Pre Packs and CVAs in the Press

Read accountingweb.co.uk's review of the  CVA versus Pre Pack debate on the 8th May.  There is already a lively debate on the page itself!

In essence, as we said before, it is very much "horses for courses" and  CVAs and the Pre Packs have their place.  Both are powerful rescue techniques that save jobs and keep businesses trading.  Yes, Pre packs have been abused in the past and are sometimes perhaps pushed where a CVA would have been a fairer deal for all concerned.  Also there is always a perception of pre packs by creditors that a deal has been done behind their backs and people who lose money will often feel they have been treated unfairly.

The most important thing to do is make sure that a professional firm  is appointed to advise on ALL the options.

If you want to talk about rescuing your business through either a pre pack or a CVA then call us on 0800 9700539

Hotel opened by Easyjet founder has gone into administration

Ernst &Young has been appointed administrators of Glasgow eH (Trading) the operator of easyHotel in Glasgow City Centre.  The hotel has now been shut.  The hotel's rooms were priced at just £25 a night and was a "super budget" option.  The hotel was converted from a 1970s office block which cost £6m.  A quick back of the envelope calculation has shown that this was always going to be a struggle.

I am going to make some assumptions here;

125 rooms with 90% occupancy at 365 days a year!  = approx £1m a year in revenue  ( this is very optimistic occupancy rate)  The return on capital assuming running costs at £300k pa is 11%  so it would take 9 years to get your money back!  I have no idea how much it cost to buy the site.

Having said that the new owners of Travelodge are convinced there is a strong market for budget hotels in the UK and are investing some £200m over the next few years.  But even Travelodge is £50 a night.

Fiona Taylor of Ernst &Young said: "We are currently undertaking a full review of its financial position, but an immediate lack of funds has necessitated the closure of the hotel and the resultant job losses.

The administrators said the insolvency move does not affect its parent, Glasgow eH Limited Partnership, which owns the site of the former Drummond House, nor the wider easyHotel chain.

What is pre pack liquidation?

Pre pack liquidation is a bit of a misnomer.  

A pre pack is the term normally used where the business and assets are sold to a third party or "newco" and the "oldco" is put into administration in one movement.  When people refer to a pre pack liquidation they are most likely thinking of a phoenix.  There is no simultaneous transaction.  To read the differences see our page on pre pack liquidation.

There is so much misunderstanding of the insolvency world.  So for a clearer understanding read our insolvency advice site at www.companyrescue.co.uk

Daniel Contractors in administration rumours

Update:  Daniel Contractors have had a winding up petition advertised yesterday. This will mean the bank account will be frozen.

A report in the Sunday Times said that Daniel Contractors, and engineering business based in Warrington, with a workforce of 1,300 was likely to go into administration.  The firm would neither confirm nor deny the rumours.   Deloittes were names as the likely administrator.  A spokesperson for construction credit rating agency Top Service said the firm had been on its radar for a while “due to increasing number of adverse reports from our customers and the mounting County Court Judgements (CCJs)”.  However the total value of the CCJs amounts to £111k but the most recent was lodged on the 8th May.

This could just be a temporary cashflow problem which they can trade out of, but if it is not, the most likely next step is a notice of intention to appoint administrators.  This will protect the company against any further legal actions against the company but they will have a maximum of 20 days, assuming one extension is allowed, before administrators will need to be appointed.


Daniel Contractors are involved in  laying large pipelines and the hire of plant and equipment - The main sector they work in is Oil and Gas.

Like many large engineering firms it suffered in the recession and lost some £100m in sales, margins have been squeezed but added to this its Chief Executive also died not long ago.

Recent accounts show that the firm made £117.4 million in revenues, with pre-tax profits of £1.3 million for 2011.

Turnaround from Local, National, and International perspectives

Date: Wed 12 June, 6pm

Venue: The Waterhouse Chamber, The Town Hall, Blagrave Street, Reading, RG1 1QH

Cost: TMA Members: FREE, Sponsors: £40.00 (after allocated free places),
Non-Members: £40.00

This event, part of the regional activities of the TMA (UK), will focus on the local, national and international turnaround and restructuring marketplace.

Informing us of the local situation will be Pitmans LLP, the largest law firm in the Thames Valley area. With two offices in Reading and one in the City of London, Pitmans have a long and impressive track-record in Turnaround, Restructuring and Insolvency; as such they are in prime position to present their overview of local turnaround conditions, cases and concerns.

KSA Group Ltd are a nationwide firm of turnaround, restructuring and company rescue specialists, with regional offices and representatives as far afield as Edinburgh, Berwick upon Tweed, Gateshead, Birmingham, Bristol and London. Their operation is supported by a vast online presence of websites and internet response mechanisms, receiving literally hundreds of hits per-day from troubled directors and advisors across the country. As such they are able to report on what is happening in the national turnaround marketplace.

Bryan, Mansell &Tilley LLP are specialists in International Turnaround situations and who better to report on the global situation than Alan Tilley, an internationally renowned figure with the TMA and the industry as a whole. Alan will speak on the current trends, challenges and cases across the globe. The presentation will also contain a brief review of the TMA Europe Conference, which will have taken place in London on 6^th & 7th June, and cover the newly launched EACTP (European Association of Certified Turnaround Professionals) accreditation programme.

There will be an opportunity for questions and answers following the presentations.

After the conclusion of the formal part of the event, attendees are invited to enjoy some quality networking time and hospitality will be provided by the event sponsors – KSA Group Ltd.

