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Wednesday, 29 February 2012

KSA Group's Nottingham Office

KSA Group is keen to promote the rescue culture in the East Midlands.  As such, we have an office at 35 Park Row in Nottingham where you can come and meet our Regional Manager, George E Davis.  He can advise the directors of a struggling business on ALL the options.

Alternatively, he is more than happy to visit you at your offices if you so wish.

Read our case study on how we rescued a £600k manned guarding company based in the East Midlands.

Monday, 27 February 2012

Who is the Official Receiver?

The term "Official Receiver" or "OR" is often used in the insolvency context.  So who is the official receiver and what do they do?  Read our new pages on the Official Receiver

Insolvency Statistics Again

It came as a bit of a surprise to many that the insolvency statistics were not worse in the last quarter of 2011.  See our blog on the latest statistics.  These showed a year on year fall.  Also, Experian has published their latest set and it shows an improving trend as well.  The insolvency rate in January 2012 was just 0.07% which was the same as January 2011.  January is on the whole a better month for businesses as they have benefited from the Christmas trading period.   Smaller firms have done better with businesses with 101 to 500 employees saw a failure rate of 0.1 per cent, less than half the 0.21 per cent rate recorded in December.

So why do people think things are going badly for UK businesses?  A clue is in the spread of the pain.  In fact businesses with more than 500 employees have seen a rise in the insolvency rate from 0.07%  in January 2011 to 0.2% this last month.   That will be why..  Larger business failures get the headlines and January was a particularly bad month for some of the UK's high street retailers.  Even Tesco issued a profit warning.

Generally speaking, insolvency statistics are not a great indicator of economic health as they are not "weighted" in terms of impact.  A couple of small shops going under does not have the same impact as a large business shedding jobs but not actually becoming insolvent.

Friday, 24 February 2012

MJN Colston in administration

MJN Colston, the teeside building services firm, has gone into administration with the loss of 146 jobs and another 420 at risk.  The business has offices in Gateshead, Blackburn, Coventry, Bury St Edmunds, Croydon, Bristol, Bridgend and Exeter.

The firm had been involved in mechanical and electrical contracting in some high profile public and private projects such as the redevelopment of RAF Northolt and Paddington Station.

In a statement, joint administrators Daniel Butters and Matt Cowlishaw, said: "We intend to trade the business in the short-term with a view to selling and novating the contracts to other providers.

It is not clear at the moment what has precipitated this collapse.  However a number of building companies have found themselves in difficulty as some of the major public projects have been put on hold.

Thursday, 23 February 2012

Peacocks' stores bought out of administration

The Edinburgh Woollen Mill has emerged as the buyer of 338 stores belonging to the stricken Peacocks chain.  The remaining 224 stores will be closed with the loss of some 3000 jobs.

Private equity backed Edinburgh Woollen Mill was a surprise bidder for part of the chain.  Administrator KPMG had renewed talks with EWM in recent days after a potential £25m deal fell through with Pakistani textile billionaire Alshair Fiyaz, who was thought to be the sole bidder for the chain just last week.

The collapse of Peacocks was the largest retail failure since the demise of Woolworths.

This is a good result for Peacocks although the actual price paid was undisclosed so the return for creditors is not known at this stage.

Tuesday, 21 February 2012

PAYE Security Deposits

From 6 April 2012 HMRC will be able to ask employers to pay a security where there is serious risk that they won't pay over their PAYE tax deductions or Class 1 National Insurance contributions (NICs).

HMRC have had the power to demand VAT security deposits under paragraph 4(2)(a) of Schedule 11 to the VAT Act 1994. Please see our page on VAT security deposits.

The reasons that HMRC will demand a deposit for PAYE and NIC will no doubt be along the same lines as before with regard to VAT.

For instance;

The director or directors of the new company have had multiple business failures.
The director or directors have failed to comply with tax legislation in the past.
The director or directors have a history of not paying taxes on time.

HMRC are becoming increasingly aggressive towards companies that have been using unpaid tax as a quasi loan from the government.

