Please visit https://www.companyrescue.co.uk/ for confidential help and insolvency advice or email keiths@ksagroup.co.uk

Friday, 21 December 2012

Directors who are having a new start in 2013

Here is a list of 3 liquidations that we are doing in the first couple of weeks of January giving the directors a new start in 2013.  Businesses sometimes do not succeed but that does not mean that another venture will as well.

In many cases, which we deal with, the directors have gone on to full employment doing something similar without the stress of a struggling company.


Route 1 Garden and Home Limited

Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 11 January 2013 at 11.15 am

See full notice below


http://www.companyrescue.co.uk/insolvency-notices/route-1-garden-and-home-limited-liquidation-notice


Fortiori Design Limited

Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 11 January 2013 at 1.15 pm

Full notice below.

http://www.companyrescue.co.uk/insolvency-notices/fortiori-design-limited-s98-liquidation-notice



Henderson Sowerby Golf Limited

Meeting of the Creditors of the above named Company will be held at Hexagon Business Centres Limited, Hexagon House, Station Lane, Witney, Oxfordshire, OX28 4BN on 15 January 2013 at 12.15 pm

Full notice below.

http://www.companyrescue.co.uk/insolvency-notices/henderson-sowerby-golf-limited-creditors-voluntary-liquidation-notice





Wednesday, 19 December 2012

Construction companies face a difficult 2013


The construction industry has always been exposed to downturns due to the time lag between inception and completion of projects and the need for working capital.  Also many are reliant on public sector contracts.  2012 started as a bad year and the fall in output in construction was to blamed for the negative GDP figures.

Despite the recent collapses of Speymill's contracting arm and Swift Horsman which has resulted in 600 redundancies there is more optimism about 2013.  This is mainly due to the hope of more public sector contracts.

The construction industry is a vital component of the UK economy and it directly and indirectly employees many people and it should be preserved where possible.

So what can be done for struggling construction businesses?


In construction the smallest mistake culminating in a cost overrun could be critical. A business may no longer be viable going forward so so liquidation might be the only option.
If a business is fundamentally viable then a company voluntary arrangement could be the answer
One particular building company we rescued had an overdraft of £150k with RBS. This bank is known for blocking pre-pack administrations where the business is sold to the encumbents. So after a meeting with KSA Group a rescue plan was put together.

For details of how this building company was rescued please read our case study; CVA Rescues Building Company in the North East

Tuesday, 18 December 2012

Redundancy consultation period to be reduced from 90 days to 45 days

The consultation period required for large scale redundancies is to be changed from 90 days to 45 days under new rules being introduced in April 2013.  This will bring the rules into line with other EU countries.  This will only apply where more than 100 people are being made redundant.  Currently if you are to make redundant less than 100 people then the consultation period is only 30 days.  Less than 20 people and there is no need for any consultation period.

The move from 90 days to 45 days in bigger businesses has been broadly welcomed by restructuring experts as companies in difficulty need to be turned around quickly and any delay can exacerbate the problem.  It is often the case that the required consultation is carried out before the 90 days are up anyhow i.e. the consultation does not have to take 90 days prior to making redundancies.

Whilst there is a duty to consult, an employer is not prevented from making redundancies if after meaningful consultation has taken place, no agreement can be reached.

How this will actually impact the world of restructuring and saving companies it remains to be seen but it could help focus minds to effect a rapid turnaround of a distressed business.












Monday, 17 December 2012

Eltech London Limited Liquidation Notice

A Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 4 January 2013 at 12.30 pm


For full notice see below


http://www.companyrescue.co.uk/insolvency-notices/eltech-london-limited-s98-creditors-voluntary-liquidation-notice

Last Comet stores to close down

The administrators at Deloitte have confirmed that all the UK Comet stores are to close tomorrow just days before Christmas.  This marks the end of the chain on the High Street.  It is possible that the brand may continue online as the website did a great deal of business.  Appliancesonline.co.uk has expressed an interest in the website and Currys may buy a couple of the stores at the 11th hour.  Dixons has hired 1000 staff from Comet in order to help process the Christmas rush.

According to a report by the administrators, the treasury is a loser in all this as the company owes some £26m to HMRC.  In addition, the company has unsecured creditors which included ITV and Google, which are owed £1.2 million and £602,000 respectively for unpaid advertising bills.  There are also £4.2m worth of unredeemed gift cards.

However, an estimated £40 million of payments will be made to suppliers and £2.1 million of holiday and back pay owed to staff will be paid in full.  However any redundancy claims will need to be met by the government for all 6000 staff.  This is likely to amount to a further £25m.

For further information see our page on employee redundancy in insolvency situations.



Friday, 14 December 2012

How to help your client in 2013


If you have a client call you up in 2013 saying they are really struggling and have just received a winding up petition what will you do?

a)   Say;  "I am sorry to hear of their situation but we are not insolvency practitioners so can't really help"

b)   Say; "please pay my bill first and then I can talk to you."

c)  Request an insolvency toolkit from KSA group, if you haven't already got one, and discover how you can stop your client and perhaps others going into liquidation and not paying your bill.

C is the right answer!

Our insolvency toolkit will demystify the jargon and help you understand all the options open to a struggling business, which, by the way, is not just administration or liquidation!

The toolkit will also show how you can earn EXTRA income from a client who is being rescued by us by providing services that are essential in any turnaround situation.

If you need urgent advice we will talk to all advisors for no charge.  To request a toolkit then please send an email to robertm@ksagroup.co.uk or for urgent advice on insolvency issues then call us on 0800 9700539 or 07974 086779

We have huge amounts of resources online as well at http://www.companyrescue.co.uk

Thursday, 13 December 2012

HMV shares plunge on debt warning

HMV Group has announced that it may breach its banking covenants by early next year.  Consequently the shares fell nearly 40% on the news.  The company has seen a 13.5% reduction in like for like sales in the 26 weeks to the end of October and net debt has risen to £176m.  The company has undergone a number of new initiates to try and boost sales such as showcasing technology in a number of revamped stores.

So far the banks have been supportive while so many commentators have predicted its demise.  See our earlier blogs on

http://companyrescue.blogspot.co.uk/2012/01/can-hmv-survive.html and http://companyrescue.blogspot.co.uk/2011/12/hmv-faces-difficult-2012.html

The company is still hanging on to their credit.  It is interesting that Comet went into administration despite having stable sales but a huge debt whereas HMV's debt is growing and sales have been sliding for the last 2 years.  One reason is because HMV occupies a unique place in the market and it does not have any direct competitors on the High Street.  There also appears to be a plan in place to turn the business around albiet slowly.  They have sold off the live music businesses to try and trim debts.

Previously HMV have not ruled out the use of a company voluntary arrangement or CVA to try and rescue the business.  However in the recent statement they have said they do not wish to close down any stores which a CVA can do.

Wednesday, 12 December 2012

Begbies sees falling insolvency revenues in first half

Leading insolvency firm Begbies Traynor reports sales down 11.2% in its first half and net profits fell too.

Pre-tax profit reduced to £2m from £3.4m before.

Commenting on the results, Executive Chairman Ric Traynor said: "Challenging market conditions have persisted with lower levels of activity in the insolvency market over the summer months."

"Overall, this led to a group performance with lower revenues and profits than the comparative period. In spite of this, the business remained profitable and continues to generate good operating margins through on-going management of the group's cost base."

Begbies said it expects UK insolvencies to remain broadly stable. With sales down 11% in the first half it expects a rise in revenues in half 2 to deliver profits in line with forecast.

Looking ahead the group added: "We anticipate an improvement in activity in the second half of the financial year during the traditionally busier winter months. Given this, we currently anticipate that the group's performance for the year as a whole will be broadly in line with last year."

Net debt stood at £18.3m from £20.1m in April this year and down from £27.3m the same time last year.

