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Friday, 29 June 2012

Avoid Insolvency with an informal arrangement with creditors

If you can't pay your debts, as and when they fall due, then perhaps you can extend the period over which they become due by agreement.  This is an informal deal, whereby the creditors of the company agree to extend the payment terms over 12-18 months.  So in effect, a time to pay plan.  Of course, you will need to pay 100p in the pound but the extra time can save the company. 

This informal deal we have called Plan A -.  Read our page on informal turnaround and Plan A

Blogged by Robert Moore

Thursday, 28 June 2012

KSA Group Insolvency Notices

Online-Recruit s98 Creditors Liquidation Notice

Meeting of the Creditors of the above named Company will be held at the offices of KSA Group Limited, Units 7 & 8, The Chandlery, Quayside, Berwick upon Tweed, TD15 1HE on 30 July 2012 at 11.15 am

See the full notice below

Wednesday, 27 June 2012

Creditors Voluntary Liquidation Flowchart from KSA Group

You have a company that is no longer viable and has debts to HMRC and perhaps trade creditors. You are worried about personal liability if you continue to trade.  The solution could be a creditors voluntary liquidation. 

Step 1 – Find a Liquidator. We can help as we have a number of insolvency practitioners. Uniquely to KSA Group, 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.

Here is a flowchart that makes it a bit easier to follow.  You can click on the image to download a copy.

Tuesday, 26 June 2012

Portsmouth CVA approved

In contrast to the fate of Glasgow Rangers, the CVA proposal by the administrators for Portsmouth FC, has been approved with the unsecured creditors getting approximately 2p in the £1.  HMRC voted against the CVA which is usual in football cases.  To see why read our page on the football creditors rule. However, overall the proposal was approved by 95% of the creditors.

The company voluntary arrangement is based on an offer from former owner Balram Chainrai's company Portpin. Portpin is offering to settle outstanding wages for part-time club employees (prior to it entering administration), and debts owed to charities as well as small local businesses owed less than £2,500.

So what next?

The Company Voluntary Arrangement was approved but with modifications.  The modifications can be insisted upon by the creditors and these were that the administrators had to continue to negotiate with other parties interested in making an offer.   The Pompey Supporters Trust had tabled an offer last Friday and the administrators at PKF are due to meet them this week.  Another condition of the CVA proposal was to restructure the players cost base.

Of course, all CVA proposals have conditions that need to be met and cutting costs to improve performance is a sensible and necessary one.

Monday, 25 June 2012

Company debts dragging your business down?

Many businesses are doing better since 2008 but all the while they are being held back by an historic debt.  The reasons for the debt may have disappeared or the problem that caused it may have been sorted.  However, it still makes its presence felt but making it hard to arrange new finance and generally draining cashflow. In some high profile cases recently we have heard about companies such as Fitness First and Clinton Cards that have had 100s of milllions of pounds worth of debt.

KSA Group can help companies by using rescue techniques such as CVAs, pre-pack administrations, trading administrations.  We can also negotiate on your behalf with HMRC to arrange time to pay VAT, PAYE and other taxes.

Have a look at our page on company debt which highlights a number of reasons why businesses find themselves in debt and what can be done about it.

UK Manufacturing not in decline

The idea that the UK doesn't make anything anymore and relies on financial services is completely untrue. We manufacture 1.4m cars a year and the UK is the 6th largest exporter in the world.  The sector employs 2.5m people and it is growing.  A report by PwC highlights this fact.

Yes, the services sector has expanded more rapidly than manufacturing in recent years but this does not mean it is in some sort of terminal decline.  Other perception problems may stem from the fact that some high profile manufacturing operations are not British owned, such as Jaguar Landrover but they still contribute huge amounts to the UK economy. 

Try this myth buster courtesy of the Make it in Britain exhibition at the Science Museum.

Friday, 22 June 2012

KSA Group Insolvency Notices

The Newcastle Roofing Centre Limited

A meeting of the Creditors of the above named Company will be held at The Holiday Inn, Metro Centre, Clasper Way, Swalwell Newcastle-upon-Tyne, NE16 3BE on 9 July 2012 at 11.00 am

See the full notice below

Streetlife Fare Limited 

A meeting of the Creditors of the above named Company will be held at 66 Albion Road, Edinburgh, EH7 5QZ on 13 July 2012 at 11.45

See full notice below

Judge in Farepak case rules that directors were right to keep trading

In an interesting opinion regarding the collapse of Farepak the Judge in the case against the former directors brought by the Insolvency Service, he has come down on the side of the directors saying they did everything possible to try and find a solvent solution whilst still trading.

This follows the dropping of the case by the Insolvency Service against the former Farepack Directors.  Of course, the savers in the scheme are rightly upset that no one has been brought to book over the affair but their ire may now be directed at HBOS who came in for some very strong criticism by the Judge.  This is what he said; "The directors efforts failed over the period between March and October 2006 on the flinty ground of HBOS, which had a policy of playing hardball, of which it appeared to be proud, and conceding nothing,"   The full statement of the Judge can be found below.

