A sale for collapsed insurer DeadHappy is expected to be completed in September after an offer was accepted from a firm operating in the life insurance sector, according to administrators Evelyn Partners.
However more than £1.2m owed to creditors is unlikely to ever be paid back with only employee holiday pay and HMRC likely to see some of the outstanding cash paid.
Of 152 potential purchasers contacted about buying DeadHappy, just two firms in the sector made indicative proposals and subsequently only one formal offer was submitted.
Neither the names of the interested parties or the value of the bid have been released by the administrators, who simply confirmed the final two entities operated within the life insurance sector.
“Work is continuing to enable a sale of the agreed assets to the purchaser and it is expected that this will be completed in September 2024,” the administrators said.
Releasing the details as part of the administrator’s proposals, it was revealed that on 7 March 2024 a teaser document and non-disclosure agreement (NDA) was issued to a target list of 152 parties.
These were 80 firms targeted for their involvement in insurance or Financial Conduct Authority (FCA) regulated services and 72 entities focussing on mergers and acquisitions or distressed investments.
Evelyn Partners administrators Adam Stephens and Kevin Ley said none of the DeadHappy directors had an interest in acquiring the business.
However, a total of 12 expressions of interest were received by the initial 21 March deadline.
Following requests from interested parties, the deadline for offers and proof of funding was extended to noon on 28 March.
“Of the interested parties, two entities operate within the life insurance sector (who we consider would be the best fit for the business of Dead Happy), and both made indicative offers,” Stephens and Ley continued.
“However, only one formal offer was received. This [was] recommended by our valuation agents as being acceptable.”
Stephens and Ley noted that it had not been possible to immediately complete the sale when they were appointed as they were first required to transfer all customers to their underlying insurers, Shepherds Friendly and Covea.
“This process was completed in July and work is now progressing to conclude the agreed sale to the purchaser,” they added.
£1.2m lost
Updating on the likely financial outcome once a sale is completed, the administrators warned that only ordinary and secondary preferential creditors were likely to receive any of their money owed by DeadHappy.
Preferential creditors consist of employee holiday pay worth an estimated £4,168.46. The secondary preferential creditor is listed as HMRC PAYE worth £199,773.45.
No figure was given about how much of this could be recouped for either the employees or HMRC.
All other unsecured creditors who are owed more than £1.2m are likely to receive nothing owed by DeadHappy.
“Due to the extent of the liability due to the secondary preferential creditors, it is also not likely that there will be sufficient realisations to pay a dividend to the unsecured creditors of the company,” the administrators said.
“Therefore, the objective will be to realise assets to pay a dividend to the ordinary and secondary preferential creditors.”
The administrators expect costs for themselves and lawyers who have acted for them during the administration process to total around £150,000 in the first year which will come out of any proceeds of the sale.
In addition, Evelyn Partners is owed £98,524 in pre-administration costs which have not been paid, while Gunnercooke and IDeals VDR are owed a further combined £5,200.
Unsecured debts and controversial history
Last month, DeadHappy’s unsecured debts were revealed to exceed £1m when it collapsed into administration in June, including more than £300,000 owed to Covea Life and £110,000 to Shepherds Friendly which underwrote its policies.
DeadHappy founder Andy Knott also submitted a claim of £144,166.58 against the business.
DeadHappy entered administration in June.
The controversial life insurer closed to new business in March after Shepherds Friendly ceased underwriting its policies.
Announcing the closure to new business on its website the firm temporarily rebranded itself as DeadUnHappy.
Earlier last year it courted controversy by placing an ad featuring the infamous serial killer Dr Harold Shipman.
In February 2023 Health & Protection reported that the Advertising Standards Authority (ASA) had told DeadHappy to avoid causing “serious or widespread” offence after banning two life insurance ads the insurer placed depicting notorious serial killer Dr Harold Shipman which attracted 115 complaints.
DeadHappy, with its logo of a smiling skull, differentiated itself from other life insurers by trying to make it easier for some people to get life insurance, it said.