Tuesday, 11 December 2012

90 Stead and Simpson stores to close down

Shoe Zone, the owner of Stead and Simpson, the retailer with 227 stores around the UK has announced that it is going to close down 90 of its Stead and Simpson stores by winding up the company, Tyler Ltd, that operates them.  It is expected that there will be some 500 job losses.  The company announced the move as it needs to increase its profitability so it needed to cut back its loss making stores. Tyler ltd will probably be put into voluntary liquidation but it is interesting to see that according to credit checks it has a rating or 93 out of a 100.....

The landlords may have guarantees from the parent company Shoe Zone but that is not necessarily certain.

The  Shoe Zone bought Stead and Simpson out of administration in 2008.

Monday, 10 December 2012

Drive Assist in administration rumours

It has been reported in some of the car dealer press that Drive Assist, the UK’s fifth largest accident management company, with a £100m turnover has gone into administration.   The press have been contacted by a number of car repairers and others that the business was "going into administration"  No one is answering the phone at the company and there has been no official announcement so it is not certain what is happening. Also a number of the dealers websites are down such as Nottingham Autopark.  As such it appears something is going on.

It is possible that the firm is trying to arrange a pre pack administration to try and ensure business continuity or are in talks with the banks to try and renegotiate the debts.  The balance sheet of the company is showing negative £325m at the last reported accounts in mid 2011.

Either way we will keep you updated if we hear anything more!

If you work for Drive Assist and are worried then you can look at our help for employee pages

update:  A number of employees have emailed me to say that they have been made redundant following Drive Assist going into administration and see comment below.  The company's website still has no announcement which is unusual.  We understand that Zolfo Cooper have been appointed the administrators.


Friday, 7 December 2012

Alternative methods of raising finance - Credit Card Factoring


With the banks no longer lending money in the same volumes as in the past there are now an increasing number of new ways that businesses can raise finance.  Some methods of providing finance have been around for a while such as single invoice discounting ( where a provider will advance money on the back of just one, usually large, invoice to a good credit risk debtor ) but new methods are gaining in popularity as bank lending decreases.  Asset based lending has grown some 100% since 2007.

A new form of finance has come to the UK from the US which is being called credit card factoring or credit card merchant advances.  This is simply an advance on money that the company is expected to take from credit and debit cards in the future.  The provider just needs some historical financial information and some references and then they can advance the money.  This is set at 1/12th of the takings but could still be invaluable if a pressing bill to HMRC needs to be paid.  The money is then recouped for a set fee from the credit card takings.  See our page on credit card merchant advances for more details.

Thursday, 6 December 2012

Collecting debts before Christmas


With most businesses shutting from 21st of December probably until 2nd or 7th January, it is likely that there will be a sharp freeze in payments to suppliers and therefore creditors.  It is likely that debtor days are going to rise sharply. For many businesses this will be the biggest recent test of all.

So look now at your cashflow, who has promised to pay your business this month? I suggest you ask if they can accelerate this payment so you receive it before 21st of December. Make sure someone is on the phone to all debtors now asking for payments.   The recent cold spell is forecast to get worse so you don't want it to become an excuse for your customers not paying.

Perhaps plan to go into the office and see if there any payments that have been sent by cheque just before Christmas, get them banked. On the 2nd or 7th January be FIRST on the phones to chase payments in.

This may seem tedious and unnecessary, BUT it is your business's lifeblood we are talking about.

Get the debtors to pay you and keep your creditors informed and paid when you can.

If you have a larger business then it may pay to get a specialist debt collection agency on board.  They are not simply more aggressive but they are effective because they do not have the emotional attachment to the customer and they can be persuasive without compromising your relationships.

Remember the best customers are those that actually pay you!!

Real Time Information - Can you pay all your PAYE?



Is your business ready for Real Time Information (RTI)?

All PAYE returns will have to be done online by October 2013 with many companies starting to do it from April 2013.

The biggest change is that all employers will have to file pay and tax details for their employees online when wages are paid – rather than at the end of the tax year. The way it currently works the HMRC only knows the true liabilities on the 19th of May following the end of the tax year when the P35 is filed.

Failure to file these returns online in "real time" will result in fines from £2000 for smaller businesses and much more for large businesses.  HMRC are likely to know about businesses that are late with payments at a very early stage.  This means that companies need to be ready to talk to HMRC earlier.

If your business is having problems paying PAYE then it may be that a "Time to Pay" arrangement can be agreed with HMRC to allow the paying off of tax over a short time scale of say 6-12 months.  However, it is important not to ignore any build up of tax debts.


Wednesday, 5 December 2012

Credit availability still falling for small businesses


A report by the lawyers, Allen & Overy, said rules forcing banks to hold more capital are already reducing credit for small companies, while proposals to increase regulation on non-bank lenders “raise serious questions” about whether they will be able to meet the needs of small business.

The non-bank lenders being asset based lending, factoring and invoice discounting which have been in the press recently due to controversial "exit fees" that are paid when a business goes into administration.

Allen & Overy also said that Europe is “far behind” the US in the use of non-bank forms of finance for small businesses.  For instance credit card or merchant finance has been available for years in the US.

It warned of a risk that regulations would “dry up” opportunities to bring new sources of capital into play in the SME market, such as pension funds.

Of course in the end it is all about having sufficient working capital.  One way that a business can get back working capital, especially if they are insolvent is by entering a company voluntary arrangement.  This means that their debts can be spread out over 3-5 years.  But here is the best bit; They can write off "upto" 70% of their unsecured debts.  However, the business does need to be insolvent and anyone thinking of going down this route needs to take professional advice as they will need the support of their creditors.


Monday, 3 December 2012

Turnaround in 2013

The TMA event held last week in Bristol with Clarke Willmott was a success with some very interesting speakers.

We heard from Philip Winterbourne, the Partner at Clarke Willmott LLP who told us how they saw the year 2012.  Principal observations were that the bank's liquidity rules and their fear of calling in loans that may have had interest rate swapping products attached them had meant that fewer companies were going into administration.

Nic Hanson from Close Brothers Invoice Finance pointed out how the market for factoring and invoice finance was growing all the time and many businesses had taken on this form of finance.  Particularly because again due to liquidity rules Invoice finance meant they didn't have to hold as much capital.

Finally Keith Steven of KSA Group explained why "Zombie companies" existed and what the future held for them.  The biggest challenge they may face could be with Real Time Information or (RTI) which will mean that companies can no longer hide their PAYE liabilities until the following year.

See his presentation below



The event was well attended with representatives from Russams GMS Interim managers, KPMG and Accountingweb.co.uk coming along to enjoy the networking and hospitality that was kindly put on and hosted by Clarke Willmott.  KSA Group helped sponsor the event.

Rescue your business before Christmas - A case study

A company was being threatened  distraint action by HMRC over a £183k debt in December 2011.

Although the company had a turnover of only £280k we managed to rescue it and get a CVA approved by HMRC and pay 42p in the £1 dividend.  Company has restructured, cut its costs, and continues to trade providing web services to its clients.

Read the case study below

http://www.companyrescue.co.uk/case-studies/cva-case-studies/web-design-and-marketing-company-saved-by-a-cva

Friday, 30 November 2012

MPG has gone into administration

Building.co.uk has reported that a £2m dispute between main contractor, Galliford Try, and subcontractor MPG who worked on the Athlete's village at the London Olympics has resulted in MPG being forced to work on a company voluntary arrangement to allow it to have some relief from its debts.  MPG owes £10.2m to creditors but it says that the dispute with Galliford has left them with a big hole in cashflow.

The disputes relate to delays on the final two plots of the village, which together are worth £80m and contained 423 units, according to construction data company Barbour ABI.

