Please visit https://www.companyrescue.co.uk/ for confidential help and insolvency advice or email keiths@ksagroup.co.uk

Thursday, 31 March 2011

Oddbins to go into administration

Oddbins will enter administration next Monday after HMRC refused to back the CVA at the creditors meeting held today.

Administrators at Deloitte have said they have been talking to interested parties hoping to buy the chain.
A statement released by Oddbins said: “Unfortunately, despite ongoing discussions with HMRC over the last four weeks the decision was made late yesterday not to support the CVA. They went on to say "As HMRC is a significant creditor this means that the CVA cannot proceed."

Wednesday, 30 March 2011

KSA Group uses CVA to rescue a recruitment business

KSA group uses a CVA to rescue a recruitment business!

They had a seven day warning letter of a winding up petition from HMRC and decided to get in touch.  If this warning letter comes you must act.

Read the full case study by clicking on the link below;

http://www.companyrescue.co.uk/case-studies/cva-case-studies/company-voluntary-arrangement-for-a-recruitment-company-case-study-35

We give free advice on the options

As we have always said it is important to know your options if your business is in difficulty.  We received a nice email today from a business we met that did not need to go down a formal insolvency route but are now completely aware of the options and will act promptly if the need arises.  They were not charged for any of this advice!

To read the testimonial and the others please take a look at our testimonial page.

Tuesday, 29 March 2011

Officers Club in Administration

The Officers Club, the Men's clothing retailer,  has gone into administration with 46 stores being sold to Blue Inc immediately after the appointment by the administrators at Grant Thornton.  The warehouse and the remaining 56 stores have been closed.  The high street chain employed 900 people but the sale to Blue Inc has saved 400 jobs.
 
Joint administrator Joe McLean said: "The Company experienced particularly challenging trading conditions in 2010 with raw material costs rising significantly. It was not possible to pass these increases on to customers given the extremely price sensitive nature of the UK retail arena. "

The stores being bought are expected to add between £25 and £30m of sales to Blue Inc's turnover, bringing its revenues up to about £80m.

In an ideal situation the whole of the business could have been sold but it seems this was not possible. 

Have a look at our page on pre-pack administration this outlines how a company can be be put into administration and then the business and assets are sold at the same time.  An alternative would be a trading administration where the business would have been put into administration, continue to trade and then a buyer found as quickly as possible.  Alternatively, the business could be saved by going into administration and exiting via a CVA.

There must be one (or two) of three "Objectives" for the Administration:
In the application to the Court the proposed administrator must state which is his or her main objective of the following three:
  1. Company rescue, as a going concern, should be the primary objective. This usually means that the company proposes a Company Voluntary Arrangement or a scheme of arrangement.
  2. If that is not possible (or if the second objective would clearly be better for the creditors as a whole), then the administrator can achieve a better result for the creditors than would be obtained through an immediate winding-up of the company, possibly by trading on for a while and selling the business as a going concern.

    2.1. In English this means trying to sell the business for more than a liquidation would raise (see Creditors Voluntary Liquidation).
  3. Only if neither of the first two objectives is possible, can the administrator realise any property to make a distribution to secured and/or preferential creditors.

    3.1. This means collecting and selling the assets for the best price to pay the bank.

Trade deficit highlights more difficulties for the UK economy

New economic figures out today
Britain's goods trade gap has widened to its highest level ever to £26.8bn over the last three months of 2010. However, in better news, the final revision of GDP for the fourth quarter has been reduced to a fall of 0.5%, down from the previous 0.6%

Meanwhile house prices showing further declines in February when compared to the same month last year.
The Land Registry figures shows prices fell 0.8% month on month, compared to a 0.2% rise in Jan. Annual rate of decline increased to 1.7% from 0.9% in Jan.

Low interest rates are still heavily influencing the figures with the low exchange rate ( caused in part by low interest rates) pushing up the prices of imported goods and thus contributing to the trade gap.  Meanwhile manufacturing industry is doing well as their goods are cheaper abroad.  But of course, low interest rates have helped stop a crash in the housing market.  It certainly is a fine balancing act!