There is already anecdotal evidence that HMRC have been asking companies to pay deposits against PAYE where the company mainly trades in cash.

What if we don't pay the PAYE deposit?

You must pay it or cease trading. Or if you seek to ignore the demand, it is a criminal offence to continue to trade without providing the required security and HMRC may prosecute if the deposit is not paid upon demand. Under section 37 of the Criminal Justice Act 1991 a magistrate may impose a fine of up to £5,000 for each taxable supply (ie each invoice) made without providing security.

It is probable that in the case of PAYE, this power won't apply until after April 2012. If you have been asked for a deposit specifically for PAYE then we would advise you seek legal advice before continuing to trade.

So if you have difficulty in paying HMRC or are building up arrears of VAT or PAYE then please talk to us - Especially if you are thinking of buying back the business out of administration or liquidation.

Monday, 20 February 2012

What is a Personal Liability Notice?

A Personal Liability Notice or PLN can be sent to the "officers of the company" by HMRC if they believe that there has been fraud or serious neglect to pay National Insurance Contributions.  This power came about in 1999 and has been used where HMRC believe they have a good chance of recovering the NIC. 

Please read our page on Personal Liability Notices

Quarter of Small Companies Expect to Fail Says Mail on Sunday

This is a very worrying headline and the statistics showing 25% of people expect their small business to fail is depressing; but not sure how reliable it is. What about telling those 25% of worried directors that there are many tools out there to help their business. The internet is a huge mine of information  and support for struggling directors. Sometimes "a trouble shared is a trouble halved" as they say.

Perhaps I am a cynic but the article should maybe have had some positive options and suggestions. On we have a suite of products and guides that can help struggling companies.

How to ask for time to pay your company tax bill

Worried about cashflow? Get our FREE Excel cashflow model to help run your business safely. Monitor your cash everyday easily.

Need to cut costs? Click for 20 great cost cutting tips for your company.

Most importantly don't worry on your own. Get advice from online guides, business clubs, mentors, accountants and turnaround companies. There are often ways to restructure the business that you or your accountants are not aware of, so call us if you need a chat about cashflow, cost problems or just to ask a question.

Friday, 17 February 2012

Rangers Administration - Missing £24m probed

A sum of £24m was lent to the Rangers by Ticketus which hoped to profit from future ticket sales at the club but, according to the administrators, it now appears that this money cannot as yet be accounted for. The administrators have said that that it is possible that the money was paid to a parent company and so they have not been able to track it through the club’s bank accounts.

The administrators have also stated that it appears that Ticketus does not hold any security over the clubs assets. Ticketus will therefore be an unsecured creditor ranking alongside HMRC who have a £9m claim for arrears of tax and a potential claim of up to £75m which stems from the way Rangers paid their players going back 10 years. This claim is due to be determined by a tribunal.

So what are the options for Rangers and will Ticketus and HMRC get any of their money back? We note with interest that one possibility that is being looked at is for the club to exit the administration by way of a CVA. This will allow the club to continue to operate while paying back a proportion of the debts to unsecured creditors.

A CVA is really the only insolvency process with sufficient flexibility and power to ensure the clubs survival in its current form. However, a CVA will need to be approved by 75% ( by value ) of the unsecured creditors to become binding. Until the exact debt to HMRC is determined then any rescue plan will be put on hold. In the interim, the Administrators will need to ensure that the all of the club’s running costs are met including the payment of tax liabilities. This will be no mean feat given the club’s recent track record. 

Is Rangers too big to fail and would Scottish football be able to survive without Rangers? This is something that even the Scottish First Minister has questioned! 

Thursday, 16 February 2012

Notice of intention to appoint administrators. The first step

When a company is in financial trouble sometimes the first thing we hear about it is that it has filed a "notice of intention to appoint an administrator."  This usually means that it is defending itself against a creditors legal action such as a winding up petition.  Many of the high profile collapses in these last few months have been predicated in this way.  In some instances the business has been sold before an administrator has been appointed.

