Thursday, 30 September 2010
The FT reported today that HMRC says there has been no change in its policy or criteria when offering companies time to pay. However, the paper carries a quote from HMRC saying that it takes “a dim view of debtors who reach agreement with us to pay their tax debts over an extended period and then fail to comply. In such cases they should expect HMRC to take firm action to recover the debt.”
At KSA Group we have had a number of companies contact us in September that have had problems with keeping up payments on a Time to Pay Deal.
We have been able to help a print finishing business in the Midlands that owes £160,000 to HMRC. A pre-pack administration was discussed by the board but a CVA is now the preferred route. A Scottish construction company with debts of £300,000 to tax man and the trade, this is a CVA. A South East based recruitment company, owed £60,000 to PAYE and VAT, again a CVA is now being proposed.
All of these business and many more that we have taken under our wing in September have one thing in common. Their TTP deal was not affordable, after bad cashflow payments were delayed under the deal and HMRC withdrew the TTP deal. Then the HMRC Enforcement and Insolvency Department issued 7 day warning letters for winding up petitions to all of them.
If you foresee any problems paying HMRC on a Time to Pay Scheme then you must ACT. If the HMRC issue a seven day letter or a winding up petition as a way of getting their money owed then your options are limited. Your bank account will be frozen once the bank knows a winding up petition has been served. Prior to a winding up petition you can enter into a CVA which HMRC will generally support. Talk to us to or visit our pages on CVAs
But lets give credit where it is due. Many firms are now much better at managing cashflow than they were in the last recession. Reasons below;
Better IT systems and reporting.
Cashflow is now a higher priority for senior management.
Employees have been embracing part-time working and wage cuts!
However, if you need to manage cashflow more effectively then you should think about a daily cashflow system. We have some spreadsheets that can help. Alternatively you could utilise the services of a good book keeping service like
The local bookkeeper
The FD centre
Wednesday, 29 September 2010
It has been a busy couple of days for insolvency practitioners as a number of companies have gone insolvent. It might have something to do with the rent quarter day being today!
It is believed that the smoking ban has also had a detrimental affect on the mainly community based pubs. In addition, the Anglo Irish Bank which has its own problems, is reluctant to put in more money.
It is not yet clear if some of the Pubfolio pubs will form part of a pre-pack administration.
KPMG, the administrators, hope to sell the company's 18 sites and properties across Scotland.
In a statement KPMG said: “In common with many developers Elphinstone has experienced very challenging conditions in recent times. It has been impacted by the reduction in construction, particularly residential, activity, with demand for development sites dropping significantly with a consequent impact on land values."
Lloyds TSB Scotland Business Monitor has reported an improvement in the fortunes of companies in the region with 30% of companies in the region reporting an increase in turnover in the three months to August.
The Scottish property market did get somewhat overheated, so I expect to see more problems for construction and property businesses. KSA Group have rescued a construction company using a CVA and we have rescued a Scottish recruitment business using a CVA. Many people in Scotland assume that a CVA will not be approved by HMRC. On the contrary the HMRC team that deals with Scottish CVA’s attended the meeting and took part in the process. The CVA vote was 100% in favour and the CVA was accepted by creditors in December 2009 paying 33p in £1.
Tuesday, 28 September 2010
Work to build a 50,000 sq metre Tesco store and shops on Station Yard in Denbigh was due to begin over the summer.
Denbighshire’s leader Hugh Evans said the council still wants to make the project work, adding: “We are committed to supporting this development in Denbigh and are prepared to hold discussions with anyone who wants to push it forward.”
As well as Station Yard, Cathco is responsible for the new Menai Shopping Centre in Bangor which houses several large chain stores such as Debenhams, Body Shop, and River Island.
So this is another construction company that has gone into administration recently. The knock on effects of construction companies going into administration can be quite serious as many other industries and people benefit from construction activity. The construction industry has always been vulnerable to downturns in economic activity as they often cannot react quickly due to the capital intensive nature of their business.
not meeting current standards. They have mainly been found to have misled consumers in their advertising by implying that their services are free.