But we need GROWTH!

Monday, 28 March 2011

Total Fitness denies CVA rumours

Graham Hallworth, the chairman of Total Fitness, which has a chain of 20 Gyms, has told the online news service, the Business Desk, that it is "definitely not" looking at a Company Voluntary Arrangement (CVA) process as part of its restructuring despite some press reports.  He went on to say that "It's true that we pulled out of a club in Lancaster last week, but that was just because we couldn't agree terms with the landlord."

The Gym chain closed 3 clubs last week in Ireland as the state of the economy meant they were losing money and the landlords were not prepared to lower the rents Graham Hallworth said.

Graham Hallworth became chairman of Total Fitness following a pre-pack administration deal last October.
He said that the restructuring exercise embarked upon since had looked at all of the business's overheads - of which rent is a substantial part.

In a conciliatory statement Graham said that he was not going to use a CVA, like JJB Sports, to shed liabilities but was going to talk to landlords as rent was a substantial cost for them. 

Gyms have been struggling recently as many people have cut back on memberships as their disposable income falls.  However Gym operators have tried to lure customers with ever cheaper membership fees.  Some offering membership at £20 a month, with no contract.

Friday, 25 March 2011

Oddbins has applied to go into administration ahead of creditors meeting

Oddbins has lodged a "notice to appoint administrators" to protect it from aggressive creditors ahead of the vote on the CVA proposal.

Read the full news article on Oddbins here

Longbenton Foods in Administration

Longbenton Foods, that runs a frozen food factory in North Tyneside which employed 150 people, has gone into administration.


Administrators at Grant Thornton are looking for a buyer of the business. Managing director, Geir Frantzen, said: “It is sad news. Nobody wants to be out of work in the current economic climate. We tried so hard but didn’t succeed. I hope the factory can be taken over as a going concern.”

The managing director said it all.  Sometimes you can try as hard as you can and do everything right but the business doesn't succeed.  So it is important to take advice on the business issues, dust yourself off and start again or do something different.

If you want advice on your options if your business is facing difficulty then have a look at our pages on administration, company voluntary arrangement, prepack,  or even creditors voluntary liquidation.

Please give us a call on 01289 30943 if you have any questions.  If you are an employee then please take a look at help for employees

Wednesday, 23 March 2011

Budget for Growth?

George Osborne has delivered his 2011 "budget for growth" with no real surprises. However it needs to be growth centric with the 2011 growth forecast downgraded from 2.1% to 1.7% and 2012 forecast also down from 2.6% to 2.5%, Inflation set to remain between 4% and 5% in 2011.

The main thrust of the budget has been to try and reduce the burdens on business so they can deliver growth and jobs. Corporation tax will be reduced by 2% instead of the expected 1% and there are a raft of measures to try and ensure that small businesses are not strangled by red tape and complex tax affairs.  Mind you we have heard the one about red tape a thousand times before.... Business rates relief has been extended and the creation of 21 enterprise zones will probably help the regions.

There has been the usual tinkering with investment schemes and reliefs but all in all it may be that "events" in the global economy and outside influences such as commodity prices will have the bigger impact on the UK economy than Osborne's Budget. 

Tuesday, 22 March 2011

JJB Sports CVA Approved

JJB Sports second CVA has had the backing from the creditors.   In an announcement they said that the deal was approved by more than 75% of the creditors.  Must have been close!

Using a CVA solely as a way of dumping unprofitable stores was no doubt debated.  It is our view that this was not the purpose of the CVA rescue mechanism.  JJB wanted its landlords to accept a cut in rents by up to 55%. It also plans to close 43 stores by April next year and possibly another 46 later, and hopes to raise around £65m with an equity issue.