See our new page on the intention to appoint administrators

Wednesday, 15 February 2012

Rangers Enters Administration after HMRC Threat

After being threatened by a "creditors administration", with HMRC petitioning the Court of Session to ask for an independent administrator to be appointed, Craig Whyte blinked and appointed Duff & Phelps to act as administrators.

So will the ten point deduction hand the league to Celtic!

What about the CVA exit route, will HMRC block any administrators' proposals for a CVA ? A CVA requires 75% of unsecured creditors (by value) to vote in favour. Will there be a "Mexican stand-off" if CVA proposals are put in front of HMRC?

Or will the next step be a sale of the assets or business by the administrators? This is going to be hugely interesting.

Monday, 13 February 2012

The Rangers Football Club plc Issues Notice of Intention to Appoint Administrators

And in the background someone has formed a new company called Glasgow Rangers Football Club Limited.  And the same person has formed Glasgow Rangers Limited last October 11.

These are both English registered companies. Is this anything to do with the "oldco" directors?

Meanwhile the current company has protection for ten days and can set out a plan to appoint an administrator

Potentially massive blow to Scottish football?

Friday, 10 February 2012

KSA Group Liquidation Notices for Purple Rain Media Limited and MVS Automative Limited

MVS Automotive Limited

Meeting of the Creditors of the above named Company will be held at The Westmead Hotel, Redditch Road, Hopwood, Birmingham, B48 7AL on the 1 March 2012 at 12.00 pm.

See full notice below;

Purple Rain Media Limited

Meeting of the Creditors of the above named Company will be held at the offices of KSA Group Ltd, Tower 42, Level 7, 25 Old Broad Street, London, EC2N 1HN on 23 February 2012 at 2.30 pm

See full notice below

blogged by Robert Moore

Thursday, 9 February 2012

Great news on manufacturing; Rolls makes over £1bn profits, sector growing

Ah another factoid for those that say UK doesn't have any manufacturing left. Like the moronic French President.

Coupled with news that the sector grew by 1% December, below

UK economy looks set to avoid double dip as manufacturing stages remarkable comeback

Read more:

Business Distress Index by R3

R3, have produced their latest Business Distress Index for January 2012 which reports on the state of business as recorded in 500 telephone interviews in December 2011.  Interestingly, the index has shown that FEWER businesses are suffering distress than before.  Distress indicators are the following:

  • Decreased profits
  • Falling sales volume
  • Shrinking market share
  • Pay cuts and freezes
  • Loss of regular customers
  • Cashflow difficulties
  • Suppliers insisting on payment in advance
  • Redundancies
  • Reaching maximum overdraft limit
  • Departure of key personnel
  • Selling assets
  • Borrowing to pay off existing debt

In December 2011, 58% of businesses reported feeling ‘signs of distress’. This is down by 10 percentage points on last quarter 68% and significantly lower than a year ago (77%)

Frances Coulson, President of R3 said"

"Surprisingly, fewer businesses appear to be feeling signs of distress than this time a year ago but this could be the calm before the storm. Many ‘zombie’ businesses have been surviving but not thriving and we know that businesses do not fail in the middle of a recession, but when the economy is recovering. The ‘insolvency lag’ we have seen in previous recessions is slower to materialise this time around, and traditionally insolvencies increase during the recovery phase. This is because a company’s financial outlook starts to improve and creditors stand to achieve greater returns than they would during the downturn. Furthermore, changes in the policies of lenders and the Government could force ‘a clear out of the system’, but whether this will happen in 2012 is doubtful."

It is fair to say that the "insolvency can" is being kicked down the road much like other hard decisions in the Eurozone.

Other interesting statistics are as follows:  SMEs are struggling more than larger companies (T/o £20m+) with 34% of them experiencing decreased profits compared to just 6% of larger businesses.  Companies that can accept online payments have seen market share drop by only 15% compared to 29% experienced by companies that cannot accept these payments.  Greater London has the greatest proportion of businesses that are experiencing distress (66%)

Despite this any sudden shock to a business such as bad weather, tax changes, or regulation can have severe effect.  If your business is in difficulty then it pays to act early.