MPG - had last reported turnover of £46.3m in the year to 31 December 2011

However, it does look like there was a  company debt problem even without the issues with Galliford as the CVA is expected to offer "at least" 32p in the £1.  So in order to survive it is needing to write off in the region of £6m.

MPG’s creditors will vote on accepting the CVA proposal at a meeting on 4 December. If they reject it this could force MPG into administration.

Several firms have gone bust on the athletes’ village project, including contractor P Elliott and subcontractors United AG and Trent Concrete.

Wednesday, 28 November 2012

Walmsley Furnishing in administration for third time.

Walmsley Furnishing, the Midlands-based furniture store chain, has gone into administration for the third time in seven years because of the economic climate.

The firm has 24 stores around the country, including Bradford Street in Walsall and the Mander Centre, Wolverhampton, employing 105 workers. Insolvency practitioners at  PCR have been appointed as joint administrators. The stores are still trading and there have so far been no redundancies.

SKG Capital bought Warmsley in September 2011 in a pre-pack deal for £250,000, which resulted in a number of store closures.  Unibrook bought the business in 2005 when it went into administration the first time.  At that time it had 100 stores nationwide.

Mr Phillips, a licensed insolvency practitioner at PCR, said: “Unfortunately Walmsley has, like so many other retail businesses, suffered from the economic recession that has blighted the British high street.
“We are currently investigating to what extent we will be able to fulfil orders, however this is dependent on our ability to acquire stock from third party suppliers. I would, however, stress that it will take some time for us to assess the situation.”

A customer helpline has been set up by the administrators to answer questions on 01922 704113.

Monday, 26 November 2012

Insolvency rate falls in SMEs apart from construction

Fewer firms are becoming insolvent according to the latest figures from Experian.  Almost all business sizes showed a fall with some 23% fewer businesses which employ 26-50 people falling into insolvency. It was only the larger firms with 500+ employees that saw an increase.   This is despite continued economic pressure on business.

Just 1,685 firms went insolvent during October, according to data from Experian, down 8.7 per cent on October 2011, to make up just 0.08 per cent of the total business population.

Leisure and business services saw a fall in insolvencies but building and construction firms were in trouble, with 5.4 per cent more of them becoming insolvent.




KSA Group Liquidation notices

Bulbecks Limited

A Meeting of the Creditors of the above named Company will be held at the offices of KSA Group Limited, C12 Marquis Court, Marquisway, Team Valley, Gateshead, NE11 0RU on 27 November 2012 at 12.45 pm.

See full notice below


A Long Distribution Limited

Meeting of the Creditors of the above named Company will be held at the Park Inn Hotel Cardiff North, Circle Way East, Llanedeym, Cardiff CF23 9XF on 29 November 2012 at 2.30 pm

See full notice below





Friday, 23 November 2012

DRL in line to buy Comet's online business

It was only a few weeks before the collapse of Comet that I was admiring the website www.appliancesonline.co.uk which is run by Bolton-based DRL limited.  Their website was cited at an online content marketing conference on how to do it!  It is not surprising then that their turnover has increased from £50m to £150m in the space of just 4 years to 2011.

Funnily enough they have now emerged as the front runner in buying Comet's online operations for a "seven figure sum"

John Roberts, who set up Appliances Online in 2000 said he would hope to run the Comet brand online, but said a deal would depend on whether he could rescue the brand before too much damage was done through the administration process.

 Administrator Deloitte is also understood to have received a bid for 140 of the 195 Comet stores, which could save more than 2,000 jobs, according to a report in The Sun newspaper.


Wednesday, 21 November 2012

What does voluntary liquidation mean ?


Creditors voluntary liquidation or compulsory liquidation means the end of the company and its assets are then "liquidated" or turned into cash for the creditors, if possible. Creditors voluntary liquidation (CVL) is the most common form of liquidation in use in the UK.

Usually the company has run out of cash, it cannot pay its debts on time and the directors are concerned that the business is simply not viable. They are also very  worried about wrongful trading.

A CVL brings an end to worry, if you have acted properly as directors, and it will allow you to get on with your life. Yes, you can be a director of another company after a liquidation!

What is a "Phoenix"?

You can liquidate a company and start the same business again, but only under strict rules and conditions. This is a potential legal "minefield" and you need to take proper advice.

Call us or read our Experts Guide to Creditors Voluntary Liquidation (see link below) if you want more details. This FREE guide tells you all you need to know about liquidation or call us on 0800 9700539 for a free chat through your company's issues.

http://www.companyrescue.co.uk/documents/KSAExpertsGuidetoCreditorsVoluntaryLiquidation.pdf

Tuesday, 20 November 2012

Recruitment company exits CVA 4 years early


Read about our client did so well in their first year of the turnaround that they exited their CVA early.

The managing director who is a self confessed sales man and not really a great financial controller had built up sales to £4.5m pa in 2009 with clients like Morrisons, Sainsbury etc.

The company provided mainly eastern European workers to warehouses in the Midlands on fixed rates. Working with Gangmasters licence and high quality standards was of course vital to work with blue chip customers.

His accountants advised that he needed to grow the management team and set up a  platform for a £10m sales business. This he duly did but had very poor luck with the management recruits. At the same time as recruiting and growing the management  team they opened a new branch in East Midlands.

The expansion was funded out of working capital and invoice discounting facility from  IGF Invoice Finance who were and remain very supportive. After 6 months the MD realised that the 6 extra managers, 6 PC’s, 6 expense accounts  and 6 extra cars had not been covered by increased sales and margins. Indeed the margins were under top down pressure and losses began to mount. Managers and their staff costs were mounting up and the new branch had also failed to cover its costs.

After losing £350k in the 2009 financial year the business started building up PAYE and VAT liabilities to cover cashflow problems. A time to pay deal was arranged and the company began paying £20k per month to catch up.

The MD decided that enough was enough and fired 5 out of the 6 managers. The cars which were on short term hire were returned and the laptops sold.

But still losses mounted.  

Read our recruitment case study to find out how this company was turned around and exited a CVA 4 years early!

Monday, 19 November 2012

Dissolved companies owe £4.7bn to creditors


Experian, the credit reference firm, has done some research and discovered that each year companies that are dissolved or closed down without going through a formal insolvency process owed £4.7bn to creditors.  This compares to the £11.7bn owed by companies that have gone into administration, or liquidation.


The credit ratings company analysed firms which closed down voluntarily since 2000 and found that taken individually, the debts left behind are small – around 35pc of these firms had less than £10,000 of total assets.


However, Experian said the “sheer volume” of businesses using this apparently benign route are generating a significant combined loss to creditors.

Max Firth, of Experian, said: "Most firms that apply to be struck off tend to have little or no debt owed to other businesses. However, hidden among these seemingly harmless business closures is a level of debt that has previously gone undetected.”

Not sure what the point is of this research/statement as it is inevitable that thousands of businesses are going to close owing small amounts of  money that  they can't pay and it is not cost effective for creditors to recover.  But the largest such creditor is almost certainly HMRC.

The cost of employing an insolvency practitioner to put a company into a voluntary liquidation when the debts are small sometimes does not make financial sense.  But as a director simply waiting until your company has completely run out of money is not good management. If the dissolution is rejected by say HMRC, then the company may be wound up by the Courts initiated by HMRC.

Then you will meet the Official Receiver and have to explain why the directors apparently drained the company of cash and left creditors with nothing. Does this sound like directors acting in the best interests of creditors? No, well it won't to the OR either. Thus personal liability for the HMRC tax debts or other creditors may become a real possibility.

When a company stops trading and owes nothing, or very small amounts of money then dissolution is one of the ways to bring matters to an end.  However, if the company has larger debts, then any creditor can oppose the dissolution and a compulsory liquidation may occur.  In any liquidation the conduct of the directors will be investigated.  So if you want to close the business make sure you do it properly.