In addition, customer advisers were found to be lacking in competence and to be providing poor advice based on inadequate information.
The OFT is therefore updating its guidance to take “explicit account of new and emerging unfair business practices”.
Ray Watson, director of the OFT’s Consumer Credit Group, said: “Debt management firms must be clear about their charges and the options available to customers.
In our view it is essential that these firms are brought to book. Many businesses and consumers, who are in need of help, may be discouraged from taking advice to try and solve their problems if they think that any advice is not value for money.
Insolvency practitioners have for years been pointing out that there is a large difference between insolvency work, that is regulated and licensed and by the authorities, and businesses in the debt management sector who are not regulated in any way.
Monday, 27 September 2010
Taylor Woodworking Castleford Limited
Creditors Voluntary Liquidation Notice
Del Stone London Limited
Creditors Voluntary Liquidation Notice
The club have fallen behind in payments over the last 2 years and have been hit by a demand for the balance to be cleared. I suspect that they were threatened with a winding up petition!
Dundee survived going into administration in 2003 with debts of £23m after fans' group Dee4Life helped raise funds.
Calum Melville, the club's director, told a Sunday paper that the HMRC used the words, 'wanted to bring Dundee to account and bring the rest of Scottish football to heel'.
If this is true then we can expect HMRC to start getting serious with overdue tax and make examples of high profile businesses! The time to pay scheme must be adhered to and any attempts to renegotiate terms are being rejected.
Friday, 24 September 2010
Read the case study > http://www.companyrescue.co.uk/London-based-retailer-CVA-casestudy.aspx
Other London companies that we have helped can be seen on our case studies pages at http://www.companyrescuelondon.co.uk/London-CVA-Case-Studies.aspx
Lloyds Banking Group are under pressure to repay loans from the taxpayer. However, I expect to see much more of this sort of action if patience starts to run out with commercial property owners. Especially, if values start to soften a little.
Targetfollow have said they are taking legal advice on the matter.
Thursday, 23 September 2010
There is an old saying; " Turnover is vanity, profit is sanity and cashflow is reality."
Fill out the cashflow and use every day to see "where you are" and what problems lie ahead. Plug in the dates that each customer that owes you money should pay you, then you have a guide to use for debtor collection
Our daily cashflow model will at a glance point out any major problems that lie ahead. It will also help with the following;
Debtor collection: are your customers taking longer to pay you? If so why is this? Best thing to do is to find out by asking how things are going with ALL of your customers, you can assess your own debtor collection dates, find out how they are doing and market to them. And then update the daily cashflow, it should show when customers are likely to pay you.
Cost cutting: Good cashflow management goes hand in hand with cost cutting, when you see daily figures it helps focus the mind! Please take a look at our cost cutting tips on our site.
The administrators from PricewaterhouseCoopers are looking for a quick sale of Archial as a going concern.
It isn't clear exactly how much tax was owed, but HMRC will generally listen sympathetically to requests for VAT and PAYE owed to be spread out over time under the HMRC Time to Pay Scheme. However, on corporation tax they are less flexible.
If you are having problems with paying tax then talk to us and we can talk to HMRC for you.
Wednesday, 22 September 2010
We do not have any further details at this stage but will keep you posted. The petition to wind up the company follows an investigation carried out by Companies Investigations branch of the Insolvency Service. Selling plots of lands from a telesales operation in Spain was always going to attract the interest of the authorities. No doubt some people have not had a satisfactory return on their investment!
Receiver, Public Interest Unit, 2nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN, or alternatively people may ring 0161 234 8531.
ACT NOW, do not leave it until it is too late.....
Step 1 – Find a Liquidator. We can help as we have a number of insolvency practitioners. Uniquely to KSA, YOU can speak to one of our IP's TODAY, if you call now on 0800 9700539. It is not possible to liquidate your own company, as the law just doesn’t allow it.
Step 2 - Pass details of any company assets over to the proposed liquidator, and our valuers may get these valued. This will independently set the value of the assets for going to auction, or you may wish to buy them.