Wednesday, 8 February 2012

The Future of the Independent Business Review

An interesting article reporting on the debate on the use of the Independent Business Review (IBR) which was held at Bristol’s Council Chambers.  An IBR is an assessment of the financial health of an organisation and is currently something that banks and investors of struggling businesses often require. 

On one side of the argument were the banks and investors, and on the other the Insititute for Turnaround representing business recovery professionals.

Read the full article here

We really appreciate great writing like this. Keith thinks that KSA's SOLUTIONS REPORTS are better than IBRs - why? Because our "SRs" look forward and set out solutions in writing with costs set out. Do IBR's do that  for directors, banks and stakeholders?

Want to see  KSA Solutions Report? call us now

Tuesday, 7 February 2012

Ross and Bonnyman in Liquidation

Ross and Bonnyman an Angus-based company established for 40 years specializing in supplying lifts for warehouses and commercial vehicles has gone into liquidation.
One cause of the company's difficulty has been the reduction in orders from the public sector which has affected the ambulance lifts part of the business.

The liquidators said they were hoping to be able to sell the assets of the business but the company could not continue to trade due to lack of cash flow.

Angus North MSP Nigel Don will this week raise the liquidation of long established Forfar employer Ross & Bonnyman with Scottish Government Ministers according to reports.

Hearts FC in trouble with HMRC

Following on from the previous blog here is one of the reasons  there are fewer CVAs done in Scotland.  The almost immediate advertisement of a winding up petition once it has been issued.  HMRC put a notice in the paper giving Hearts FC 8 days to pay the tax owed otherwise the court will appoint a liquidator.

 In a statement, Hearts said: "The club is aware of the notice placed in a newspaper relating to an earlier petition presented to the Court of Session.

"We are confident, however, that the relevant matter involving HMRC will be resolved in the very near future and no action as specified in the public notice will be necessary."

Don't let it get to this stage!  Call us if anyone is threating a winding up petition.  You do not get as much time to act as you do in England and Wales

Scottish Insolvency Figures

The recent statistics on insolvency in the UK has highlighted the fact that Scotland has been struggling more than other parts of the country.   This is because the insolvency rate for both individuals and companies is proportionally higher than the rate in England and Wales. 

2010 there was a total  of 1041 liquidations, 241 administrations, and 7 CVAs
2011 there was a total of  1237 liquidations, 236 administrations, and 14 CVAs

From the figures above it is  liquidations that have seen the biggest rise.  However, the fact that CVAs have gone up from 7 to 14 is progress in that it is likely that this rescue mechanism is being considered appropriate more often!  Anyone who wishes to have a fuller understanding of the CVA mechanism can register their interest in the next Scottish CVA Seminar.  Or you can call our Scottish Regional Manager Derek Robinson on 0131 242 0081

Monday, 6 February 2012

Winding up petition analysis

KSA Group has done an analysis of the number of winding up petitions (WUPs) that have been advertised recently in the London Gazette.    They are interesting in light of the recent insolvency statistics that have been released.

January 2011 saw a total of 999 winding up petitions advertised.  This was a huge number and if you look at the number of administrations last year they were highest at this time of year.  However, liquidations did not show a particularly high peak at that time.  So, how many have been advertised in January 2012?  The answer is 766.  This is a more usual figure but it is likely that the total number of insolvencies may not show the increase that many are expecting in Q1  2012 following a slight increase in Q4 2011.

That said, directors should not be complacent and it may be that many businesses have fallen before a creditor has resorted to issuing a winding up petition which is seen as a last resort.

But if you get one of these then give us a call. You must act!

