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Thursday, 30 June 2011

LLoyds Banking Group to cut number of suppliers

Lloyds Banking Group have announced 15,000 job losses by the end of 2014 which is obviously very difficult on those who will have to be made compulsorily redundant. 

However, There is also troubling news for Lloyds' suppliers, since - as part of the plan to take £1.5bn of annual costs out of the bank - it is reducing the number of businesses that provide goods and services to it from 17,000 to less than 10,000.  This is likely to hurt the smaller businesses that supply the bank.

With public sector strikes on today and Greece in trouble,  it looks as if the lending boom and subsequent bust is having a delayed effect which was not originally envisaged!

Wednesday, 29 June 2011

Late Payments! How to improve debtor collection

As many readers will know a business can be making lots of profits, on paper, but can still fail if they don't collect cash.  The converse is also true in that some business are making losses but still have lots of cash.  Mind you, these tend to be large companies with lots of funding and/or profits from previous years.

So what can we do about it?  You need to collect in the debts!  It sounds obvious but we see lots of companies that are owed money and have allowed debts to build up.  Often the management have always felt comfortable with their clients slow payment in the past that it became expected and then they stopped paying altogether.

In these tough times you need to get in the cash!  or you could face insolvency and go into liquidation

Please look at our updated page on debt collection and late payment

Tuesday, 28 June 2011

TJ Hughes to go into administration (update)

Update 30/06/2011;
Liverpool-based department store group TJ Hughes has appointed Tom Jack and Simon Allport at Ernst & Young as joint administrators.

Previously we said;

TJ Hughes, the department store, is the latest retailer to seek protection from its creditors by filing an intention to appoint administrators within the next 10 days.  We do not know who the administrators are at this stage but it is understood it could be Ernst and Young.

The department store is based in Liverpool, has 57 stores and employs 4000 people.  Earlier in the year it was reported that credit insurance was refused to its suppliers and so the firm was bought out by management from its private equity owner Endless.

This is another sorry tale of a retailer failing.  However, it does appear that consumers really are now cutting back spending quite hard as opposed to just talking about it.   The government needs to think of a way to stimulate growth in the economy as another way of reducing the deficit.  Consumer spending, investment, and confidence are all part of the mix!

Monday, 27 June 2011

Jane Norman in administration?

Again I find myself blogging on another retailer likely to go into administration! Jane Norman. It doesn't have to be this way.  I know that sales have fallen on the high street in May and June but early action can avoid a more expensive administration process.  A CVA has much the same powers as administration for unsecured creditors.  However a secured creditor such as bank has the power to appoint administrators.  So of course we cannot comment on individual cases.

According to Accountancy Age  Jane Norman is likely to be sold in a pre pack administration with Zolfo Cooper lined up as administrators. 

Jane Norman employs 1600 people and it closed its 90 UK stores over the weekend.

We have already taken  calls from worried suppliers this morning.  If you are a supplier please look at our pages for suppliers

Birmingham Hyatt Hotel in Administration

One of Birmingham's landmark hotels, The Hyatt in the city centre, went into administration on Friday.  The administrators are Ernst & Young and they said in a statement that the hotel will continue to trade as normal while a buyer is sought.  According to reports, it is understood that the owners, the Bhatia family, who own the Waldorf in London, also in administration, will look to buy one or both of the hotels back from the administrators.

Of course, the Bhatia family will need to pay the market price for the hotels otherwise they would fall foul of s238 of the Insolvency Act - Transactions at an undervalue. 

The Birmingham 24-floor hotel has 319 rooms and sits next to the International Convention Centre and Symphony Hall.  It hosted the Tory Party Conference last October.

Friday, 24 June 2011

KSA Group Insolvency Notices

Bridgestone Surveyors Limited in Liquidation.

See the full notice here;

Phase Building Services Limited in Liquidation

See the full notice here;

Habitat stores in administration

Habitat has put 30 of its stores into administration with the other 3 in central London being sold to Home Retail Group, the owners of Argos and Homebase.  The deal is reported to be for £24.5m.

Habitat has said that the 30 stores would continue to trade as normal for 6 months while the administrators conducted talks with potential purchasers.