Commenting on the approval of the CVA Proposal by creditors, Mike McTighe, Chairman, said:

"I am delighted that our CVA proposals have been approved at the creditors' meetings held earlier today. JJB continues to develop strong relationships with its landlords who have supported the Company in this process, and we look forward to working with them, alongside all our stakeholders, as we continue to achieve crucial milestones in our turnaround"

This demonstrates again what a powerful rescue tool the CVA is.  However we understand that landlords can be compromised unfairly so it is important that they buy into the proposal and can benefit if the retailer's fortunes improve.

A further announcement is expected today giving more details.

Now that's real inflation

Today we learn that inflation on the RPI measure hit 5.5% in February and the CPI rate hit 4.4%. These are worrying numbers, but not really a shock to the average UK person who has to buy food, fuel and petrol every week.

I personally think with an escalating cost of living (through inflation) and take home pay falling across many tax bands from next month, there could well be a further quarter of negative growth ahead as austerity bites.  The pubs' restaurants, hotels and service sector will see falling sales and margins as they try to hang on. Shop sales will be flat or falling in volume terms.

The solution to rising inflation? Surely the Base Rate must rise?

Oddbins CVA proposal published - Creditors meeting on the 31st March

Following the announcement that Oddbins is struggling with debts to HMRC and trade creditors it has published its proposals for a company voluntary arrangement or CVA


Creditors are owed sums totalling over £20m but the largest creditor is HM Revenue and Customs, which is owed over £8m. The majority of this will probably be for excise duty and it will be interesting if the Voluntary Arrangement Service will support the CVA.

The proposed dividend in the CVA is 21p in the pound which is quite low. However, this does reflect the difficult situation the company finds itself in as spending is cut back on the high street. The creditors meeting is on the 31st of March when Oddbins are hoping for a 75% by value of the creditors to agree for it to go through. Some creditors have been quoted that they support the idea of a CVA, however they want to see a real change in the business. They cite that the product mix is too diverse and they stock too many specialist wines.

Deloitte, which is handling the restructuring, estimated that creditors would receive 13.6p in the pound if Oddbins were put into administration.

As part of any CVA you must compare it with the outcomes in liquidation or administration and show that it produces a better result. This is what Deloitte have done although the uplift is modest.

How will the Landlords fare? The proposal means landlords will get 70% rent until Christmas 2012, at which point it will go back to its original level. This will give a valuable breathing space for the company and should allow it to close fewer stores although 39 stores are being closed on the 24th March 2011

If you are retailer struggling then take a look at our retailer rescue page and please get in touch. A CVA can be used for a retailer with only a few stores as well as hundreds!

Monday, 21 March 2011

Peverel Holding Companies In Administration

The holding companies behind Peverel, the UK's largest property management firm owned by Vincent Tchenguiz, have gone into administration.

Peverel manages 190,000 properties including retirement homes and some sheltered housing.  In Bristol it manages the 5102 building which overlooks the Bear Pit roundabout in the city centre, flats in Bedminster and the Portishead Marina.

The administrators Zolfo Cooper said the operating companies, which employ around 4,000 staff were not affected by the collapse of the holding companies.

However, Zolfo said it would run the businesses in the hope of securing a sale. The Tchenguiz brothers were arrested as part of the investigation into the collapse of Icelandic bank Kaupthing.  The brothers deny any wrong doing.

Zolfo Cooper said there were no plans for staff redundancies within the operating companies and all property management services are expected to continue.

Friday, 18 March 2011

New Company Rescue Website is Now Live

The new Company Rescue website is now live at;

http://www.companyrescue.co.uk/

The new site is still the most informative website on the internet for struggling businesses, but now is even easier to use. On the site we give examples of how KSA Group can help struggling companies and what a powerful rescue tool the CVA mechanism can be.  We also have many informative pages on administration and liquidation

The redesign has been done with the end user in mind.  The new site should be easier to navigate with colour coding for ease of reference and easy to read menus. For clarity we have a number of new pages highlight who we are, where we are, and what we do.  We look forward to helping thousands of business people and their advisors every week FREE!

If you think we can help your struggling company then please give us a call.