Step 3 – Let us know who the company owes money to (creditors). KSA will write to them all to let them know what’s happening and tell them that a creditors meeting will be held. This will quickly remove creditor pressure from YOU and they will start talking to KSA instead!
Step 4 – Give us all company information and books and records. KSA will give you a list of all the information we need in order to liquidate your company. This information will allow us to prepare the necessary reports for the creditors.
Step 5 – A company director needs to "chair the meeting of creditors". In actual fact the liquidator will run the meeting but you or one of your directors must attend it by law. The meeting of creditors is usually a simple short meeting with no one attending.
Call us now to talk through the issues and get free advice, 0800 9700539. If you're based in the South East call 020 7877 0050. Based in the north? Call 01289 309431 or 0191 483 343.
What does liquidation mean and how does it work? How to people go about winding up a company? What are the risks for directors of wrongful trading? Can I be a director of another company, if we liquidate this company (yes)?
Get more information and answers to these questions by calling or click here
Tuesday, 21 September 2010
The liquidators, Geoffrey Martin and Co, said yesterday that local shoppers and internet shoppers, had been affected. He urged any creditors to come forward before the meeting.
For a guide to the liquidation procedure please take a look at our site.
Now that the company is fighting to survive, some of the bondholders, mostly hedge funds and investment banks, could call in their debt and force the company into insolvency. These bond holders have walked away from negotiations saying they do not get enough out of the planned restructure. The exit of the bondholders comes after the Court of Appeal in May upheld a decision by the High Court to give RBS precedence over bondholders in the ranking of creditors.
Under the plan, major creditors such as the Royal Bank of Scotland would be paid with funds from Cattles' Welcome Finance subsidiary, leaving little for bondholders, whose debt is tied to the parent company. The proposed deal aims to take the company private after paying 1p per share.
We would expect that this could result in serious impairment charges for the banks and a serious headache for the bond holders. With a total outstanding loan book some £200m less than senior debt and bonds, there is surely a major deficiency ahead.
Monday, 20 September 2010
Winding up a company
Keep looking on this blog for new pages as we are adding new ones all the time.
The disqualification comes as the result of an investigation by the Insolvency Service which found the Beanscene director had taken £189,000 from the company to pay back a loan while it was technically insolvent. Richardson, from Pollokshields, Glasgow, has now been told he cannot take part in the running or formation of a company unti l September 2016.
The married father-of-two also has to resign his directorships of other companies.
An Insolvency Service spokesman said: "The disqualification of Gordon Richardson should offer the public reassurance. The Insolvency Service will not hesitate to use its powers to remove dishonest and reckless people from the business environment."
The message here is clear!
Even if the company owes you money you must not create a potential preference for any creditor. If the company is technically insolvent then you must act reasonably and treat all creditors equally, even if your are a creditor yourself. For more details on how to find out if you are technically insolvent and avoid an action for wrongful trading please read our extensive guides on our website
Friday, 17 September 2010
Whatever happens the HMRC will need to collect taxes it is owed eventually. Apart from tax evasion and inaccuracies of its own making the time to pay scheme (TTP) will no doubt be looked at.
Thousands of businesses have been given time to pay their VAT and PAYE that they owe as the government would rather see them pay something rather than go under. I suspect that HMRC will be far less willing to give companies TTP schemes in the future and will be tougher in enforcing any non compliance. In the end HMRC are better than most at collecting their debts... A winding up petition tends to force the issue. If you are threatened with a winding up petition by a creditor then you need to take immediate action as once served your options are more limited.
Thursday, 16 September 2010
R3 have based their statistics on companies with a turnover £50,000 to £1m. Their research was conducted amongst 301 firms which were started in the 90s or 2000s, with over 33% stating that their business relied primarily on those public sector contracts.
So what next? Lets hope that HMRC will not want to see these businesses going into liquidation but would rather they restructured their debts and continue to trade. If your business is likely become insolvent then make sure your know your options.