The company has said that it has found the retail environment very challenging and in a statement it said; "A return to profitability for the business in the UK appears unlikely in the near term as many of the stores are expensive and poorly located for a furniture retailer,"
It also promised to fulfil all existing orders and protect customer deposits.  This is good news as other retailers have not been in a position to do this.

So our earlier blog of crunchtime for retailers has been borne out by events....
If you are a struggling retailer see our page on how a CVA can help.

Moben Kitchens in Administration ( deposit update )

Update 7/07/2011: Moben Kitchen and Dolphin Bathroom customers who have paid their deposits in cash or set to lose all of it.  The administrators at Deloitte have said.  This amounts to 453 people whose deposits are worth £1.5m.  Should a deposit protection scheme be put in place for major household purchases??

Previously we said
Moben Kitchens is to enter administration. BBC Breakfast news covered the story today saying it will close and all jobs will be lost. We suspect that that is a  bit premature and that some parts of the business may be saved or sold. But until the formal appointment of an administrator we will have to wait and see.
Update 4pm

Deloitte are the administrators for Moben Kitchens and any queries from customers should be directed at them.  We are not able to answer specific enquiries on the phone as this blog is for information purposes only.  If your business is struggling as a result of the administration by all means call.

Thursday, 23 June 2011

Kitchens Direct owner to enter administration

Homeform, the owner of the brand Kitchens Direct, has filed an intention to appoint administrators in the same week as it launched an advertising campaign on all its brands.  Its website says it is doing this to maintain its position as market leader.  Unfortunately, it appears that the cash has dried up. 

However, the brands are valuable and the company told the BBC that it is "close to securing a deal that will safeguard the future" of bedrooms business Sharps and Kitchens Direct.

If you are supplier to the business then please take a look at our pages for suppliers

Dolphin Bathrooms to enter administration ( Deposit Update)

Update 7/07/2011;  It looks like the customers of Moben Kitchen and Dolphin Bathrooms who paid cash deposits are set to lose all of it as the administrators at Deloitte have been unable to find a buyer.  Those who paid by Debit Card and Credit card should get their money back.

Previously we said;
The owner of Dolphin Bathrooms, Homeform, has announced that it intends to go into administration.  The company owns other well known brands such as Kitchen Direct, Moben Kitchens, and Sharps Bedrooms.

The firm has 160 showrooms across the UK and employs 1300 people.  The firm has said that it is hoping to sell the Moben Kitchen and Dolphin Bathrooms.

Deloitte are the administrators for Dolphin Bathrooms and any queries from customers should be directed at them. We are not able to answer specific enquiries on the phone as this blog is for information purposes only. If your business is struggling as a result of the administration by all means call.

Pre Pack Administration Reform

In draft proposals to be published this week by the insolvency service all creditors will get 3 days notice of any intention to sell the business to a connected party.

It has been argued before that this is an attempt to reform the system in order to stop the occasional "dodgy deal", or as a PR exercise, that will destroy the rescue culture and put jobs at risk unnecessarily.

The principal aim of administration, as enshrined in the insolvency act, is rescue.  In many instances publication of the fact that the business is in serious difficulty can make a bad situation worse as customers and suppliers pull custom and credit. 

The outcome of this reform, if it goes ahead, will send a clear message to directors of struggling companies that they must take advice early and work with turnaround experts to put a rescue in place before a winding up petition forces their hand.  A CVA is a powerful rescue tool that should not be overlooked.

Take the insolvency test to see if you need to talk to someone.  Sales and profits can be high but you can still be insolvent if you cannot pay your creditors when they fall due or your liabilities are more than your assets.

Friday, 17 June 2011

The Licence Factory in Administration

The Licence Factory has gone into administration following an appointment by its lenders GE Commercial Finance. The company specialised in home and fashion accessories such as bags, umbrellas and luggage and is a subsidiary of Stockport-based Marlwood.

In a statement Marlwood said: “Marlwood will continue to explore the options available to it with respect to the ongoing business, however, it is clear that this appointment will present severe challenges to the group.

“We intend to issue a trading update shortly to provide shareholders with further information about the financial position of the group.”