Thursday, 17 March 2011

Company Voluntary Arrangement Seminar Yesterday

Yesterday, KSA Group held the inaugural seminar on Company Voluntary Arrangements in Moorgate EC2.  The session was well attended and the delegates received an intensive introduction by Keith Steven  on how the CVA mechanism is one of the best rescue tools available. Keith also demonstrated that it is very much underused as a recovery tool and quite often misunderstood. 

We went through the law that sets out the CVA mechanism, recent case law, and  the practical steps needed to ascertain if a distressed company is suited to the CVA procedure. The delegates had 3 tests, to win a bottle of Champagne, on many aspects of insolvency and CVA's to check they were listening and learning! 

Using a  real case study for a London furniture retailer Keith took the attendees through the case from day one when we were first contacted, through the difficult phase of making people redundant  to the end CVA deal and  ongoing restructure of the business. 

The delegates found the power of the CVA to terminate employment contracts and property leases fascinating.

The competition winner was John Green of Maxxus Associates, who had a firm grasp on what was needed to promote the CVA as the rescue tool of choice for struggling businesses. Well done John and to the others who were close on his tail!


So finally, a special thanks to everyone who came along and participated.  We will be holding another one soon in another part of the country.  Watch this blog for details or email Robertm@ksagroup.co.uk if you wish to attend the next session.

Monday, 14 March 2011

JJB Sports Looking to Shareholders

JJB Sports is to ask shareholders for an extra £65m as the retailer fights for survival.

This follows the blow last week that its rival, JD Sports, had pulled out of talks to buy the chain.  Shares fell 10% on Friday as a result with each party blaming the other for the lack of progress.

However, JJB said in a statement on Monday that it was in "constructive discussions with its major shareholders in relation to their continued support".

Also there would be a "revised business plan, anticipated funding requirements and proposed financing arrangements on or around 15 March,"

JJB, which operates nearly 250 stores and employs 6,100 staff is in the process of trying to push through a second CVA so that it can close down more of its stores.

Friday, 11 March 2011

Oddbins in CVA proposal to its creditors

Oddbins is seeking a company voluntary arrangement with its creditors in an effort to save the business, Simon Baile, the UK wine retailer's MD,  has confirmed today.  Simon Baile said that a company voluntary arrangement (CVA) "is the preferred route"

Earlier this week, the retailer said it would close 39 of its 128 stores, heightening concerns about its future.

Poor Christmas trading and a court dispute with the group's previous owner appear to have brought things to crisis point.  Baile said of the remaining 89 stores that would stay open are all making money.  This yet again brings in to focus the fact that a multiple outlet retailer can have some poorly performing stores, tied into long term leases, that bring pressure on the group as a whole.  For Oddbins the CVA is the preferred route as they will be able to terminate the leases on the underperforming stores.  Of course, this is tough for landlords who may have offered concessions to big name retailers on the understanding that they were good for the rent even if that particular outlet did not make money.

Oddbins' situation is another example of tough times for the UK wine trade, which witnessed the collapse of Threshers owner First Quench Retailing at the end of 2009.

Struggling retailers should have a look at our retailer rescue page that shows how a CVA can save your business.

Bennetts in Administration

The independent electrical retailer, Bennetts, which has 14 stores around the country and employs about 300 staff,  went into administration yesterday and staff have been told.  The firm has major stores in Colchester, Norwich, Martlesham Heath in Suffolk, Bangor and Farnham.

The administrators at PKF are expected to hold a press conference later today.  We will update this blog once we know more.


All Saints administration fears

It has been reported that the youth fashion chain, must secure funding by tomorrow night in order to avoid administration.  Lloyds Banking Group have lent over £28m to the chain and reportedly have KPMG on standby to initiate administration proceedings.

Liquidators of Kaupthing and Glitnir, the collapsed Icelandic banks, have put their stakes in the British clothing chain All Saints up for sale, though the majority of the retailer's stock is owned by the entrepreneur, Karen Millen.