The smart options is to ensure that before there are no funds left, you should place the company into creditors voluntary liquidation.

Hampson Industries to go into administration

Hampson Industries, the Brierley-Hill-based aerospace group is set to call in administrators after struggling with debts of £55m. Hampson, which makes tools used in the production of the F-35 Joint Strike Fighter, is expected to appoint Simon Kirkhope and Chad Griffin of FTI Consulting LLP as joint administrators later today.

The firm recently sold its entire share capital of BHW(Components) for £2.4 million as it looks to repay its debts.  The firm had been up for sale as a whole but there was not much interest and the plans were shelved

Earlier this year Hampson Industries' shares were suspended after the company admitted it was not in a position to publish its annual accounts in the timeframe required by listing rules.

Harley Medical Group in administration

The Harley Medical Group, which specialises in cosmetic surgery, has been forced into administration following the claims made by women who had the PIP breast implants fitted.  1,700 women were seeking compensation which ran into millions of pounds.   The firm said that it could not afford to replace all the patients implants free of charge, unless it actually ruptured and so the NHS has been doing the operations where there was deemed a significant risk.

It has emerged that all the doctors and directors have been transferred to another firm and are carrying on performing surgery.  Documents filed at Companies House reveal Aesthetic and Cosmetic Surgery Ltd was set up in September with the same directors as Harley Medical Centre and based at the same address near Harley Street.

This, of course, has raised questions about the process and left many people angry.  There is always a risk if you employ a private company to do anything let alone a surgical procedure. However, questions should be asked as to why this company's insurance or PI cover is not involved in paying for corrective surgery.  I would have thought that this would offer some recourse.  Why are they not paying out?  Did they actually have adequate cover?  The latter is surely the main question.




 

Friday, 16 November 2012

Retail sales in surprise fall prior to Christmas

Yesterday was a bad day for statistics and figures for the economy.  Retail sales figures saw a 0.8% decrease in sales volumes in October which follows the bounce back in growth which was recorded for September of 0.5%.  This comes on the same day as the Eurozone falls back into recession.

One of the main reasons for the decrease was the fact shoppers have cut back on food and clothing purchases according to the Office of National Statistics. Food stores reported the biggest monthly decline in sales since November 2011.  However the quantity of goods had increased by 0.6% when compared to last year.

This trend is a little alarming so close to Christmas and follows the demise of Comet last week.  However Comet's sales figures were broadly stable prior to the administration it is believed.


Christmas time will be a make or break sales period for many retailers and they must get their online stores working well and able to deliver!

If you are struggling and are looking for a plan B visit or retailer rescue pages

Wednesday, 14 November 2012

Hotel du Vin owners face administration

MWB, the owner of the Hotel du Vin and the Malmaison chains of boutique hotels, is in talks about how to refinance its huge debts with Deloitte lined up as administrators if the talks fail.   The shares have been suspended and are likely to be worthless.  At one point in 2007 the shares were trading at 300p but have fallen to 3p.

One of the main issues is that the company is in dispute with its part owned subsidary MWB Business Exchange about the repayment of £4.8m pound liabilities between the two companies.

Although the company has undergone a number of refinancings it remains highly indebted. New management took over from chief executive Richard Balfour-Lynn and finance director Jag Sing, who stepped down earlier this year.

The firm has been able to hold up revenues at its hotels, but has been unable to find ways of cutting costs, which have eaten into the bottom line. A failed venture into restaurants, called Bistro du Vin by former CEO Richard Balfour-Lynn has also drained around £1.5 million of working capital.

Administration looks  a likely option with the assets of the group sold off to recover some of the monies.  However, there is likely to be little return for unsecured creditors. 


Tuesday, 13 November 2012

Company Turnaround in 2013 - Out with the old, in with the new!

Turn of the Year – Turn of the Company. “Out with the old, in with the new” are familiar words at this time of year; they are also the fundamental principles of corporate turnaround. As we move from this year to the next, our three speakers – a lawyer, a financier and a practitioner - will look back at the old year and help us to prepare for the new. In a nut-shell: review refocus and get ready.

Time will be allocated for questions and answers. Attendees are invited to participate in some quality networking and enjoy the hospitality provided by the sponsors for the evening

 As Gold Sponsors of the Turnaround Management Association (UK) our guests attend for free to this CPD qualifying event.

Speakers:


Ken MacLennan, Associate, Clarke Willmott LLPKen MacLennan
Ken qualified as a solicitor in April 2008. He has a wide range of experience in corporate restructuring,  turnaround and insolvency work, both contentious and non-contentious. He has also been on secondment with a large high street bank in its restructuring team.
Ken has advised insolvency practitioners, banks, directors, companies, creditors, landlords, individuals and other stakeholders. His varied experience includes, pre-pack and trading administrations, restructuring advice, security reviews, equity and property stakes, antecedent transactions and asset recovery, and advice relating to CVAs, IVAs, administrations, liquidations and bankruptcies.



Nic Hanson, Director, Close Brothers Invoice Finance.Close
Nic Hanson
Nic Hanson has over 20 years of experience within the Invoice Finance industry and has recently joined Close Brothers to expand their presence in South Wales & the West of England. His focus is on providing funding solutions for small and medium sized operations whilst simultaneously increasing awareness of the Close Brothers brand and the advantages that the company has to offer to local businesses.




 Keith Steven, Founder & CEO, KSA Group Ltd.
Keith Steven of KSA Group Ltd has been rescuing and turning-around companies since 1994; he has worked for insolvency firms, turnaround funds and venture capital investors. Keith formed his own turnaround practice, KSA Group Ltd in 2001, and he is acknowledged as an expert in the delivery of CVAs for SME companies faced with financial difficulties.Keith Steven
Drawing on case studies from 2012, Keith will illustrate the variety of ‘turnaround tools’ available to directors and advisors in order to effect a company rescue, including formal and informal procedures and creditor negotiations – including with HMRC. Many of the key skills of Keith and his company are available via the internet free of charge; he will impart his advice on being the ready for the future with similar magnanimity.



Date

29th November 2012

Time
5.30pm - 8pm


Location
Clarke Willmott LLP,
1 St. Georges Square,
Bath Street, Bristol BS1 6BA


Drinks and refreshments will be served
afterwards so there will be opportunities for
some networking and you can take away our USB
Toolkit with the hundreds of guides on
insolvency matters.


If you would like to come along as a guest of KSA Group please RSVP on
020 7877 0050 or email me at robertm@ksagroup.co.uk

More details are available on the TMA (UK) Web site This is a CPD Qualifying Event

Monday, 12 November 2012

Radio 4 Discusses Zombie Companies on Tuesday Night

On Tuesday night 13th November at 8pm the Radio 4 programme, File on 4, will be discussing "Zombie Companies" and what effect they may be having on the economy.  See below for the link to the programme.

http://www.bbc.co.uk/programmes/b01ntfwh

The fact that there are thousands of inefficient businesses that are just getting by, saddled with large debts but unable to invest or grow is becoming more of a hot topic recently.


Wednesday, 7 November 2012

ING leasing pulls out of the UK


The economy could lose some £1bn of finance as ING Lease UK is closed down.  The leasing arm of the Dutch bank, ING, lends to thousands of small businesses that want to buy new vehicles and equipment.  Leasing contracts have become more popular as bank loans and overdrafts have been harder to come by.

Under a lease arrangement, a broker arranges the purchase of the equipment, which is owned by the leasing company. All the business has to do is keep up the regular payments.

ING has already announced the sale of its UK savings business, ING Direct, to Barclays. It has been off-loading assets to repay the Dutch government for aid received during the financial crisis in 2008.

The withdrawal of leasing contracts by the European banks has come about as these banks are being asked to hold more capital in reserve.