Friday, 3 February 2012

Insolvency Statistics for 2011

So, we finally have the statistics for 2011 business insolvencies.  Much has been made of the last quarter's results which show an increase but the important thing is to look at the figures over a full year.  Look at these figures:

CVAs in 2010                          765
              2011                           767

Administrations 2010               2831
                          2011                2808

Receiverships     2010              1302
                           2011               1397

Liquidations 2010                    16045
                    2011                     16871

As predicted, the figures are pretty flat with a bit of a jump in liquidations which is most apparent in the retail and leisure sectors.  Receiverships have gone up also but this does include commercial property that is subject to an LPA receivership appointment, so is not strictly a corporate insolvency event.

Keith Steven said, "the recovery in growth in the UK has not materialised and ironically that is when insolvency numbers for companies will rise. Having said that KSA Group is seeing a large increase in winding up petition action by HMRC (witness Portsmouth City) and we, as a firm, are expecting to double the number of CVA deals this year compared to 2011".

Hopefully more companies will turn to CVA as the best rescue tool.

Madhouse in Administration

Madhouse, the fashion retailer, has gone into administration today with 700 jobs at risk.  Alexander Lawson Jacobs has been appointed administrator.  Deluxe Retail, that traded as Madhouse, had a turnover of £29m but made a loss of £231,000.  Last year, according to the firm had a deficit in the accounts of £39k but the auditors felt it was viable as a going concern as the main creditor was supportive of the firm.  We suspect that this is no longer the case and the firm had little choice.  No winding up petition was advertised.

We will post more details when we know more.  If you are an employee of the firm then please refer to our help for employees page

If you are struggling retailer remember that administration is not the only option.  A CVA can help you restructure the firm and you stay in control.

Thursday, 2 February 2012

Micro Anvika Proposes CVA

Micro Anvika, the Tottenham Court Road based electrical retailer, is proposing a company voluntary arrangement in order to restructure and survive according to The Register Magazine

The retailer has 7 stores and a concession in Harrods but it has been hit hard by the fall in consumer spending on some big ticket items, as well competition from the internet.  The proposal will mean that it can close some of its loss making stores.  The company turned over £30m last year but that was down from £43m 2 years previously.  The company accounts show that it made a loss last year of £993,000.  The overall debts of the company are not known at this time.

In order to persuade the creditors to agree to the restructure the board of directors will not be taking any pay rises or bonuses and the shareholders will not receive any dividends.  This is according to the letter to creditors that was leaked to The Register.  Quite right!  If the directors and shareholders are  to ask the creditors to take a hit on their debt then they need to be seen to be doing all they can to support the business.  A CVA requires grit and determination from the directors in order to succeed.

The creditors meeting for the CVA is in March. 

Wednesday, 1 February 2012

The Discovery Stores Closing Down?

Update: 7/02/2012  Andrew Nichols and John Butler of Driffield-based licensed insolvency practitioners Redman Nichols Butler were appointed administrators of Discovery Store on January 27, according to documents seen by the Yorkshire Post.

I have been receiving emails from people in relation to a firm that operates gadget shops called The Discovery Store Limited.  A number of people have complained that the staff have not been paid as the firm has said that it is going into administration and they should claim their money from the government. It is true that in the event of insolvency unpaid wages can be claimed from the national insurance fund.  For more details please see our page on redundant employees  However, my research so far has not indicated that it has gone into a formal insolvency procedure and so no claim can be made.  If the firm is compulsory wound up then a claim can be made, however this may be some months away. The firm has had a couple of CCJ's against it but that is all.  

If the business owes money to HMRC or trade creditors they may petition to wind the company up. Employees may try and get an employment tribunal to award them their pay.  If the firm subsequently goes insolvent then any award will have to be recovered from the remaining assets if any.

The firm says it has 20 stores but lists only 5 as it appears that some are being closed down after the Christmas trading period.  So what, if anything, wrong has been done.

Has the firm been trading wrongfully?  This is difficult to ascertain but they need to have been wilfully piling up debt knowing that there was no chance of paying the creditors for this to be the case.  It could be argued that they are closing down stores to avoid exactly that.

To see what the staff have been saying then read this
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