So what happened here? 
As a secured lender, GE Commercial Finance have the right to appoint an administrator in order to recover their debt.  See our pages on fixed and floating charges and creditors rights.  Their debt is paid ahead of the trade creditors and HMRC who are unsecured in an insolvency situation.  This may seem harsh on the others but finance would be much more expensive for businesses if the lender had no security.

Please read our latest enews!

You can read our latest enews by clicking on this enews page.  If you are not on our email list and you would like to receive our newsletter then send me an email at and I will ensure that you get added to our list!

In the Summer issue we cover the following;

HMRC and the time to pay programme
Partnership insolvency issues
Our new toolkit for professionals
How we can help private equity and business angel investors

Thursday, 16 June 2011

Is my company viable for a restructure

Most companies can be restructured, most can cut costs (see our guide to cost cutting ) even if the directors think they have cut costs as much as possible already. Most can increase prices (yes I know many of you think you cannot) most can increase margins. Almost every business can collect its cash in quicker.

Read our new page to help you decide if your business can be restructured.

Wednesday, 15 June 2011

AEI Cables CVA Approved

According to the Northern Echo,  the CVA was approved by creditors in respect of AEI Cables.   Despite laying off 120 workers the firm now has a survival strategy.  This has in effect saved the remaining 189 jobs at the firm. 

AEI Cables, based at Birtley, County Durham, has suffered since the increase in price of its raw materials, particularly Copper.  See our earlier blog on the subject.

So how does the vote work?  75% of the creditors (by value) who vote need to approve the proposal.  This means they will receive a dividend on their debt, which may be in the region of 40p in the £1, paid to them over a period of 3-5 years.
The firms chief executive Clive Sharp said: "We cannot express enough how sorry we are to have to lose 126 of our colleagues but we were advised that this was the only option to save the company and the jobs of the other employees."

The amount received in redundancy for the workers is calculated by the DBIS. Please see this page for details.

If you have any questions on CVA's then please call us on 01289 309431 or 0207 877 0050.  We have done more than any other practitioner!

Tuesday, 14 June 2011

Administration followed by a CVA

If a company is threatened by a winding up petition then it may be appropriate to go into administration and then exit the administration via a CVA.  This protects the company from aggressive creditors and then hands back control of the business to directors and allows the company to pay back a proportion of its debts over time.   This process is usually cost effective and is appropriate if it allows a better return to creditors in the long run.
See our new page on administration followed by a CVA

Monday, 13 June 2011

Haldanes in administration

Haldanes Stores has confirmed it is has filed a notice of intent to appoint administrators following advice from its legal team and an insolvency practitioner.

The firm that has 13 stores in Scotland has been embroiled in a bitter row with the Co-op, from whom it bought 26 stores, and it has issued proceedings in the High Court claiming that the Co-op had "materially breached key terms of the agreements" when it bought the Somerfield stores.
The discounter chain Ugo or Haldanes Express are not affected by the administration.

Haldanes employs around 600 people across the UK


 Haldanes has stores in the following Scottish towns
  • Kelso in the Borders
  • Buckie in Banffshire
  • Shawlands in Glasgow
  • Crieff in Perthshire
  • Dunbar in East Lothian
  • Larkhall in Lanarkshire.
  • Forfar
  • Arbroath
  • Ellon
  • Fraserburgh
  • Wick
  • Prestopans
  • Carluke
  • Tranent

Arthur Harris, CEO,  had previously admitted the 23 Haldanes branded stores were struggling and said he had invested £2m through another of his companies to ensure the business could continue.

The Co-operative Group is owed substantial rent arrears from the group.
Could the business have been rescued? 
As we know there is not much of a rescue culture in Scotland and have written on the subject on our website.  But a CVA is an often overlooked but powerful rescue tool that can close down underperforming shops and can be done at a lower cost than administration. 
Blogged by Robert Moore

Kinetics in administration

Kinetics, another company exposed to the social housing sector, has succumbed and gone into administration.  This follows Rok, Connaught and others.  With other "social services providers" such as Southern Cross, the care home operator, in difficulties it appears there is a widespread problem.  Southern Cross has argued it has been a fall in occupancy levels that has hit them the hardest and Kinetics has lost a contract from Westminster Council. 