ING leasing UK has its offices in Redhill and half of its 300 work force are expected to be make redundant in the near future.  ING has been cutting back on many of its European operations that will result in the loss of 2350 jobs


Will there be a funding shortfall?

In 2012 31% of total investment in new machinery and equipment has been paid for through leasing contracts, so the ING closure will cause months of disruption. Other finance providers such as Investec Bank, Aldermore and Close Brothers will try and make up the difference but it is expected that there will be a substantial gap in funding especially for small businesses where ING did most of their lending.

Want to know about finance?

The banks not lending has ensured meant that more creative finance products have emerged.  Have a look at our raising finance pages on company rescue.


Tuesday, 6 November 2012

Disqualification for care home directors


Deepak Mohan Mirpuri and Arun Mirpuri ran Larongrove Limited, which operated the Abbey Grange home in Sheffield until August 2009 have been disqualifed from being company directors following an investigation by the Insolvency Service.

Monies belonging to seven vulnerable residents were paid into the home’s business account instead of being held separately.

The company subsequently went into administration, so the money could not be recovered.  The residents lost some £58k.

There was no suggestion that there was criminal intent so no fraud investigation was done.  However, good practise guidelines for care homes state residents’ money should be kept separately from the firm’s business account - but, instead, the owners used it as working capital.

After Larongrove went bust, Abbey Grange was taken over by another firm, Country Court Care, which introduced changes including a ring-fenced account for personal savings, and refurbishments.

Robert Clarke, head of company investigations at the Insolvency Service, said: “The orders made in this case send a clear message to other directors that if they run a business which causes harm to the public they will be investigated and removed from the business environment for a long time.”

In conclusion, if you are desperate enough to use clients money as working capital for your business then you really, REALLY, need to seek advice.

Monday, 5 November 2012

KSA Group Insolvency Notices

Liquidation Notices

Starfish Clothing Limited

A Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 9 November 2012 at 1.30 pm

See the full notice below

http://www.companyrescue.co.uk/insolvency-notices/starfish-clothing-limited-s98-creditors-liquidation-notice

Strategic Aviation Limited

Meeting of the Creditors of the above named Company will be held at the offices of KSA Group Ltd, Tower 42, Level 7, 25 Old Broad Street, London, EC2N 1HN on 22 November 2012 at 12.00 pm

See full notice below

http://www.companyrescue.co.uk/insolvency-notices/strategic-aviation-limited-liquidation-notice

Friday, 2 November 2012

Insolvencies down 25% on last quarter has been reported widely.


This statistic comes as no surprise to many in the turnaround profession. Figures from the Insolvency Service show that 986 firms went into administration, receivership or a company voluntary arrangement in the third quarter of this year.  That was a 25% drop on the previous quarter.  This is not the whole story as liquidations that make up the largest type of insolvency procedure are down only 5.6% year on year.

R3, the insolvency trade body, warns about the "zombie" businesses that are just scraping by and paying only the interest on the debts and will get into serious trouble if the economy takes a turn for the worse.  The Telegraph business supplement ran an interesting feature on this phenomenon.  You can read it here.

The standard ran an excellent comment piece about the current market you can read it here
http://www.standard.co.uk/business/markets/anthony-hilton-maybe-there-are-too-few-insolvencies-8273363.html 

Low interest rates and quantitative easing are definitely helping companies stay afloat.   However, the article didn't allude to the fact that HMRC are also not putting pressure on struggling companies probably, in my view, as they want to concentrate for the moment on companies and individuals that can pay but have found a way not to pay!






Thursday, 1 November 2012

Save your business from going under


If you want to save your business from going under then you could use a company voluntary arrangement or CVA to do so. This gives the business a fighting chance and leaves you in control. For more details have a look at our new page.

http://www.companyrescue.co.uk/company-rescue/guides/save-my-business-from-going-under

Comet to go into administration next week

The suppliers of Comet are reportedly putting pressure on the company to pay in advance for its Christmas stock.  This is because they have been unable to get adequate credit insurance.  If the suppliers refuse to supply then simply the company cannot trade. This is what finally brought Woolworths to its knees.

We hear that the company has told staff that it intends to go into administration next week

The owners, OpCapita who bought the company for £2 but were effectively "paid" £50m to take it off Kesa's hands, have been stopping the slide in sales and have cut costs by reducing staff levels from 8,000 to 6,000.  This has prompted OpCapita to seek a sale of the business which has prompted the suppliers  action.  Administration is not inevitable but with little interest so far, it may be the only way that the business can continue to trade.

The retailer could have gone into a CVA which would have allowed it to shut down its poorly performing stores, always assuming that its creditors would have supported such a move.  Much would have depended on the position of its landlords.

The company could still exit the administration via a CVA but a pre pack administration may  be the most likely option if a buyer is ready to take it on.  But if a buyer can be found quickly and suppliers keep supplying then it may escape insolvency.

If you are an employee of Comet then please see our page help for employees.  However, please do not ring our offices or contact KSA, as we have no more  information than stated here.

Comet's customer care team is handling any customer inquiries on 0844 8009595.

Appliances online have set up a webpage to help those who have purchased or are about to purchase goods from major manufacturers.  You can see the web page here.  http://www.appliancesonline.co.uk/comet.aspx


Wednesday, 31 October 2012

Partnership Overdrawn Current Accounts


For limited companies, overdrawn director's current accounts are a common problem when facing an insolvency situation.

To recap, an overdrawn current account is when a company stops making profits but the directors continue to take out drawings which will be later voted as dividends, so effectively owing the company moneyuntil the dividend is voted.. Efficient and correct in good times for a company, but this approach can cause problems when losses are made, there are insufficient reserves to cover the dividends and directors can find themselves with personal liability problems.

What about partnerships then?
Partnerships of course have their own tax benefits, but if the partnership has not been making any money and there are overdrawn current accounts, then the unique situation arises where the partners are joint and severably liable for the account. In an insolvent situation this could be very damaging on top of the personal liabilities of the partners to the creditors.

In a limited liability partnership the partners will not be joint and severably liable for the overdrawn account but it will be, in effect, the same as a directors overdrawn current account. So in an insolvent situation the same rules apply. An LLP will not offer complete protection against creditors and we have blogged on the subject before on what you need to know about limited liability partnerships
So for a partnership what are the Solutions?

Well, options include:

Repay the debt you personally owe to the company.

Offset any loans the partners have made to the company (this is called set off).

Make a lot of profits in future periods to offset it!

A company can use a Company Voluntary Arrangement to reverse the current year directors drawings into the PAYE Scheme if there are insufficient reserves to pay a dividend. However, for a partnership that may not operate a PAYE Scheme this is not possible. A partnership voluntary arrangement or PVA may be an option, which will allow the partnership to continue to trade with money owed to creditors paid off over time and the partners will need to pay off the overdrawn account as they are in effect debtors of the partnership.

What happens in a winding up of a partnership if there are overdrawn current accounts?

In any liquidation the liquidator can demand that partners repay their overdrawn current account to the partnership for the benefit of the creditors. They can take legal action to make partners pay this or even make them bankrupt.

So, partners may be at risk of losing their home if their current account is overdrawn and not recovered.

The important thing is to take advice on this matter from professional advisors before it becomes an unsurmountable problem.

Tuesday, 30 October 2012

Yellow Pages Winding up Petition?

Will Hibu, the oddly renamed  former "Yell", formerly "Yellow Pages" (confused!)  survive?

It is according to the FT, facing threats of a winding up petition from creditors who were to be paid £65m this week. This 6 year old debt is probably unsecured and therefore the debt holders have few options, but to threaten the blunt winding up petition approach

Should Hibu be wound up? Well we don't know the intricacies of the £2bn - yes two billion - of debts it is carrying, but one thing is probable. If the company is served with a winding up petition, then the secured debt and bond holders may appoint an administrator.

