Tuesday, 30 December 2008
So, here is my last blog of 2008, I guess most won't read this until 5th January when most people are back to work and facing the dark days of January. I hope you had a good break, a relaxing time with too much food and drink and now realise, like me, that some exercise would be a sensible idea!
Over the week since my last blog Christmas has come and gone, sales have started, many retailers have failed with many more teetering on the brink.
Retail disaster over Christmas? If you need to close non performing retail outlets, consider Pre-Pack Administration or company voluntary arrangements.
This last fortnight saw fashion retailer USC pre-packaged through administration back to previous owner Sir Tom Hunter; Whittards sold to a private equity company; Zavvi enter trading administration; Officers Club in a pre-pack; Adams on brink of Administration and so on.
There will be many more, today I took a call from a distribution company, its biggest customer? TNT, it was doing most of it's work as a subcontractor to TNT and now it has told them there is NO WORK for the foreseeable future as the TNT depot and order book is virtually empty!
Big name retail failures take the headlines but this small Manchester company won't survive January without work, the MD will probably lose her home and the staff their jobs.
This is the flip side of the big failures and over the next 3 months more than 300,000 people will lose their jobs, as a result of the crash of 2008, in SME companies.
Mind you having been to the "January" sales on Saturday the question seems to be "recession what recession"? Or are people just buying bargains and now, and will not spend unless retailers give them a big discount in future? Time will tell.
Once again happy new year to one and all.
Tuesday, 23 December 2008
As we draw close to the witching hour of rent and salary payments many retailers may not be able to see past 29th December. That's the day that many have to find 3 month's worth of rent and pay December salaries. If the big insolvency boys are to be believed there will be up to 15 major retailers going into insolvency procedures (typically pre-pack administrations) over the festive period or beyond.
For the management and staff involved this will be a frightening time: will I get my redundancy? If so how much redundancy am I entitled to? How will I pay the mortgage? Will I get a new job?
Hardly the stuff of tidings and joy for those people. Expect to see 100,000 plus people lose their job in January 2009, making this the worst month since the recession of the early 90's. But this will only be the start of much higher job losses for a period of up to 12 months.
Some of the at risk retailers in my view include: Zavvi, DSG International (Currys), Whittards of Chelsea, Ponden Mill and Clinton Cards.
To my regular readers ignore the gloomy prognostications and have a great time over the break.
KSA will be closed from lunchtime today until Monday 5th January but anything urgent please cal me on 07974 086779 or email firstname.lastname@example.org
Wednesday, 17 December 2008
The old fashioned way is liquidation or of course administration can be used. Alternatively we can terminate leases with the directors remaining in control, without terminal insolvency and this can often leave a healthier business to recover.
See this new guide here to terminating a lease in a company voluntary arrangement or CVA
If you have a client or business that needs to shed property or face unnecessary closure, call Keith Steven now on 07974 086779.
Friday, 12 December 2008
Why? Well let's look at look at two key issues for General Motors UK Ltd (the actual trading company in the UK):
Number 1: look at its balance sheet: at 31st March 2007 it had an insolvent balance sheet to the tune of (£396m) yes negative to £396m. What does that balance sheet look like if the supporting parent goes into Chapter 11 in the US? INSOLVENT.
Number 2: look at its credit rating - ZERO. So its highly likely that suppliers to General Motors UK Ltd cannot get any credit insurance or indeed factoring /discounting of their debts. So as the board of those suppliers do you look at the news, consider the issues and STOP supplying GMUK? Or do you keep supplying?
Incredibly complex decisions need to be made by hundreds of suppliers to Vauxhall and other car companies over the next few weeks.
Wednesday, 10 December 2008
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The people behind www.companyrescue.co.uk are KSA CompanyRescue; we have helped over 500,000 people since 1994. Our website is designed to offer high quality and useful advice to businesses in distress. KSA have been in turnaround for over 13 years and have directly been involved in rescuing all sorts of companies from £nil to £500m sales. Over 300 companies have been helped directly by KSA in that time.
“Keith Steven of KSA is the leading expert in CVA’s in the UK, I have absolutely no hesitation in recommending you and you can give my telephone number to any potential clients!”