Wednesday, 15 September 2010
"Richard Philpott, from KPMG Restructuring, said: “The business has historically been engaged in long term contracts and its pipeline of future work has suffered from the inherent uncertainties surrounding various public sector projects. " he went on to say, “During the last 12 months it has also suffered a significant drop in turnover, leading ultimately to the cash pressures and trading difficulties faced by the business today.”
KPMG also said that they were looking to trade the company whilst in administrative receivership.
So what is administrative receivership? It is not the same as administration
A receiver is appointed by a floating charge holder – this is typically a bank.
So what does this mean?
1.The company requires finance for its activities and borrows from a bank (or other secured lender).
2. In consideration for providing the loan the bank requires security. Normally the company will sign a debenture with a fixed and floating charge. This allows the bank security over the assets of the company.
3. If the terms of the agreement are breached or the company does not conform to the bank's wishes the charge holder can:
a) Appoint investigating accountants to ascertain how secure or not the bank's debt is and what is the best route forward (not always receivership).
b) Demand formal repayment of the loans without notice.
c) Appoint a receiver to administer and receive the company's assets in this case KPMG
4. The receiver has a duty to collect the bank's debts only, he/she is not generally concerned with the other unsecured creditors or shareholders' exposure. So unfortunately the non secured creditors are unlikely to receive anything much.
There are other options available such as a company voluntary arrangement (CVA)
Funnily enough we rescued a building company in the North East using a CVA.
For details of how this building company was rescued please read our case study; CVA Rescues Building Company in the North East
Unfortunately, there is no doubt that with large public sector jobs lost we will see unemployment rise further. According to R3, many businesses feel they are heavily reliant on public sector contracts which could lead to further jobs lost in the private sector . If you think that your business is at risk then you should put plans in place now!
Talk to me and I can guide you through your options. For detailed guides please take a look at my company rescue site.
Tuesday, 14 September 2010
Of course, it may be that they can pass on their higher costs to the consumer but as the market is so competitive I expect that many of them will have no choice but to try and absorb the costs. Future spending cuts will certainly also dampen consumer demand.This will mean that some will not survive.
However, terminal insolvency is not necessarily the end result. Struggling retailers might consider using a CVA if they become insolvent due to the higher cotton prices. If the cotton prices fall, and the profits increase, then our CVAs have a "profit ratchet" in them to allow creditors to receive more money over the lifetime of the CVA.
Monday, 13 September 2010
After a period of steady recovery and catching up with legacy debts from the boom period, many recruiters have only just got themselves back to profitability and we learn that a recent fall in vacancies could lead them back to recession in 2010-11. So do Recruiters face a double dip ahead?
With hundreds of recruiters in time to pay deals with HMRC, according to Begbies Traynor's Red Flag Alert, KSA Group is seeing a marked increase in enquiries from the recruitment sector. We have successfully turned around over 20 recruitment firms including a £3.5m turnover Scottish based recruitment business.
To enable recruiters to learn quickly all about the many issues and options to restructure their business, KSA has launched a unique 96 page guide to turning around or restructuring your struggling or insolvent recruitment company.
Learn the trade secrets of the UK’s leading SME turnaround advisor and company voluntary arrangement expert; Keith Steven. His team can rapidly take away cashflow pressures and get recruiters focused on the job of recruiting NOT firefighting.
Friday, 10 September 2010
Search and Secure Limited - Meeting of creditors
A third of businesses said they were "over reliant on public sector contracts". This 'worst case' scenario would mean 148,000 businesses could be placed into corporate insolvency.
As per my previous blog, I suspect a fair few of these will be in the North and the Midlands.
Many people have asked "where will the axe fall?" Most observers are interested in which services and benefits will be cut. However, as the cuts draw nearer it is becoming apparent that certain regions of the country are going to be hit harder than others. Looks like the North and the Midlands will be hit hard as past governments have tried to stimulate growth in the region by increased spending there.