As so called zombie companies go, this would be a massive failure and one that would hurt a great many banks.

Friday, 26 October 2012

Could bankruptcy get you out of paying maintenance following a divorce?

A case is going through the courts at the moment, where a former company boss, who has been declared bankrupt, is arguing that he should have his debts to his ex-wife wiped out too. His divorce settlement gave her the family home, and £500,000 in installments. So far she has received £211,000, and he says that should be enough.

If he wins, it could have far-reaching effects.

Alexander McRoberts, aged 54, of Datchet in Berkshire was divorced in 2003. He fell into financial difficulties shortly afterwards and was declared bankrupt in 2006. This was discharged in 2007, but Mr McRoberts is arguing that the bankruptcy should have cleared the debt.

His lawyer has pointed out that he is not in a financial position to repay the debt. And that his ex-wife, Mandy McRoberts, is a company director in a £500,000 home in Windsor, which makes her considerably more financially comfortable than her husband. He also says that if the debt still stands, Mr McRoberts is concerned that he will have to declare himself bankrupt again.


Mrs McRoberts has argued that £349,000 is still outstanding from their divorce settlement nine years ago. Her lawyer has highlighted that if the court finds in favour of Mr McRoberts, it will create a legal loophole, which would enable spouses to dodge their responsibilities through bankruptcy. He said it would mean "opening the door to all the bankrupts out there who don't want to pay their lumps sums in family proceedings."

The impact
The judge said: "I don't want to do anything that suggests that so long as you go into bankruptcy that is the gateway to avoiding the family court's orders. There are lots and lots of husbands and wives who are company directors."

However, he added that there may be an argument that the bankruptcy court could take the changing needs of both parties into account - and that the case "raised some curiosity as to the relationship between the bankruptcy jurisdiction and the family jurisdiction."

He added that the case needs further consideration, and the decision has been reserved for a later date.

Thursday, 25 October 2012

Bowen Travel Group in administration

Update 26/10/2012;  It has been confirmed that the Boden Travel Group has gone into administration and all staff have been made redundant.

The Bowen Travel Group has 38 travel agencies across the West Midlands, Lincolnshire and Northamptonshire. It also operates three coach holiday brands - Bowen's, Appleby's and York's - under umbrella brand BGT Travel.

It is understood that Deloitte have applied for an administration order.  The website has been suspended and all staff were told that the business was in administration. according to the reports.

A Deloitte spokeswoman was unable to confirm its involvement at this stage.

If you are an employee of the business then you can refer to our help for employees pages but please do not call our office.  Any holidaymakers should direct their enquiries towards Deloitte.


UK " out of recession " if ONS is to be believed.

No wonder that David Cameron could not contain his excitement after seeing the GDP data and let slip that "good news was on the way".  After an "Annus Shambolicus" for the Government this is a great news.

Britain left recession in the third quarter after posting its strongest quarterly GDP growth in five years!  Official data released today showed that the economy grew by 1%.   That is 30% more than the most optimistic economists were predicting.   The Office for National Statistics said Britain's gross domestic product rose by 1.0 percent between July and September after shrinking by 0.4 percent between April and June. On the year, the economy was flat.

 Of course, there is the usual comments that these figures contain one off events like the Olympics and an extra day working etc etc but overall it is still a better picture.   Industrial output was 1.1 percent higher, the strongest rise since the second quarter of 2010. Construction - which accounts for less than 7 percent of GDP - contracted by 2.5 percent.

 Other indicators have pointed to an improving picture.  The Markit's purchasing indexes have shown an improvement, unemployment has been falling, retail sales have been improving and the insolvency rate has been falling.  

 Now wait, that last one, the insolvency rate, is an interesting one.  Historically, if the economy improves after a recession then the insolvency rate actually rises....

Why is that?  Simply because creditors get tougher when they think there is a better chance of getting the money and banks look to call in loans when there is a market for assets if the business cannot survive.  Also if they want to lend to a growing company they will need to stop lending to a failing one.    Finally there is the issue of overtrading.  This is when orders are made but the money from customers is not called in fast enough to fund the expansion.  We have a great page on why profitable firms go bust here.


Wednesday, 24 October 2012

Electrical services company issued with winding up petition but survives using a CVA

An electrical services contractor, working in the industrial and commercial building and construction sector based in Kent saved by a Company Voluntary Arrangement.


The director contacted KSA Group  after reading the website.  A meeting was held between the director and KSA Group regional manager on 6th August 2012.

KSA Group were appointed to assist the company on 10th August 2012. The company encountered financial difficulties because of considerable sums owed by two main contractors. The company was owed c£85k in certified payments and some of the debtor days exceeded 16 months. The director had cut costs prior to KSA Group's appointment via one redundancy. However, a winding up petition was issued by one of the trade creditors.

Find out what happened by reading our CVA case study

Tuesday, 23 October 2012

Barkley Alexander and Associates Limited in Liquidation



KSA Group, the authors of www.companyrescue.co.uk, always watch our space for competitors.

The internet has low barriers to entry and companies can make all sorts of claims. So it is interesting to see an advisor, BARKLEY ALEXANDER & ASSOCIATES LIMITED, advertising on Google as www.barkley-alexander.com  have actually gone into liquidation as of 17th October 2012.  So who is paying for the website and the online advertisements and why?


BEWARE of companies that claim to offer all sorts of easy solutions like CVA for debts of just £15,000 - Check them out first. Are they regulated, licensed and experienced? Then look at their testimonials, can they give you referees?

Here is a quote from their website.

Do you want to write off 100% of the current companies debts?
Do you want to ‘buy back’ the companies assets?

The fact that they can’t write good English ( err company’s perhaps)  should be a warning!


CAVEAT EMPTOR - buyer beware. These claims are misleading and may be dangerous for your company in difficult times.

Given that they are actually in liquidation DO NOT PAY anything over until they have done a job of work!

Always seek out good practitioners.  They should have a clear address, location, pictures and bios of people who work for them, and genuine testimonials.   They should also NOT be in a insolvency mechanism themselves!

KSA Group Liquidation Notices

UK Bailiff Company Limited Creditors Liquidation Notice

A Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 2 November 2012 at 10.45 am

For the full notice see below

http://www.companyrescue.co.uk/insolvency-notices/uk-bailiff-company-limited-creditors-liquidation-notice

Reds Technologies Limited Creditors Liquidation Notice

A Meeting of the Creditors of the above named Company will be held at The Elstead Hotel, 12-14 Knyveton Road, Bournemouth, Dorset, BH1 3QP on 7 November 2012 at 1.00 pm

For the full notice see below

http://www.companyrescue.co.uk/insolvency-notices/reds-technologies-limited-s98-liquidation-notice

Monday, 22 October 2012

Manganese Bronze the London black cab maker has filed for administration

London black cab maker, Manganese Bronze, has filed an intention to appoint administrators.

In a filing dated today the firm announced: “that discussions with various parties to secure funding on acceptable terms to address the Group’s financial needs have proved unsuccessful. The Board has therefore concluded that the Group is no longer a going concern and has filed notice of intention to appoint administrators.”

The difficulties mostly stem from a production problem that resulted in a fault with the steering column of the car.  This has meant that as many as 400 cabs had to be recalled.  The firm had been hoping for an injection of £15m from the Chinese car-maker Geely, which would have transferred production to China.  For the first six months of 2012 the firm recorded an operating loss of £3.1m on revenues of £34.3m. In August it revealed it had understated past losses by £4.25m.

However the filing does state that they think the business has a viable future.  This is at some odds with the company's opening statement.  