HBOS refused to extend the overdraft and forced the directors to continue trading and collect deposit even though it looked like it there was to be an insolvent solution such as administration or liquidation. This did not impact upon them (the bank) as HBOS had its overdraft of £40m to the company secured so it would be fully repaid in the event the firm went bust. 

The directors tried to find a solvent solution but ultimately the banks action forced the company into administration.  It goes to show that in hindsight it is easy to say "Oh you should have just shut down to stop the creditors position getting any worse." It is often not as simple as that. 

What can we learn from this episode?

Importantly, it shows that the company directors, and their advisers, should always consider ALL the options and this may be to carrying on trading and do a deal with creditors, renegotiate contracts, cut costs and drive more sales.  Some insolvency practitioners look at administration and liquidation as the only options and ignore other rescue mechanisms such as informal arrangements and company voluntary arrangements.  A CVA may not have been appropriate in this case but administration or liquidation didn't solve the problem. for the unsecured creditors. The bank obviously played hard ball and recovered most of its debts but to the detriment of the savers in the scheme. It will be interesting to see if the bank coughs up the £10m extra contribution that the judge suggested should be paid?!

Thursday, 21 June 2012

Camelot Healthcare in administration

Camelot Healthcare, the operator of four Cheltenham care homes, has fallen into administration leaving up to 60 jobs at risk.  However, but the administrators at PKF accountants have said that they should remain open but with some redundancies.  The firm runs the Broadleas, Dalkeith, The Hawthorns and Pinehurst homes.

Krissimon Care are to run the homes which have 79 beds between them until a buyer can can be found.

The joint administrators said that all residents, staff and relatives had been notified and would be kept fully informed.

Carehomes have been in the spotlight not too long ago with the collapse of Southern Cross.  Many operators took on too much debt in the boom years and found themselves in difficulty when the local authorities started to reduce the amount they were prepared to pay for beds.

Wednesday, 20 June 2012

Fitness First CVA Approved

Now there is a more realistic CVA than the one which was proposed for Rangers!  Fitness First's  CVA proposal has been approved with creditors accepting 28p in the £.  The administrators said that the likely return in administration would have been 0.5p!

Approval of the CVA will also see lenders convert their debt into shares in the business once the restructuring programme is completed.

As we previously blogged the chain will see 67 of its gym's moved across to other operators and the remaining stores will get a 55% rent reduction across its remaining locations for 6 months whilst this transition is being completed.

This sounds like a good deal for Fitness First and again shows that a good CVA will get approval if it is realistic and fair. 

Gym operators have seen their margins squeezed as budget operators come to the market and customers cut back on subscriptions.

Tuesday, 19 June 2012

Olympic Torch passes through Berwick Upon Tweed the hometown of KSA Group

Staff at our head office in Berwick upon Tweed got some deserved time off to see the Olympic Torch pass through the town.  

One of the torch bearers was Josie Goodfellows who is in the Netball club with our corporate advisor, Marie Moody (pictured with her daughter and the torch!)

The time has come to stop moaning about the traffic chaos, tickets, VIP lanes and let's look forward to the biggest sporting event in the world.  Go Great Britain!

Inflation rate falls to 2.8%

The inflation rate has fallen to 2.8% from 3.1% as the fall in oil prices and the dropping out of VAT rises are taken into account.  This is welcome relief for hard pressed consumers in the face of lack lustre wage growth.  However, much of the fall has been the result of the Eurozone crisis which has meant that there has been downward pressure on oil prices as worries persist about the strength of the global economy.

These lower than expected inflation figures will also strengthen the case of further quantitative easing by the Bank of England to try and stimulate the economy. 

Monday, 18 June 2012

Graydon Insolvency Predictor predicts flat insolvency levels

The credit referencing agency Graydon has predicted a flat rate of company failures in the second half of 2012 but warns that certain sectors are likely to have elevated levels of insolvency.  The Graydon Insolvency Predictor says that it expects the number of company liquidations to increase by only 1.4% from the rates seen in the first half of 2012.  But the figures will show a fall of 4.8% in the period when compared to 2010.  However it goes on to say that the projected failure rates in retail, construction, and real estate will go up between 2% and 5%.  This is not surprising given the state of the economy and confidence.    Construction is going to be hit harder later in the year as more Government projects are coming to and end and the pick up in demand from the private sector is not materialising. Retail is going to continue to suffer for reasons that we are all familiar with. However, an increase in vacancy rates will further compound the problem as footfall is affected given the lack of choice that the high street or shopping centres give.

In practice, this means that companies in construction, retail and real estate are 2.6 times more likely to collapse in the present market than those in the other sectors covered by the data, including such support industries such as those providing accounting, marketing and project management services.