Quote from a chartered accountant, former 3i senior manager and now entrepreneur; Mr Stephen L, who used us to restructure one of his companies.
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Tuesday, 9 December 2008
Common questions we are hearing on our help lines
What are my rights if I lose my job?
What are my rights if the administrator continues to employ me?
What are my rights if I am a subcontractor?
Please visit this new page now http://www.companyrescue.co.uk/company-rescue/guides/redundant-employee
Or if you prefer visit the very good site at DBERR (was DTI)
If you want any other topics covered on our websites please ping me an email at email@example.com
Monday, 8 December 2008
I thought a simple link page to the administration guides we have on our website might help people get the answers quickly, please click the link below
Last week saw the following substantial companies enter the administration procedure.
JA Magsons - York - toy wholesale
Fitzgerald Lighting - Bodmin - lighting manufacturers
London Scottish Bank plc - London - sub prime lending
Bowie Castlebank Ltd - Glasgow - multiple retail
Unoco Group - Nottingham -Education sector
Pettifer Construction Limited - Warwickshire - construction
These well known names are just the tip of the administration iceberg, unfortunately thousands of jobs were lost last week and we will see administration numbers and job loss numbers soar as the new year starts.
Tuesday, 2 December 2008
Well, you would be partly correct with that perm any one of 4 approach!
Of course directors have a legal obligation not to trade wrongfully or to trade when the company is insolvent and they know it has no reasonable prospect of paying its debts as and when they fall due. Witness the directors of Woolworths last week having to put the company into administration because cashflow was so bad that it could not see how to pay wages and creditors.
There are many stories of banks forcing companies into administration or receivership because the company was so distressed the banks stepped in try and control things. So yes bank's often do take part in the decision to enter insolvency (and not just their own)!
With HMRC responsible for some 60% of all winding up petitions (obviously before being told to become the next national bank for SME's) one could argue that aggressive creditors control whether a company goes into an insolvency procedure.
But there is another force at work here. Many companies use factoring, invoice discounting and trade insurance to assist with working capital in their business. In the last 2 weeks I have been planning to write this piece because it is the TRADE INSURERS that are now controlling the future of thousands of UK companies SME or large companies.
If the trade insurer removes cover on a debtor company, your company could suffer rapidly. Last week I met with a company that had suffered a £300,000 hit to cashflow because the factoring company it used had clawed back advances against General Motors invoices.
This week I am reliably informed that suppliers to Ford have had a similar unilateral decision forced upon them. Indeed this was from an ex client who had successfully exited their CVA. Perhaps this could be rectified by Ford Motors paying in say 30 days or less, if not this could undo 3 years of hard turnaround work.
Rover was brought down by trade insurers refusing to cover their risk, Woolworths faced the same ignominy last week, others will see the same thing happen to them and usually to one of their larger customers.
Cascade this down through the supply chain and big problems lie ahead even for profitable companies.
So the answer to my question - Atradius, Euler Hermes and Coface? If you don't know these names you soon will.
Monday, 1 December 2008
People are asking me the same questions every day now, "what are sales like for other people? "have they fallen off a cliff"? "I am desperate for cash, my customers are slowing down payment, what can I do"?
These are of course anecdotal and based upon the micro business issues they face, but today the bigger picture started to emerge. Sales HAVE fallen off a cliff, read the excerpt from the BBC news site today below
Record decline in manufacturing
Collapsing new orders have been blamed for the weak figures. British manufacturing shrank in November at the fastest rate since the figures began being collected in 1992. The Purchasing Managers' Index fell to 34.4 from October's figure of 40.7, which was both the lowest level and biggest fall seen on the index. The fall in the figures was based on a collapse in new orders.
Alan Clarke at BNP Paribas described the index as being at "absolutely horrific levels".
"We are already seeing a pretty rapid pace of contraction in hard manufacturing activity in the UK and it is going to get even worse.
Worrying times indeed, I now forecast that cashflow will reach critical levels in the weeks after Christmas, with factory and business shutdowns its easy not to pay your creditors, trouble is your customers won't be paying YOU either.
So manage cash, costs and spending NOW.