Manufacturing, traditionally a strong industry in the North and Midlands, has seen a bit of a renaissance of late but this is unlikely to be able to replace the money in the economy that is lost through public sector cuts.
If you are based in the North and rely on government spending for your business, now might be the time to seek advice..
Company Rescue North East
Thursday, 9 September 2010
A Scottish based recruitment business had seen its turnover fall from a peak of £6.75m in 2007 to c. £3.5m in 2009/10. The recession caused this sharp decline in sales as companies stopped hiring.
Most particularly the business had suffered from bad debts from customers linked to the construction industry.
If you listen to critics in Scotland they will tell you that no CVA’s are supported by HMRC! On the contrary the HMRC team that deals with Scottish CVA’s attended the meeting and took part in the process. The CVA vote was 100% in favour and the CVA was accepted by creditors in December 2009 paying 33p in £1. The business continues to trade well.
Read our full case study on how KSA Group used a CVA to rescue a recruitment business
This particular building company encountered financial difficulties because of the costs incurred in the diversification of the business, in particular into electrical contracting.
The financial status was difficult with trade creditors owed some £40k and HMRC £110k. No creditors had started legal action and Employees’ claims in insolvency would have amounted to c.£100,000. So making people redundant was unaffordable.
The business had an overdraft facility of £150k with RBS. This bank is well known for blocking pre-pack administrations where the business is sold to the same directors.
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
Italian Cash and Carry Limited - Meeting of Creditors
Wednesday, 8 September 2010
HMRC are planning to investigate more husband and wife type companies and will no doubt be cracking down on small business people that they feel are evading tax. As the only source of income may be the employer company then this could in turn place pressure on the business cashflow. If directors are found to be breaking the rules then the HMRC are likely to be firm in collecting unpaid tax. This in turn could push businesses into trouble.
If HMRC are threatening actions to collect taxes, or if the business has unpaid PAYE, VAT, corporation tax and is threatening legal action to wind up the company then directors should act quickly. Contact KSA Group on 0800 9700 539 if you need some advice on dealing with company tax problems.
Tuesday, 7 September 2010
Disruption to major tube services might push some businesses over the brink. If meetings are delayed it will mean that business might be put on hold.
The London chamber of commerce estimates that London businesses will lose £48m. 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? Then please take a look at our site for struggling London businesses
Unfortunately, for unsecured creditors ( trade creditors ) are unlikely to get anything back from the administrator.
Very rarely can administrators sell the assets and the business to generate sufficient monies to pay the bank (usually the secured creditors) in full, plus the unsecured creditors. What is more they will need to get paid their fee!
What about employees? Well it is, on the whole, bad news. The administrators have to take on the employee's rights after 14 days of being in office (as administrator), As such the administrators want to sell or close the business before they take on that risk.
So the administrator(s) will look at which parts of the business are viable and which should be closed. Then they will make the employees, who are surplus to requirements, redundant as quickly as possible.
Employees made redundant by an insolvency practitioner should visit our employees guide page.
If you are an employee of Connaught Group then please take a look at our guide on employee rights in an administration.
Friday, 3 September 2010
Businesses from banks, to accountancy firms and hairdressers are interviewed to build this survey.
If the downward trend continues we will see contraction in the economy. Services account for nearly 2/3rds of the economy so the next survey will surely be watched carefully by Hawks.
KSA people talk to scores of businesses across the UK everyday and our view is that debtor days are rising, banks are (generally) not lending and cashflow is tight for many small to medium sized companies; if sales fall too this could be a perfect storm for many SME's
Wednesday, 1 September 2010
However, if you fail to act properly and reasonably by continuing to take credit KNOWING that the company cannot repay it, then you may be at risk of personal financial loss. If you do this then you risk being accused of wrongful trading, as defined in the Insolvency Act 1986. If the business is subsequently wound up under compulsory liquidation or creditors voluntary liquidation then the Official Receiver is duty bound to investigate the actions of the directors. If you trade ‘wrongfully’ then you may be personally liable for the company’s debts.
So, voluntary liquidation is the most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don’t act to put the company into liquidation.