The event speakers

Suzanne is one of the leading insolvency and turnaround specialists in the South East dealing with all aspects of corporate and individual insolvency, restructuring and refinancing including, but not limited to, contentious and non-contentious issues arising in administrations, receiverships, liquidations (solvent and insolvent), bankruptcies, voluntary arrangements, and security issues, and in restructuring and refinancing projects. Suzanne is a licensed Insolvency Practitioner.

Chambers Guide to Legal Profession for 2010 states that Suzanne has a: "high-level skill set and commitment to meeting her clients' needs". Specialist interests are Debt Recovery, Dispute Resolution, Insolvency & Restructuring, Automotive Sector, Invoice Discounting, Construction & Engineering. Suzanne is a graduate of Middlesex University. She trained and qualified as a commercial litigation and insolvency solicitor at Pitmans, joining in 1994

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.

Drawing on case studies from across the UK, Keith will paint a picture of the national scene and illustrate the situation with examples of companies currently being ‘rescued’ or in the ‘work-out/post-restructuring stage. The combination of regions, sectors and corporate ‘tangles’, plus the diversity of rescue options used by KSA Group, should ensure an educational and entertaining presentation.

KSA Group is one of the leading turnaround and insolvency specialists in the UK, with offices and representatives in London and across the country. Their priority is company rescue, not corporate closure. The company developed the UK's first on-line turnaround and support site,www.companyrescue.co.uk, with over 1,500 pages of free information, PDF guides, FAQ's, flowcharts and case studies - information freely available, and of great value, to accountants, lawyers, bankers, advisors and of course directors of /investors in struggling businesses.

KSA Group is delighted to sponsor this evening’s Thames Valley event and is proud to be a Corporate Sponsor of TMA.

Alan Tilley is founding principal of Bryan, Mansell and Tilley LLP.  He has over 20 year’s expertise in operational and financial turnaround and restructuring, managing the complex issues in preserving enterprise value while operating in the zone of insolvency. He is a frequent speaker on cross border European restructuring and has written several articles on the subject.

He is the 2008 recipient of the TMA International Chairman’s award for outstanding service to the international turnaround and restructuring profession and Insolvency & Rescue UK Turnaround Manager of the Year 2010. He is co author of the Institute of Chartered Accountants best practice guideline on Turnaround’s. His hands-on and Board level experience in finance and operational management makes him equally at home in large and small companies, in distress and performance improvement situations, in M&A due diligence and in stabilising new acquisitions.

If you would like to come along to the event as a Guest of KSA Group get in touch with Robert Moore Please email robertm@ksagroup.co.uk or call 0207 877 0050

Punch Taverns restructuring talks in difficulty

Punch Taverns have been holding talks with its debt holders, which according to insiders, have reached a stalemate. This could lead to the business defaulting on its debts and going into administration.  The group owes some £2.4bn spread between 2 divisions which owns 4000 pubs.  The parent company is paying about £2m per month to stop the divisions defaulting on the debts.

The plan needs the approval of three-quarters of creditors for the restructuring to be implemented. Punch has said that it wants an agreement to be reached by the end of next month, or the company could go into default.

Given the size of the company and its dominance in the UK pub market it is likely some sort of deal will be thrashed out.  Punch have previously said that a pre pack administration would not be in the interests of the company or its shareholders.

A company source told the Mail on Sunday that; ‘We are still trying to achieve a solvent restructuring.’

But one key shareholder said: ‘The company could end up being forced down a pre-pack route, which would wipe out the shareholders, including many employees.’

Punch recorded a pre-tax loss of £16.7 million in the six months to the end of March.   Like so many others pubs have found themselves under increasing pressure from supermarket discounting, taxes and low consumer spending.

If your pub business is struggling why not read our guide on how to rescue your pub, hotel or restaurant business

The guide covers:

• Is my pub or hotel company insolvent?
• How can a pub get a time to pay deal with HMRC for PAYE and VAT?
• What is a Company Voluntary Arrangement and why it is a great rescue tool
• How to cut costs in your business
• How to deal with a winding up petition from HMRC.

Construction output down to levels last seen in 1998

Construction output in the UK shrank by 2.4 per cent in Q1 of 2013, falling to its lowest level since 1998.

The decline in output was mainly due to a  sharp fall in new work, especially in the public sector.  There has been a small rise in repair and maintenance work for private housing.  So sounds like the big infrastructure projects will be delayed until nearer the election so that it can flatter the GDP figures...

Construction output, is now 6.5 per cent lower than for Q1 2012.  Construction is down 20% since 2008 when there was a mini boom after the credit crunch.

The UK’s economy has contracted by 2.6 per cent over the same period.

The amount of new housing work available declined by 4.1 per cent and the amount of infrastructure work by 7.5 per cent. Housing repair and maintenance work by public corporations declined by 3.2 per cent, against a 0.4 per cent rise in output for the private sector in this area.

Meanwhile Experian has published statistics that show the insolvency rate among businesses with 25-50 employees fell by 0.07 per cent from 0.24 per cent in March 2012 to 0.17 per cent in March 2013 – almost back to the levels seen in March 2007 of 0.16 per cent and nearly half their peak of 0.35 per cent in March 2009.

Insolvencies also fell by 0.07 per cent amongst businesses with 11-25 employees, down from 0.25 per cent in March 2012 to 0.18 per cent in March 2013. This represents a fall of about 30% in the insolvency rate overall

If you strip out the effect of insolvencies in the construction sector then the rest of the UK businesses are holding out very well.

For insolvency advice visit www.companyrescue.co.uk