The administration follows the collapse on Wednesday of Kinetics’ repairs and maintenance subsidiary, DC Group, which was put into compulsory liquidation after it owed £7 million to HMRC.  Seaflame, provider of gas installations, another subsidiary, has also gone into administration with Zolfo Cooper as the administrators.

It is hoped that the majority of contracts will be novated to the new trading companies that are being set up.  In addition it has been stated that many of the jobs will be moved across.  However, the new companies will employ 650 people instead of the 1000 currently and 273 people have been made redundant.

If you are affected by the administration then please refer to our help pages for suppliers and employees

Friday, 10 June 2011

HMRC to give update on time to pay scheme next week

Paul Gilhooley, the deputy head of enforcement at HMRC, will give the ICAEW conference next week an update on the Time to Pay Scheme. 

There is no doubt that the scheme was a lifeline to businesses during the financial crisis but it is likely that HMRC do not want to see it being used as a simple way to defer tax payments for the years to come.

We are already seeing evidence of HMRC being less willing to agree to them and the statistics showing 3,390 TTP requests were refused in the first three months of 2011, in comparison to 2,440 in the same period in 2009 bear this out.

If you are on a time to pay arrangement then it is advisable to have a plan B if you think that you may need to ask for another one.  We can help you examine the options such as a CVA which, if accepted by creditors, allows you to pay off the debt  over a longer time period of 3-5 years.  However, your business must be viable going forward and you must have the will to change and turn the business around as you will remain in control.  Remember that just because HMRC will refuse a time to pay does not mean they will refuse a CVA - a different department deals with CVA's

Wednesday, 8 June 2011

Treasury Select Committee to ask bank bosses why they have not lent more to SME's

The Treasury Select Committee is to ask why bankers have not met lending targets for SME's.  Watch the debate at this link at 2.30pm 

Vince Cable has threatened to raise a tax on them if they don't.  Could be a difficult meeting!  To face the grilling are;

  • Stephen Hester - RBS,
  • Douglas Flint - HSBC
  • Bob Diamond - Barclays
  • António Horta-Osório - Lloyds Banking Group

We are finding that banks are less willing to lend to businesses as the "work in progress" is not what it was.  Bankers are losing confidence in smaller businesses. 

Life and Style in administration (update)

Ethel Austin's successor, Life & Style, is in difficulties  See our post on Ethel Austin going into administration for the second time last year.

Life & Style was created in March last year, after it bought the trade name and assets of Ethel Austin which has had its base in Merseyside.   The company had 91 former Ethel Austin stores.
This was the second time that the Managing Director of Life and Style, Elaine Mcpherson,  had bought Ethel Austin from administration. The chain first collapsed in May, 2008.

Update 10th June:  The firm has now gone into administration with RSM Tenon acting as administrators.  It is thought there are buyers interested in the 150 strong chain

So is this the only way to protect a business against winding up petitions and the like?  Not exactly.  A company voluntary arrangement or CVA can also protect the company.  It is quite technical but take a look at our CVA moratorium page on the subject.

In 1995 case law was reported that provides a very powerful argument to stop legal actions. Re Dollar Land (Feltham) & Ors [1995] BCC 740 reported that the court decided that a winding-up order should be rescinded if there was a real prospect that CVA proposals would be approved by the company's creditors. In other words let the CVA majority decide.

In this way a CVA can protect a company.  However, a draft CVA proposal does take a little time to get together, So it is important to take advice EARLY if you are suffering problems.

Tuesday, 7 June 2011

HMV Has Two Years To Turn The Corner

Against the backdrop of yet more evidence of slowing retail sales (May's figures show a fall of spending of 2.1% as compared with last year) HMV has been thrown a lifeline by its banks, Lloyds Banking Group and RBS.  HMV has been rescued by a two year facility of £220m.

However, the terms are tough at 4% over market lending rates and the banks will next year have 5% of the shares in HMV having been issued with convertible warrants. Also shareholders will not be able to recieve any dividends until the first £90m of the debt is repaid.  What is more the banks are insisting that monies from the sale of Waterstones should be used to pay down debt.   In order to pay back the loan they are going to need to bring in some cash and quickly.  Almost half the stores are going to convert to centres for the purchase of electronic tablets and related kit, apps, and downloadable entertainment.  This conversion needs to be a success.