So what has happened?  
It is possible it faced a winding up petition that would have meant that the company would have been unable to trade.  However more likely it is viable if someone would inject £15m into it!  The failure of that money coming forward put it into an impossible position.

Thursday, 18 October 2012

30 shops a day closing down


According to research by PWC and the retail data provider Local Data Company (LDC) shops on the UK high street are closing at a rate of 30 a day in August and September.

High-profile administrations such as Game Group, Peacocks, Past Times and Clinton Cards helped push the number of closures of town centre chain store outlets to 953 in the first half of the year.  This compares with 174 in the whole of 2011.

The changing face of town centres can be seen by looking at which types of retailers are doing well.  There are 7% more discount stores in the UK  the first six months and  11% more payday loan outlets, and  8% more pawnbrokers....  The lack of expansion plans by the more established retailers has also been blamed in as one reason the High Street is floundering.  Expansion plans need the banks to lend and they have not been keen to do this.  Especially since some well known brands such as HMV are heavily indebted.

Despite these figures the vacancy rate has remained fairly stable at 1 in 7 and this in part has been helped by new independent shops opening.  However, they tend to pick their spots and so some parades can decline quite rapidly.

The most common factor that the large multiples have is that they have too many shops that were opened during boom times and are stuck in long leases at relatively high rents.

However even for smaller multiples there is a way out.  A Company Voluntary Arrangement or CVA can help a retailer close down stores that are dragging the whole company down.  Read our page on retailer CVA s

Wednesday, 17 October 2012

Zombies and Company Rescue feature in the Telegraph Business Supplement!


Business Turnaround Experts featured in the Daily Telegraph. 

Please read the supplement by clicking on the picture.  This flat lining economy has resulted in thousands of businesses that are carrying large debts, no growth or declining sales but are managing to continue to trade.   Good people are tied up in these unprofitable companies that means that other more lean companies are having to work harder says John Moulton of Better Capital.  This situation is not helping the economy recover and grow.

Mild cashflow problems? Serious threats by creditors? Winding up petition threats from the tax man?  

It is, in our view, an abdication of management responsibility not to ACT when the pressure is building.  Hence the lack of confidence that banks may have in the board.

When pressure from creditors starts to mount and the threat of legal action comes along, then there is a powerful alternative to terminal insolvency.  Keith Steven writes that a company voluntary arrangement is often the best option for companies that are struggling with debts and need to stop firefighting and allow the turnaround to get under way and allow existing or new directors to get on with running the business.  Read the Telegraph article here

Of course, business turnaround needs more than just a single mechanism like a company voluntary arrangement but also the need for turnaround experts in finance and operations.  Management often need to change and they should use tools like daily cashflow forecasts, get up to date financial reporting from experts like Insight Associates, also featured in the supplement and set out a recovery plan with stakeholders such as banks, employees, creditors, investors and shareholders. Often it is necessary to bring in interim managers to help them move forward.  KSA Group has close connections with experienced quality people who can help in this regard.
                
Phone us on 01289 309431 for details.

Insolvency Practitioners Hoping For Increased Business

An article in Accountancy Age today highlights the strangely quiet world of insolvency  in the UK.

http://www.accountancyage.com/aa/news/2217365/third-of-practitioners-expect-company-collapses-to-rise-in-2013

At a recent Pinsent Masons conference over 450 practitioners and staff were questioned on their expectations for the insolvency market in the next 12 months. Over one third predicted a rise in insolvency appointments.

Well they would, wouldn't they!

Seriously though, experience shows that once a recession has firmly ended and a recovery begun, the number of insolvency appointments rises quickly as "zombie" or failing companies are closed down and assets and businesses sold to stronger players.

So we guess that, with two thirds of respondents NOT expecting a rise in appointments, a firm recovery is not expected either?

Tuesday, 16 October 2012

KSA Group and Company Rescue featured in Telegraph Business Reporter Today

Keith Steven writes in the Business Turnaround Supplement of  the Sunday Telegraph.  Below is a scan from the paper.



If you cant read it - here is the text.

The legal sector is in trouble. The introduction of the Legal Services Act has led to the option of forming alternative business structures (ABSes), meaning a number of distressed firms with failing businesses may be snapped up by larger players.

But as is customary in any marketplace, whenever you see consolidation, you also see failure. Businesses close down, other companies purchase distressed assets and a consensus between stakeholders is rarely reached. If the Solicitors Regulation Authority (SRA) thinks a firm is a risk to the clients, then it may instantly intervene. “Effectively the business dies there and then,” says Keith Steven, managing director of KSA Group.

“To put a company into liquidation takes three weeks, but the SRA can intervene in a flash – if they’re ready to go, they can be there “today”. In most cases, the SRA will give prior warning by writing to distressed firms requiring the management to seek external insolvency advice. But often if it gets to this stage, it’s already too late.

“Smart lawyers should be thinking about turnaround options that are available before it’s imposed upon them by the SRA,” explains Steven. “The aim should be, even before the SRA gets them on its watch list, to get advice before insolvency options are required.”


Common warning signs such as poor cashflow, falling sales or not being able to meet payments to HMRC should be taken seriously by partners and directors. Struggling with PAYE and VAT payments are indicators that management must act. “A new pair of eyes coming in can spot the issues,” explains Steven.

“The reason management doesn’t address structural business problems is fear of change. But change has been forced upon them by the market and smart directors must act to turnaround the business.” The KSA Group offers a variety of solutions including plans “A”, “B” and “C” to the distressed firm, and works with it and the SRA to prevent regulatory intervention.
Plan “A“ can be used while it’s still possible to defer creditor payments, restructure bank debts, chase debtors, cut costs and turn the business around.

If creditors choose to reject this informal deal, then Plan “B”, may be used, this is often a formal Voluntary Arrangement (CVA or PVA) to pay creditors over a fixed period while continuing to trade. Debts are substantially discounted on the way through. If it gets to the stage where it is impossible to turn the business around, that may mean plan “C”, when a break-up sale to buyers or a prepack administration becomes necessary. “That’s not desirable for all parties, but it can sometimes be the only outcome” said Steven.

The KSA Group also offers a free online guide at www.companyrescue.co.uk which has served as a crucial aid for companies feeling the pressure of a tough economic climate, with thousands still trading with its help.

020 7877 0050
www.ksagroup.co.uk/help-for-lawyers


Uniglaze in administration and up for sale

Uniglaze the Norwich-based  the toughened glass and double glazing firm, has gone into administration despite doing a deal with its creditors last year.  At the time a new management team, led by managing director Philip Davis, was drafted in to oversee a CVA (Company Voluntary Arrangement) –  The move kept the firm afloat, saving some 280 jobs at the time.   

However, Administrator Chris Pole the director of KPMG's restructuring said; " In spite of the company’s efforts to find a resolution to its problems via a CVA, the company’s cashflow has been substantially impacted by a further decline in turnover and the insolvency of a key customer. “In the context of a persistently difficult market for businesses supplying into the construction sector, the company has been unable to restructure further or to attract additional funding, leaving the directors with no other option than to seek the appointment of administrators."  

A total of 88 staff have lost their jobs and KPMG are looking for a buyer. 

So, it is pretty clear that this is not ammunition for those that say that all CVAs don't work.  Yes, some do not work and are misused and in order to facilitate discussion and debate in this area we have a new website at www.company-voluntary-arrangements.co.uk where anyone is free to discuss the mechanism.  Lawyers, landlords, funders, employees, insolvency practitioners, directors are all invited to contribute.  