So given the difficult state of the economy how come more businesses are not going into liquidation?


  1. Lack of pressure from HMRC and Banks
  2. New companies not taking market share from existing providers
  3. "Zombie companies"with historic debts kept going due to point 1
  4. A period of stagnation and inaction as a result of uncertainty in global economy.

Friday, 15 June 2012

Allders in Administration

As we thought might happen, see our blog earlier,  Allders of Croydon has gone into administration this morning with hundreds of jobs at risk.  Insolvency practitioners at Duff and Phelps have been appointed as the administrators.  This is a blow to Croydon as Allders is an important draw for shoppers to the town centre.  The administrators have said that the store will remain open and accounts paid while they seek to determine its future.  They are optimistic and there is interest in the store as part of a total redevelopment of the town centre.

If you are an employee of Allders please see our help for employees pages

KSA Group Insolvency Notices

Bright Digital World Limited Liquidation Notice

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 2 July 2012 at 10.15 am.

Full notice below

When Sparks Fly Limited Liquidation Notice

Meeting of the Creditors of the above named Company will be held at The Westmead Hotel, Redditch Road, Hopwood, Birmingham, B48 7AL on 22 June 2012 at 11.45 am

Full notice below

Voluntary Dissolution Flowchart

If you have a small company that is no longer trading and has a few small debts to HMRC and perhaps trade creditors but no money to liquidate what can you do?

Often the best solution is to seek to dissolve the company from the Companies House register. As long as there are no assets and there are no legal actions, then voluntary dissolution could be a sensible solution.

There are of course rules to follow and the company directors must act properly and keep all company books and records. For a full guide to dissolution click the link below.

Here is a flowchart that makes it a bit easier to follow

"Does my company qualify for voluntary dissolution, I am not sure"?
Call us now on 0800 9700539 and get some expert advice, we'll help you decide if you can dissolve it with our step-by-step dissolve your company programme.

Thursday, 14 June 2012

Allders to face administration if rent deal fails

The historic Croydon department store, Allders, is in negotiations with its landlords and the local council over its £2m a year rent and rates bill as the next quarter day approaches.  The half a million square foot store has seen sales fall since last year’s summer riots and a general fall in consumer spending.   A rent reduction has already been agreed of £2 a square foot but it is understood that Allders is seeking a rent and rates payment holiday.  This implies some quite serious cashflow issues and it may be that the business will have to go into administration if no deal is struck.

A spokesman for the landlord said: “We have been, and remain, supportive of Allders and seek an outcome that works for all stakeholders concerned. We are in discussion with Allders and are exploring the options available to them.”

Harold Tillman, the retail entrepreneur, has seen his investments suffer in recent years.   Jaeger was sold just above its debt level and Aquascutum has been put into administration.  However, most of the businesses he has bought have been struggling. 

Earlier this year Tillman restructured his ownership of the store by reducing his stake to 35% while retail restructuring expert Hilco took a 35% stake and Royal Bank of Scotland's subsidiary West Register took a 30% equity slice.

The department store is currently up for sale for around £50m, as it plays an important role in the proposed redevelopment of the adjacent Whitgift Centre.

Administration followed by a CVA flowchart

This is what the administrators at Glasgow Rangers were trying to do.  An administration followed by a CVA is a way to exit an administration and continue to trade.  It is particularly common in football as it is a way of ensuring that the club can continue in the league as no new license is required as there is no new company.  However the mechanism can be used in many other situations.  We have created a flowchart to help explain the procedures.

Please click here for the full flowchart.

Need more explanation or wondering if it could work for you? 

Call 0800 9700539

Wednesday, 13 June 2012

Pre pack administration - What actually happens and when

The pre pack administration process is perhaps better explained using a diagram! 

KSA Group has just revamped its flowcharts that help people to understand the insolvency mechanisms.  Next up is the pre pack administration.  This involves various stakeholders and contrary to popular belief it does not actually happen overnight.  There needs to be a fair amount of preparation and planning to successfully complete a pre pack.

Click here to download the full flowchart.

Peters Bakery in Administration

Peters Cathedral Bakers based in County Durham, has gone into administration. The firm employs over 400 people and has 58 shops and a 50,000 sq ft factory in the North East of England.

Insolvency Practitioners at KPMG said it had been hit by the "rising costs of raw materials, energy prices and an increasingly tough retail environment".  They added that they are looking for a buyer for the company which trades as Peters Bakery.

It said the company would continue to trade until a buyer could be found, but warned redundancies were expected.

Peters Bakery,  the supplier to some of the UK's biggest supermarkets, had a turnover of more than £12m, KPMG said.

Could this firm have been saved by a CVA? 

