Please visit for confidential help and insolvency advice or email

Wednesday, 30 September 2009

Simple liquidation guides online: BUT. Don't leave it too late!

After a revamp and a tidy up we recently relaunched our dedicated liquidation web site for those directors (or advisors) looking for information on closing their company down.

This is the ONLY website in the UK devoted solely to liquidation:

Written in Plain English this site has been completely revised and is now easier to use. It sets out guides and flowcharts for the liquidation process.

With thousands of companies no longer viable after the worst recession in two generations, many now need to close. BUT the main tip we would give is do not leave it too late.

Why? Well the most common enquiry we receive at KSA Group is how do we pay for a liquidation when there are no assets and no cash??!

Frankly if a business did have assets and cash and does not have them now, when precisely did the penny drop that it would not have the modest assets left to cover liquidation fees? Did these directors run the company into the ground and take every last penny out?

Many callers to liquidate my company are amazed that they cannot wind up their failed company themselves. Given that only a licensed insolvency practitioner can liquidate a company, payment is required!

Please visit for further information on creditors voluntary liquidation, compulsory liquidation and members voluntary liquidation.

Blacks to Close 89 stores, using a company voluntary arrangement?

BBC, Times and Retail Week report that Blacks is cutting 89 stores. None of these news items mention the CVA story (see earlier blog here )

I suspect that the store leases will be determined by the CVA as they have been loss making for a considerable period. This means in plain English, " we cannot wait to get rid of 89 loss making stores where the leases have us tied up in knots"!

Additionally, around 50 head office jobs are to go.

This CVA will be interesting - will it follow the JJB plc and Focus DIY plc model? In those cases the only creditors taking part were the landlords of unwanted stores. A normal CVA would include all or mostly all creditors.

Sunday, 27 September 2009

Blacks Leisure chooses company voluntary arrangement solution (CVA)

Outdoor and leisure clothing retailer Blacks Leisure, (Blacks, Millets and Free Spirit) looks likely to propose a CVA to cut costs, close unwanted stores, make 400 redundancies and seek support of its creditors to survive.

Having put one division into pre-pack administration last week, it is now using the more morally acceptable CVA approach to restructure the main business.

I guess the penny is now starting to drop about company voluntary arrangements and how powerful they are to restructure failing retailers and other viable struggling companies

This year JJB Sports plc, Stylo plc and Focus DIY plc have all put forward CVA's. Stylo's aggressive plan was rejected however.

The article link below to the Sunday Times is worth a quick read. The author says erroneously that CVA's are used "used mostly by retailers that enables a company to agree with its creditors how its debts should be paid and to close underperforming stores".

Any viable company can use a CVA, we are currently working on CVA's for recruitment , software companies, marketing companies, accountancy companies, engineering companies, retail companies, manufacturing companies, e-commerce companies, commercial cleaning companies, packaging companies, window companies etc.

Bingle is a good new simple web tool

Just tested Bingle, a great tool for checking search results on Bing & Google on the same screen

So, if you are maintaining a website for key words you can check both search engines at a glance. Simple!

Monday, 21 September 2009

Insolvency numbers decline in August

The news that formal company insolvencies fell by 23% on July 2009 seems incredible given we are 5 quarters into the worst recession, some say, since the 1930's. Yes the number of failed companies rose 11% on August 2008, but these numbers are hardly consistent with deep recession.

Regular readers of this blog will know that I think the formal insolvency statistics are heavily skewed by nearly 200,000 companies using the Government's time to pay programme for VAT and PAYE, (TTP).

This programme avoids the need, perhaps temporarily for some, for liquidation or administration, as their business can survive and avoid breaching bank facilities by spreading their tax debts over up to 12 months, or even longer in some cases.

If all of these companies do survive, then the insolvency statistics, when mapped against previous recessions, may show a marked deviation from the normal peak of insolvencies after a recession.

What's more, these companies are probably not reducing employment numbers by as much as they would have to, if going through a formal insolvency. Is this having an impact on the overall unemployment numbers which are also behind the recession curve?

Without using insolvency tools it is increasingly difficult and time consuming to reduce employment numbers in a company. By postponing payments of taxes out of future cashflow, directors taking their perhaps rose tinted spectacle covered eyes of the profit and loss issues in their business. We see this every day, if the tax is not due for payment now, directors often think its not due at all! We also hear "I can afford to pay our PAYE and VAT over 6 months", on a regular basis, when in truth there has been no analysis of affordability

One could argue then, that looking at the raw statistics the TTP scheme has been a success for the Government. One wonders though if the companies using the scheme have taken enough steps to cut costs and survive an upturn when it comes. Simply spreading tax payments on a wing and a prayer basis is unlikley to suffice.

Thursday, 17 September 2009

What is a winding up petition? What do we do if we get a Petition?

We have launched a new guide page to these frequently asked questions today.

Click the title above to go to that page.

These are very common questions that we hear every day! It is often because directors have left things too long and creditors have got upset. So, if you or your client's are receiving threats of winding up petitions (usually from irate creditors OR their solicitors) then you are heading down a very rocky road.

You must get help and take action.

What is a Winding Up Petition?

This is the most serious action that can be taken against the company. Usually the company has breached any trust the creditor had, payment deals have failed, cheques bounced and generally the directors have not kept their word. So the creditor reacts with the “nuclear” option.

If a creditor elects to wind the company up, it is serious in its intent to recover the money it is owed and / or to put the company out business.

Got these threats now from Revenue & Customs or trade suppliers??? ACT now and call for help

KSA Group 0800 9700539

Wednesday, 16 September 2009

Unemployment rises again

News today that unemployment continues to rise is worrying but actually not suprising. What does surprise me is that the pace is so low.

Only 24,000 people joined the list in August. I have a view that many more companies are planning more job cuts but are hanging on for green shoots.

The autumn and winter could see a sharp rise each month as we see the economy bumps along the bottom.

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

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."
Web Analytics