Details of how to contribute are on the site or you can just email robertm@ksagroup.co.uk 


Monday, 15 October 2012

CVA Case Study for an IT Services Company

IT services to the Education sector based in the North West.
The directors of the company contacted KSA Group as they were having cash flow problems due to 3 particular factors.
1. Business model used to focus on low margin hardware sales
2. Bank reduced overdraft and paid down the company's credit cards thereby reducing the available working capital and pushing the company past the new overdraft limit.
3. Due to the academic year the company experiences seasonal fluctuations.
The company had recognised the problem and had tried to restructure by making 4 redundancies saving c. £120k pa, 4 directors of the business had left and the business tried to refocus its efforts on technical service and maintenance to increase cashflow.  However, cashflow problems continued as a result of the loss making in the past , SO they thought that a CVA may be needed to provide some relief of the cashflow pressure and buy the business some more time. After looking at all the options KSA Group agreed.
Following our instruction from the directors, HMRC tried to levy distraint on the goods of the company but were persuaded by KSA not to do this pending the outcome of the CVA negotiations.  This was the same strategy that KSA used with all the creditors and we kept them informed of all the developments and work that we were doing to try and restructure the company.
To keep cash flowing we need to persuade the secured creditors,  such as the factor and the bank, to support the company.  The factor undertook to maintain the facility throughout the CVA process and the bank agreed to provide a credit card facility and convert the existing overdraft into a term loan.
At the creditors meeting, held in August, the HMRC and trade creditors voted 100% in favour of the CVA and accepted a dividend of 54p in the £1

Friday, 12 October 2012

TC Bathrooms in administration despite denials of financial problems

TC Bathrooms has finally entered into administration following denials by the Managing Director that the business was in trouble.

Ernst and Young are the administrators for the company which includes distribution arm TC bathrooms, Ossett-based showroom business Victorian Bathrooms and retail network bathrooms4all. The majority  of these stores are in London and the M25 corridor.  8 of the 17 Stores have been shut down.

Joint administrator, Hunter Kelly added: "The company's trading performance has been impacted by the economic downturn and the contraction of the new housing and refurbishment markets. In addition, whilst the business remains profitable, it has been unable to service the debt taken on to fund its recent considerable expansion."

So this sounds like it was the their bank that put it into administration.  As a secured lender they have the power to appoint administrators.

Thursday, 11 October 2012

Gemini Riteway Scaffolding in administration but new company taken on business.

Gemini Riteway Scaffolding is in administration it was revealed last night.  The official notice can be found here


The firm is one of the largest scaffolders in the South East.  However it appears that it has restarted operations from its Horsham office trading under the name ANT Structures according to the Construction Enquirer.

So what has happened?  

Looks like a pre pack administration where the assets were sold to the new company at the same time as the company went into administration.  


British Property Federation defends CVAs !

The British Property Federation (BPF) have in the past been critical of CVAs as they believe that they unfairly penalise landlords.  However they appear to have warmed to the process a bit.


Speaking at the Insolvency Today Annual Conference (ITAC) 2012, the BPF’s director of real estate policy, Ian Fletcher, said; “Our members tend to like the transparency of the CVA and I take on board the point that they don’t always work.

“With JJB, there has been some criticism but landlords received rents on units that they may not have done for another two years. We have to remember the situation that the business was in at the time.”

This is a bit of a turnaround in the BPFs view but they appear to be looking at the broader picture.  What would have been the alternative?  KPMG the main proposers of CVAs said at the conference that the mechanism had to be shown to be a better outcome than an administration.  An administration would no doubt have a bigger impact on the ability of the company to pay rents and keep trading in existing premises.

It was also mentioned that the continuing weakness of consumer spending meant that companies that were already struggling and in CVAs were facing an uphill task and so the failure of a company in a CVA was a reflection more on the company and its market than the CVA process itself.

Of course we always say that the CVA needs to be well structured to ensure that it is fit for purpose.  Common mistakes directors and their advisors make when proposing CVAs and implementing them are the following;

Not changing the management's way of doing things
Not cutting costs hard or fast enough.
Not getting all stakeholders on side. Such as the bank and crucial suppliers.
Trying to pay back too much too quickly.
Having over optimistic forecasts of future revenue.






Tuesday, 9 October 2012

KSA Group saves 1760 jobs using CVAs

We have done an analysis of all the companies that we have successfully negotiated CVAs for and which have been approved by creditors and filed at Companies House.  Since January 2011 KSA Group has "saved" 1760 jobs in these firms.

What do we mean by that?  

Well, prior to the CVA being filed these businesses faced being wound up or being put into administration or liquidation as they suffered under the weight of their debts.  The CVA allowed the unsecured creditors to receive a dividend on their debts ranging from 30p to 100p in the £1 and the business to get on with making money and being a useful and productive member of the business community!

So what did we actually do?  

The main thrust is to persuade the creditors that the business is viable going forward.  A special thanks to the team in our Berwick Office who do all the creditor liaison in this respect.   Our corporate advisors talk to the client's bank, HMRC, trade suppliers, and customers amongst others.  We also advise the directors on how they can cut costs to become more efficient using the powerful company voluntary arrangement mechanism.

Of course those jobs are just from CVAs.  They do not include the work we do with pre pack administrations, trading administrations and informal time to pay deals with creditors.








Monday, 8 October 2012

Paramount Foods in Administration

Paramount Foods went into administration over the weekend  following the loss of a major contract with Morrisons, which accounted for 40% of its turnover.

The administrators at Duff and Phelps said; "While the company has incurred trading losses historically, the recent loss of a major customer has left it without any prospect of returning to profitability in line with a turnaround plan embarked upon in July this year."

Discussions about the future of the business are now taking place with customers to find a suitable buyer for part or the whole of Paramount Foods. Duff &Phelps has asked for interested parties to come forward and get in contact.

The company is one of the largest manufacturers of frozen and chilled pizzas in the UK and supplies some of the biggest supermarket names, including  Sainsbury's, Asda and Tesco. It employs 138 people at its Salford bakery, which produces pizza bases, and a further 312 in Deeside.

If you are an employee of the business then please take a look at our help for employee pages.

Friday, 5 October 2012

We can rescue companies in Scotland!


winding up petition issued by a creditor against a Scottish company is an even more dangerous step than in England as there is no grace period after the petition and before the advertisement.

In effect the moment a petition is served it is advertised on the wall of the Court.  This may lead to the bank accounts being frozen.  This particular quirk of the Scottish system is one reason why there are fewer corporate rescues in Scotland than in England.  However, KSA group are keen to change this!

Derek Robinson is our Regional Manager in Scotland with offices at

66 Albion Road,
Edinburgh
EH7 5QZ

Derek has a wealth of business knowledge.  A creative and yet objective thinker, Derek understands very well the challenges of running a business and is keen to advise and help directors overcome challenging financial circumstances.  You can call him on 0771 476 5578 or 0131 242 0081

Please read our new pages on winding up petitions in Scotland to see what can be done.

KSA Group in Birmingham can rescue companies

Russel Mallen, a chartered accountant,  is very experienced in the provision of quality accounting information in distressed situations and he heads up our KSA Group operations in Birmingham.  

Comapnies often have a breakdown of accounting and reporting in the stress that insolvency can bring, Russell will oversee a deep review of the systems and reporting, tidy up the balance sheet and profit and loss and set out meaningful information for the directors and their advisors. He can also set out the options for any recovery plan.

So if you are worried that your business does not have sufficiently robust accounting practices and the business is struggling then call Russell as he can help on both fronts!


Call Russell on  0121 3780671 07989 575933

KSA Group to promote rescue culture in Midlands

KSA Group is keen to promote the rescue culture in the East Midlands.  As such, we have an office at 35 Park Row in Nottingham where you can come and meet our Regional Manager, George E Davis.  He can advise the directors of a struggling business on ALL the options.

Alternatively, he is more than happy to visit you at your offices if you so wish.

Read our case study on how we rescued a £600k manned guarding company based in the East Midlands.

We recently held a Seminar in Birmingham about how the CVA mechanism was the best way to rescue struggling businesses.
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