Retail commentators have said that the chain expanded too quickly by opening 60 shops in an already very competitive market.
Larger companies such as All Saints Fashion can always ask for emergency funding from their investors. However, for smaller retailers without larger backers this is not an option. So what can you do if you suddenly find yourself running out of cash. A CVA can terminate leases on loss making shops and give the business time to restructure.

For more information on how we help retailers please refer to our retailer rescue page.

Tuesday, 8 March 2011

Auto Windscreens Starts Again

The Auto Windscreen brand, along with some assets, has been bought by the company's previous managing director Nigel Davies.  The assets include its freehold properties and 19 leasehold sites.
 
Trifords Limited, part of the Markerstudy Group, acquired the rights to the name and the other assets from the liquidators of Auto Windscreens Limited, and has pledged to create 250 jobs. Nigel Davies has been brought in to manage the new company.
 
So what has happened? Is it fair?
 
When this happens people refer to the term "phoenixing" in that a new company has risen like a phoenix from the flames. 

Is it legal?

Yes, provided the rules are observed and the liquidator maximises the interests of creditors then the business assets can be sold to a "connected party" in this instance Nigel Davies the previous MD.

In this event the liquidator must satisfy himself that he/she has
  • Obtained the best possible value for the assets having typically advertised the assets for sale in the media and or on the internet.
  • Ensured the creditors interests are not compromised by investigating the conduct of the directors prior to the liquidation.
  • The trading name of the new company is not the same or similar to the liquidated company.
    (This restriction on re-use of a trade name can be lifted if the court agrees)  

Often a "phoenix" will require new cash in the form of investment to get the company going. This can sometimes be a stumbling block too. As can the fact that the new company may have to take on the employees employment rights from the old company (TUPE).  However, in this instance all 1000 staff were made redundant and so it was not an issue. 
 
Auto Windscreens called in the administrators after losing the Aviva contract and so they could not pay HMRC who subsequently issued a winding up petition.

Monday, 7 March 2011

Insolvencies Falling as Economy Recovers

The latest research by Experian shows the continued trend of fewer businesses becoming insolvent in January 2011 when compared to January 2010. 

The index reveals 1,266 businesses failed in January 2011 compared with 1,426 in January 2010.   In previous recessions the number of insolvencies has normally risen as the economy recovers but it would appear to be "different this time".  Some sectors have faired better than others with the construction industry only showing a modest 6% fall in insolvency figures, whereas the IT industry has seen a 30% fall. Scotland has shown a 16.9% fall in the number of insolvencies from January 2010 which was greater than a corresponding 11.2% drop for the UK as a whole.

These figures will give ammunition to those on the MPC who believe that the economy can absorb a small interest rate rise in order to tame inflation.  In addition, we shall have to wait and see what the budget holds for hard pressed businesses later this month.




Liquidation Reports Now Available Online

Creditors Voluntary Liquidation Reports now available for the following companies;

GR Joinery North East Limited
Thames Fishing Tackle Limited
Emergency Cooling Limited
Classic Restorations Limited

As part of the Insolvency Act 1986 a report by the insolvency practitioner needs to be sent to all creditors of the company.  These outline why the business failed, what the deficiency on the account was, as well as including all the requisite notices.  This report is also sent to the registrar at Companies House.

The above companies have all entered into a creditors voluntary liquidation process.  For more information please refer to our webpages at http://www.companyrescue.co.uk/

Friday, 4 March 2011

Bristol Cars in administration

The iconic car manufacturer Bristol cars has announced that it has gone into administration.  The cars were all handbuilt in Bristol and the company had a low production run with just one showroom in London.  Given the strength of the brand, although not it would appear the strength of the company, it is likely that the name Bristol will continue.  It is not clear what has precipitated their fall but it follows Overfinch, the custom coachworks for Range Rover cars which went into administration in November. 

The administrators at RSM Tenon are looking for buyers for the firm that first starting making aeroplanes before World War Two.

