prescribed Part as costs associated with the Prescribed Part.
• iv) If the Administrators think that funds will become available for unsecured creditors, the Administrators may at their discretion make an application to court for permission to make distributions to unsecured creditors under Paragraph 65(3) Sch.B1 IA86.
• As the Administrators currently hold the view that there will be insufficient funds to enable a distribution $\mathbf{v}$ to be made to unsecured creditors other than potentially by virtue of the Prescribed Part as provided for by Section 176A IA86, they are not seeking to form a creditors' committee.
• vi) Should the Administrators conclude that the cost of making a distribution to unsecured creditors by virtue of the Prescribed Part would be disproportionate to the benefits then the Administrators will make an application to the court under Section $176A(5)$ IA86 for an order not to distribute the Prescribed Part to unsecured creditors.
• vii) Should it become apparent that an extension is required to the Administrators' term of office the Administrators shall either apply to the court or seek consent from the appropriate classes of creditors as defined in (ix) below.
• viii)The Administrators may use any or a combination of "exit route" strategies in order to bring the Administration to an end, but in this particular instance the Administrators are likely to wish to pursue one of the following options as being the most cost effective and practical in the present circumstances: -
• $(a)$ Once asset disposals are complete, the Administrators will apply to the Court to allow the Administrators to distribute surplus funds, if any, to unsecured non-preferential creditors. If such permission is given, the Administration will be brought to an end by notice to the Registrar of Companies under Paragraph 84 Sch.B1 IA86, following registration of which the Company will be dissolved three months later. If permission is not granted the Administrators will place the Company into creditors' voluntary liquidation or otherwise act in accordance with any order of the court.
• Alternatively, once asset disposals are complete, the Administrators may place the Company into $(b)$ creditors' voluntary liquidation. In these circumstances, it is proposed that Russell S Cash and Michael Horrocks be appointed as Joint Liquidators and any act required or authorised to be done by the Joint Liquidators may be done by either or both of them. In accordance with Paragraph 83(7) Sch.B1 IA86 and Rule 2.117(3) IR86, creditors may nominate alternative liquidators, provided that the nomination is made after the receipt of these proposals and before they are approved.

• $\left( \mathrm{e}\right)$ If there are insufficient funds with which to make a distribution to unsecured non-preferential creditors, once all of the assets have been realised and the Administrators have concluded all work within the Administration, the Administrators will file a notice under Paragraph $84(1)$ Sch.B1 IA86 with the Registrar of Companies to end the Administration, following registration of which the Company will be dissolved three months later.

• ix) The Administrators shall be discharged from liability pursuant to Paragraph $98(1)$ Sch. B1 IA86 in respect of any action of theirs as Administrators at a time resolved by the secured creditor, or if a distribution has been or may be made to the preferential creditors, at a time resolved by the secured and preferential creditors or in any case at a time determined by the Court.

• x) It is proposed that the Administrators' fees be fixed under Rule 2.106 IR86 by reference to the time properly given by the Administrators and the various grades of their staff according to their firm's usual charge out rates for work of this nature and that Category 2 disbursements (as defined by Statement of Insolvency Practice No.9) be charged in accordance with their firm's policy. As the Administrators have stated that they think that the Company has insufficient property to enable a distribution to be made to non-preferential unsecured creditors other than potentially by virtue of Section 176A IA86, it will be for the secured creditor and if appropriate the preferential creditors, to determine these.

Administrator's progress report

$2.24B$

Name of Company

The Debt Advisor Group plc

$\overline{\ln$ the

High Court of Justice, Chancery Division, Manchester District Registry

2764 of 2007

Court case number

04728183

Company Number

(a) Insert full name(s) and address(es) of administrator(s)

We (a) Craig Anthony Livesey and Robert Jonathan Hunt of PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP 101 Barbirolli Square Cornwall Court Lower Mosley Street 19 Cornwall Street Manchester Birmingham B₃ 2DT M₂ 3PW

administrator(s) of the above company attach a progress report for the period

(full name of court)

from

$\mathfrak{t}$

(b) Insert dates

(b) $29$ June $2010$

(b) 23 December 2010

Signed Joint Administrator

$23|1|0$

Dated _

The Insolvency Act 1986

Notice of move from administration to dissolution

2.35B

Name of Company

The Debt Advisor Group plc

In the High Court of Justice Chancery Division Manchester District Registry

Company Number 04728183

Court case number

2764 of 2007

(a) Insert name(s) and address(es) of $administrator(s)$

(b) Insert name and address of registered office of company

(c) Insert date of appointment (d) Insert name of applicant / appointor

We (a) Craig Anthony Livesey and Robert Jonathan Hunt of PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Cornwall Court 101 Barbirolli Square Lower Mosley Street 19 Cornwall Street Manchester Birmingham M₂ 3PW $B32DT$

having been appointed administrators of (b) The Debt Advisor Group plc

on (c) 29 June 2007 by (d) the directors

hereby give notice that the provisions of paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 apply.

(full name of court)

We attach a copy of the final progress report.

Signed Joint Administrator Dated $23|x|$ 10

Contact Details:

You do not have to give any contact information in the box opposite but if you do, it will help Companies House to contact you if there is a query on the form. The contact information that you give will be visible to searchers of the public record

Sarah Helyer
	PricewaterhouseCoopers LLP, Benson House, 33 Wellington Street, Leeds, LS1 4JP
	Tel 0113 289 4014
DX Number	DX Exchange

Companies House receipt date barcode

When you have completed and signed this form please send it to the Registrar of Companies at:

Companies House, Crown Way, Cardiff, CF14 3UZ

DX 33050 Cardiff