In return, the banks have basically said that they will not call in the administrators.  As the bank is a secured lender they can do this.  See our page on creditors rights.  

It is of course interesting to note that the taxpayer is in effect going to be a shareholder in a high street store!

Monday, 6 June 2011

Von Essen Hotels Group to sell £200m worth of Hotels

Christie & Co have been instructed to sell 26 hotels in the Von Essen Group.  They have put them on the market with a guide price in excess of £200m for the whole portfolio.   Christies have said the  venues fall into the categories of classic, luxury family and country hotels.  Jeremy Jones, group director of corporate hotels at Christie & Co has asked for final bids by mid July. 
This is the full list;

• Amberley Castle, near Arundel, West Sussex

• Buckland Manor, Near Broadway, Gloucestershire
• Cliveden, Taplow, Berkshire
• Lower Slaughter Manor, Lower Slaughter, Gloucestershire
• The Royal Crescent, Bath
• The Samling, Windermere, Cumbria
• Sharrow Bay, Ullswater, Cumbria
• Ston Easton Park, near Bath
• Thornbury Castle, near Bristol
• Ynyshir Hall, Machynlleth, Powys, Wales
• Seaham Hall, Seaham, County Durham
• The Elms, Worcester
• Fowey Hall, Fowey, Cornwall
• Ickworth, Bury St Edmunds, Suffolk
• Moonfleet Manor, Weymouth, Dorset
• Woolley Grange, Bradford upon Avon, Wiltshire
• Bishopstrow House, Warminster, Wiltshire
• Callow Hall, Ashbourne, Derbyshire
• Congham Hall, King's Lynn, Norfolk
• Dalhousie Castle, Bonnyrigg, Midlothian
• The Greenway, Cheltenham, Gloucestershire
• Homewood Park, Bath
• Lewtrenchard Manor, Okehampton, Devon
• The Mount Somerset, Taunton, Somerset
• New Park Manor, Brockenhurst, Hampshire
• Washbourne Court, Lower Slaughter, Gloucestershire

Obviously, selling assets is a fast way to get cash out of the business.   However an urgent sale is unlikely to achieve the same price when compared to if they were to be sold on the open market in the event that Von Essen were solvent.  Von Essen Hotels had a debt of some £250m.

Meanwhile the administrators at Ernst & Young reported to the Police that there were financial irregularities at the firm.   According to The Times today, accountants found turnover was £53m not the £74.2m as stated in the annual report and underlying profits were only £8m instead of the stated £24.9m..

Friday, 3 June 2011

Walsal Fabrications Limited Creditors Voluntary Liquidation Notice

KSA Group Insolvency Notice

Walsal Fabrications Creditors Voluntary Liquidation Notice

AEI Cables looking to propose a CVA

Meeting is being held today 14th June in London. We will let readers know the result as soon as we do!

AEI Cables, which employs about 350 staff in Tyneside has had to let go more than 120 people in an effort to save the company.  AEI Cables makes cables for the defence and civil engineering sectors.
The company is believed to have suffered as a result of volatile prices in raw materials, most particularly copper. 

A company spokesman said: "We regret this difficult decision but we had to take swift action to save the jobs of as many people as possible."

AEI Cables chief, Jim Duffy, said that if he had not made the cuts the company would have gone into administration with the loss of 189 jobs.  He also said that he was planning to propose a Company Voluntary Arrangement (CVA) but that he had to cut costs so that the proposal had a good chance of being approved.

Well done Jim!   It looks as if he has taken swift action to keep the business out of the hands of the administrators which would have been an even worse outcome for the staff.

Thursday, 2 June 2011

My best company rescue!

Oil and Gas Sector Services company £3m sales

There have been hundreds of clients in my 15 year turnaround career, but one of the most satisfying was the engineering company I helped restructure, turnaround and raise investment for, from an industry Goliath for this little David.