If you are a business affected by the problems at Bristol then please get in touch.  If you work for the firm we have a very useful page on your rights in administration

Thursday, 3 March 2011

JJB Sports CVA Proposal Sent Today

The 22nd of March will be a critical day for JJB Sports as the creditors will vote to approve the company voluntary arrangement that KPMG has proposed.  If successful JJB Sports will need to close 43 stores, with a further 46 that could be closed  in the next two years, in order to survive.  The support of landlords is viewed as crucial to get the vote through by passing the magic 75% of creditors by value test. 

In order to sweeten the deal, the CVA proposes that the landlords will receive 50% of the rent after the stores close until the landlord can find another tenant.  Nice in principal but not sure how workable that is if the stores remain unlet.  Also the landlords will get a higher dividend if the company makes more money in the next 2 years.  This "profit ratchet" has been part of all our CVA's for many years.  It is our view that if the creditors support the company in difficult times then they should share in the upside.

UK head of restructuring at KPMG, Richard Fleming, said: "The CVA proposed by JJB today gives the company a chance to avoid administration and carry out a fundamental restructuring of its property portfolio. A CVA must always offer a better return to creditors than administration and in the case of JJB we estimate the return to compromised landlords to be within a range of 24.6p to 29.2p in the £1 versus 1.1p in the £1 in administration."

It is more often than not that a CVA will get more in the pound than an administration process for unsecured creditors.  So it is our view that it is not being used enough!  Hopefully if this CVA works then it will be to the economy's benefit and save jobs.

To read the CVA proposal please see below

http://www.jjbcorporate.co.uk/pdf/CVA%20and%20Transfer%20to%20AIM%20anouncement%2003-03-11.pdf

Wednesday, 2 March 2011

Businesses in administration unfairly treated by some suppliers

The insolvency trade body R3 has launched a consultation on how to curb the practice of demanding "ransom payments" by some suppliers who wish to supply businesses that are continuing to trade in administration. In effect by demanding higher payments, as a condition of their cooperation, is putting themselves ahead of other creditors. Insolvency practitioners believe this is hampering their efforts to save companies.


R3 consulted with some MPs and representatives from the insolvency profession and it was clear that the government would need to see a clear case of it saving the government money as it was not a priority. Legislation would be required and would take time.

Time is often something that businesses facing difficulty do not have. This is a drawback of going into administration process as it is a very public event and all suppliers and customers are likely to know about it even if they are not creditors.

However, if the company starts the company voluntary arrangement process this is not in the public domain and there is less of a likelihood of ransom creditors if they are all kept appraised of the process. The CVA is registered at Companies House only when approved.

Tuesday, 1 March 2011

HMV Shares fall by 20% following profits warning this morning

Further to my earlier blog it looks as if HMV is in difficulty again as it issues a profit warning sending the shares down some 20% in early trading.  In a statement it said that it was in negotiations over its debt.  An extract below

"While the Group continues to comply with the terms and conditions of its bank facility agreement, and is not in breach of any covenant tests, it does not expect to meet certain of its covenant tests when they are next tested by reference to its full year results. The Group has therefore commenced discussions with its lenders ahead of publication of its full year results regarding potential changes to the facility agreement"

See full trading update below

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10800099

Primark sees slowdown on High Street

Primark, the discount fashion chain, has said there has been a "noticeable slowdown" in UK consumer demand since the start of 2011.   Primark posted its weakest sales figures for some 5 years sending the shares in its owner, Associated British Food,s falling yesterday by 6%.  Primark has been popular as bargain hunting shoppers have found their clothing to be good value.

The sales fall is significant because if Primark is finding trading tough then it is almost certain that other smaller shops are feeling under pressure.  Other retailers are also reporting some evidence of a fall in spending on the High Street, most noticeably John Lewis.  Surveys are reporting lower footfall as well with the fall most marked in the North. 

With JJB Sports trying to get through another CVA to rescue the business from administration there is no doubt that shoppers are beginning to tighten their belts. 

Just because JJB Sports does a CVA does not mean that it is the preserve of large companies.  A CVA can be used to restructure and rescue smaller retailers with as few as 3-4 outlets.

If you are struggling retailer read our pages written especially with retailers in mind.  Link below
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