Wednesday 23 April 2014

Planned tube strikes

With tube strikes set to go ahead over the next two weeks (5 days of strikes in total), businesses in and around London could be pushed to the edge - so act now if you think your business might be in trouble.

Hopefully, the strikes will be called off before they can cause disruption but if not, talk to us if you need advice on cashflow and rescue options.

Take our insolvency test if you're worried your business is insolvent: www.companyrescue.co.uk/company-rescue/guides/insolvency-test

Don't wait until you're already in debt and creditors are threatening legal actions - if you're worried, act now!

Wednesday 5 February 2014

London Tube Strike Again!

Again, I find myself blogging about the London Tube strike. It doesn't look like there are likely to be any breakthroughs soon.

Disruption to any transport infrastructure might push some London businesses over the edge.

The London chamber of commerce estimates that London businesses will lose £50m. Of course, if you have customers in London but are based elsewhere this will still affect you. If you are based in London but with customers outside London it is still a major headache.

Want to talk to someone in London if this strike is the last straw? If you feel you really have had enough of your business and it is no longer viable then a creditors voluntary liquidation might be the answer. Please click on the link below for details our 50 page guide.

A complete guide to Creditors Voluntary Liquidation


If the business is solvent and you want to sell the assets, pay off all creditors then a Members Voluntary Liquidation might be appropriate. Please click on the link below for a full 20 page guide

A guide to Members Voluntary Liquidation (MVL)

Monday 14 September 2009

One year on from Lehman

It is 2 years since the run on Northern Rock and one year since Lehman Brothers failed. Remarkable how fast this year has gone!

In that time RBS effectively went bust, Bank of Scotland was rescued by Lloyds, itself now struggling with the burden; interest rates are at all time lows, printing money is seen as a great solution to preventing financial meltdown and some £175bn has been pumped into the economy alongside the cost of bank rescues. Yet growth is nowhere to be seen.

When you read the paragraph above, it brings home just what a huge hit the UK ecomony has taken, yet like a punchdrunk boxer it keeps swaying along from crisis to recovery to crisis. Optimists claim that the ecomony is growing well, pessimists wonder if a second leg to the recession is imminent.

It's a question we will never know the answers to, but I wonder what would have happened if the government had not rescued the banks and let capitalism work?

Morever, how will we pay for all of this desperate stuff?

The Sunday Times reported yesterday that 60% of voters expect severe spending cuts alongside tax rises from June 2010 (after the general election).

Some hangover ahead?

Wednesday 9 September 2009

"You won't get a company voluntary arrangement approved by HMRC".

To be honest we are getting really angry about the incompetence and arrogance of certain UK insolvency practitioners towards the concept of company voluntary arrangements.

In the last month I have heard this ridiculous claim in 4 separate cases/potential clients/banks.

All statements were from IP's from large firms who frankly should know better. Or if they don't it suggests to me that they simply have never bothered to use a CVA properly or they have followed the daft view that 100% of the debt MUST be repaid in the shortest time possible. Or, being cynical, they wanted the bigger fees and control of administration.

This is not true, factually incorrect and basically misleading clients, creditors and banks.

In our long experience it is true to say that the Combined Voluntary Arrangement Service (VAS HMRC) is tough but it is always fair. Indeed the service has an online guide to its approach here
http://www.hmrc.gov.uk/manuals/insmanual/ins10105.htm

This open and fair approach to CVA's includes accepting well proposed CVA's that offer the best deal possible for creditors. Remuneration levels of directors will be scrutinised and if necessary reduced as a condition of its support. If excess cash is generated by say year 5, they will ask that some of that is paid to creditors.

All fair enough.

The VAS does not expect a CVA to offer 100p in £1 in 2 years as many practitioners falsely claim. Indeed the Insolvency Act is not prescriptive about dividend levels or time frames anyway. The framework created by the '86 Act is deliberately loose to allow ANY deal to be put in front of creditors, who decide by majority vote whether to accept, modify or reject that deal.

This framework highlights the brilliance of the CVA legislation to my mind.

For proof of this being more than a rant by yours truly, please see an extract from the VAS (HMRC) guidelines below in italics. I have underlined the key points.

INS10167 - Introduction to Voluntary Arrangements
A fair and optimum offer is made to creditors
A 'fair and optimum offer is made to creditors' means that there is

•no unacceptable expenditure
•the arrangement cannot be improved upon
•all obligations under the arrangement are achievable.

Companies need working capital and some leeway for investment to keep them competitive and for contingencies such as bad debts

•saying 'no' to unnecessarily high drawings or personal expenditure does not compromise the rescue culture.

It simply requires those running a business to adjust their personal expectations to their current circumstances.

support of a proposal is not dependent upon receipt of a minimum level of dividend.

•Judge each case separately on its merits and the available information.

If the criteria are satisfied accept it on the basis that saving viable businesses will stimulate enterprise and ultimately generate more revenue.

Explore arrangement prospects yet remain fair to those who pay on time


So the next time an insolvency practitioner says, "You won't get a company voluntary arrangement approved by HMRC" or you must pay 100p in £1 in say 3 years", tell them they are wrong.