The job entailed defeating a winding up petition with a company voluntary arrangement (CVA), raising working capital, and restructuring management.

This company was a well established business trading for 30 years in this sector. It had a poor year in 2003 followed by an even worse event in 2004; the business lost its biggest customer and incurred a bad debt of £286,000 into the bargain.

Everywhere the MD turned, he was told “bin the company” walk away and start again” etc. Mr D was appalled that 30 years of trading could end up with that result and did not want to let his creditors, the bank or his people down.

I believed that an honest approach to creditors would be well received as the MD was trying to obey the mantra of the law – “maximise the interests of creditors”. A CVA was proposed but before the creditors received their copy and could vote, a single creditor (who was also a competitor) took the opportunity to try and knock the company over with a winding up petition.

This was filed in the Sheriffs Court in Edinburgh and notified to KSA Group on the same day. We immediately took action and appointed a lawyer and junior counsel to represent the company and seek to have the petition struck out.

The sheriff agreed and said – “it is not equitable to allow a single creditor to make the decision on the company’s future, when the law and the case law (Re Dollar Land) allows for the body of creditors to decide under the company voluntary arrangement process”.

The petition was therefore rescinded and the CVA was approved by creditors just over 2 weeks later. This was probably a first in Scotland and was driven by expert advice from KSA Group.

After the CVA?

We assisted the MD to restructure the company to survive the rigour of the CVA; I joined the board as a non executive director to facilitate the medium term recovery and also to explain the CVA to the potential investors. Whilst Mr D was very focused and driven, other management was generally weak. We conducted a review of ALL senior management over 2 months and reshaped the board and the SMT (Senior Management Team). We replaced the non performers quite quickly. Whilst painful for the patriarchal MD it was necessary and he knew that.

Some seven months into the process the International Goliath wanted to acquire the company to act as a bridgehead into the North Sea market. The really good news was that they were dual based in Italy and Houston in the USA and I was part of the negotiation team that had to travel to Italy (great pasta and brilliant red wine!) that led to the Goliath buying 80% of David and providing new working capital in excess of £700,000.

A little over a year later the Goliath purchased the CVA debt and the company successfully exited the CVA process. RBS, the secured creditor was paid in full and unsecured creditors got 29p in £1.

So, the moral of the case study is that a CVA (if there is a reasonable prospect of it being approved) can defeat a winding up petition. But the CVA is not a panacea - much hard but often satisfying turnaround work may still be required post rescue.

2011 update, 6 years later the company has nearly quadrupled in size and the company is now operating from two sites as its growth is so rapid. What price the insolvency people who told Mr D to “bin it”?

Wednesday, 1 June 2011

Southern Cross in Trouble

Southern Cross, the nursing home provider, has asked landlords to defer a portion of its rent payments for 4 months.  This is worrying news for all those involved, most particlularly residents and relatives of those in care.  Darlington-based Southern Cross recently reported half-year losses of £311m.  The company, which operates 750 homes, warned then that it was in "critical financial condition".

The landlords are expected to be supportive, according to the company, but their patience may run out.  However, it would be very difficult for the government and local authorities to resist calls to support the firm and ensure that there is minimal disruption for residents and their families.  This might be a politically prudent "bail out"  It may depend on who their bankers are......

If you are provider to Southern Cross then you need to stress test your business to see if it could withstand any debts from Southern Cross not being paid or deferred.  If you think it might cause a problem then have a plan B.  We are happy to talk through options on the phone for no charge.

Blogged by Robert Moore

Lothian Helicopters in administration (update)

Update  - As of the 1st of June 2011 there has still been no formal notice on the London Gazette that says the company has gone into administration.  In effect the company has just ceased trading and put up a notice on their website saying it had gone into administration which is not actually the case! 

Before we said;

Lothian Helicopters, Scotland’s main helicopter operator, has gone into administration. There is a rather curt message on their website telling people to speak to Pay pal or their credit card company for a refund.

When a company goes into administration the administrator must post a notice on their website. Many do not immediately do so. 
The company or administrators have not issued a statement and as such we do not know who the administrators are.  The company last filed accounts in December 2009 and it had some £1.1m of assets with £936k of liabilities.
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