Wednesday 2 September 2009

Banks hoard cash, lending to business down £8bn

Well who would have thought it? Banks get rescued, money gets pumped into the system (QE) and the next thing you know is, lending to businesses and consumers falls!

In July net lending to non bank businesses fell by a staggering £8.4bn in July. The reason, bad debts and the bank's fear that much more bad debt is in the pipeline.

Vicky Redwood, UK economist at Capital Economics, noted Bank figures that showed a £365m, or 40pc, increase in write-offs on conventional corporate debt and £250m rise in write-offs on unsecured lending in the second quarter.

"While the biggest losses on 'toxic' assets may be behind us, recession-related losses on conventional loans are only just starting to come through," she said. "These losses are likely to erode much of the capital that banks have raised. Accordingly, it is understandable that banks are being cautious about lending more, even though their funding costs have fallen.

So what is going to happen in the next 2 quarters for companies looking for working capital support? I guess more of the same is on the way. Tighter business lending will inevitably lead to more pressure on businesses to cut costs, they'll avoid taking sales where they worry about getting paid, more redundancies will result and ultimately more business closures.

Would it not have been easier to let the banks go bust or agree to rescue them on condition that there was full and frank disclosure on the bad and doubtful debts the banks hold? Or is the banking system's ability to assess bad and doubtful debts so poor that they simply don't know?

Until we know what the bad debts are likely to be, I believe the banks won't lend. How to unpick that impasse is one for the debate up to and beyond the next election.

Going back to SME business lending "Vince Cable, Liberal Democrat Treasury spokesman, added: "It is becoming clear that the Bank's attempts to boost lending are only having a limited impact as banks continue to hoard money. If firms are unable to access credit it is likely we will see even more companies going under, deepening the recession and driving up unemployment."

Friday 28 August 2009

Double dip recession is certainty, not just for UK

The shocking business investment numbers released yesterday give the lie to the "green shoots myth" for business.

Investment by businesses contracted on a quarter-on-quarter basis by its largest amount since 1985 and its looks like the annual decline this year is likely to be about 18 per cent — the biggest fall, outside wartime, for more than a century.

With that backdrop I cannot see a big recovery or even a small recovery in the economy. We have been saying for some time that companies, to survive the recession, have been cutting costs, reducing employment and now its clear they have also cut investment.

With 180,000 companies not paying PAYE and VAT on time (to survive cashflow crises) it is clear that SME businesses are having to "hunker down" for worse times ahead, by cutting investment, costs and employment.

Alongside consumer tax rises, next year we will see the new Government cut costs, public sector employment and investment too. Smart boards are already planning for that and cutting their cloth to fit. Coupled with falling investment as employment falls, less money will be spent by the consumer, so service sector and retailers in particular will see growth grind to a halt again after a recent rise.

So will this lead to the double dip recession or W shaped recession. Nothing is ever certain but that is what I am thinking as each month goes by.

So what of other countries? The rise in GDP in Japan is interesting. Much of this is probably restocking by companies, remember Japanese manufacturing collapsed last year. So good news for Japan ahead? NO.

This week the worlds largest car manufacturer, Toyota, decided to close a US plant and mothball two production lines (one in Britain), this is the first time in its history it has taken such actions. Does the board of Toyota see growth ahead?

Fujitsu announced 1,200 job losses in the UK . This after shorter working hours did not work in the UK. Falling revenues were to blame. No growth there then.

France and Germany also announced growth in Q2 of 2009. I also think this was driven by restocking and the bringing forward of car sales for example. Ambrose Evans-Pritchard of the Telegraph's recent article also points out that Eurpoean credit contracted recently (ie did not grow).

"We should not succumb to optimism that everything has been overcome. The whole world is in recession together and nobody alone can export their way out of the downturn. The recovery cannot last unless there is rise in global demand, and jobs are created, and there is no sign of that."

"The rebound in Germany and France is not sustainable. The state has stepped in to compensate for the private sector. As long as economic growth relies on the state, you cannot talk about durable recovery."

So lets wait and see, but it looks like a fall in GDP is ahead and it will be late 2010 before meaningful recovery in the major economies and then I think growth will be very sluggish.

Wednesday 26 August 2009

Company Rescue Newcastle Open for Business - NEW WEBSITE

KSA Group has offices in Gateshead and Northumberland as well as our London and Birmingham offices.

We know many of our friends and accountancy contacts want a dedicated web site for Newcastle, Sunderland, Gateshead, Middlesbrough and all North East based business and their advisors.

We are delighted to launch http://www.companyrescuenewcastle.co.uk/ for rapid advice for all struggling North East companies.

With simple to follow guides to company voluntary arrangements, administration and pre-pack administration, and creditors voluntary liquidation its the first place to start when looking for help.

Our new site also features a Flowchart and guides section. All guides are FREE to download.

If you are an advisor to a strugggling company, please contact Keith Steven on 07974 086779 or Eric Walls on 0191 4823343.
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