KPMG are very experienced in CVAs so it may have gone into administration instead because of one or all of the following;

Level of secured debt was high and the lender wanted administrators called in.
A winding up petition had been served against the company so effectively time ran out.
A major creditor stated their intention not to support a CVA.
A potential sale will mean the best result for creditors....

Tuesday, 12 June 2012

The CVA Process in Pictures

Sometimes it is easier to understand a complex process by looking at a diagram or flow chart.  KSA Group has just revamped its flowcharts that explain the various insolvency procedures.  First is the company voluntary arrangement or CVA.  We hope this helps to make the CVA procedure clearer.  If you have any questions on how one can be used to rescue your company then please give us a call on 0800 970539

Click here to see the flowchart. 

Manufacturing output in surprise fall

There seems to be no respite in the recent gloom and doom around the place at the moment.  The markets have lost their excitement following the "rescue" of the Spanish banks and focused on the huge levels of debt that dog the governments in the Eurozone.  Now the manufacturing output statistics for the UK has shown a contraction of 0.7% in April after a rise in March.   Sharp falls were seen in the pharmaceutical and food sectors, while aerospace and electronics both saw a rise in output.  The levels of output are just 0.3% higher than ago.

This will put further pressure on the Bank of England to increase QE or even reduce interest rates and the Government will be hearing more calls for a bold growth strategy.

Manufacturing has been a bright spot in the UK economy with the car industry doing particularly well.  It will be a tragedy if the efforts of rebalancing the economy are undone by the Eurozone crisis.

If you are a manufacturing company which is struggling with company debts to HMRC, or your factor is making life difficult then please get in touch. We have solutions to alleviate issues with both your unsecured and secured debt.

call us on 01289 309431

Monday, 11 June 2012

Don't rely on your accountant for insolvency advice

Accountants do not know everything about insolvency!  So don't rely on them for insolvency advice
In many instances illegal dividends and loans are being made to company directors as a way of reducing tax payments. A dividend becomes illegal if the company does not have enough profit to cover it. HMRC take a dim view of directors who do this and are less likely to agree to time to pay deals.

It should be remembered that a company director has a legal duty to act responsibly. If a company becomes insolvent ( ie meets any one of the insolvency tests ) then the legal duty of the director changes and they must act in the best interests of the creditors. (all of them being treated in the same way). If the directors do not act in the creditors' interests and they act "wrongfully", then they can be made personally liable for the company’s debts from the time they knew the company was insolvent!

So saying my accountant told me to do it may not impress a creditor, liquidator or judge in a civil law action.

If you are an accountant who wants to know more then you can apply for our insolvency toolkit for advisors

Talk to KSA Group for advice or have a look at our comprehensive guides on overdrawn directors accounts

Free cashflow forecasting spreadsheet for directors

Everyone likes to get something for free! You don't get many handouts in business, so today we are giving away our free daily cash-flow forecasting spreadsheet for SME company directors!

Click here for your copy, no need to register or tell us who you are! Just click and download.

Friday, 8 June 2012

Spanish debt downgraded by 3 notches

It seems that the markets are finally losing patience with the leaders of the Eurozone to face up to their financial problems.  The downgrading of Spain's debt from A to BBB is basically taking it only two notches above junk status.  The economy of Spain is stronger than that of Greece but its banks are sitting on massive property losses estimated at Eu100bn.  The assessment by Fitch is stark, they are talking of property value falls of 50%...!

This is mainly designed to push the leaders into coming up with a solution.  The markets are awaiting the results of the Greece election which will basically be a vote on whether they want austerity imposed by others or go down the default path and impose it on themselves.

It was always so that if you owed the bank £1000 it was your problem but if you owed them £100,000 it was their problem!

Uncertainty is killing any growth or investment. 

Thursday, 7 June 2012

Clinton Cards sold to American Greetings

 A subsidiary of American Greetings, Lakeshore Lending Limited, has bought the brands and remaining assets of Clinton Cards it has emerged. 

This comes as no surprise since American Greetings bought the debt of the business and appointed their own administrators at Zolfo Cooper.  The administrators have announced that 350 out of the 784 stores would close.  The purchase has saved over 4,500 jobs and has given American Greetings a strong foothold in the UK card market.  However they will be up against stiff competition from Moonpig and Funky Pigeon,  the latter has already started to open some stores under the ownership of WH Smith who were also reportedly interested in Clinton Cards

Wednesday, 6 June 2012

Cecil Jacobs in administration

The independent photography retail chain, Cecil Jacobs, has fallen into administration with administrators at PKF taking control of the business.   The chain has 19 stores and employs 156 staff.  Given the difficulties that Jessops have found themselves in where they have had to be helped out by a direct injection of cash by Canon, the photographic market looks like a tough one to be in.  Online retailers are the biggest threat to such shops.

To be honest I was surprised when one opened in Kingston upon Thames right next door to Jessops.  They did cater for more advanced photographers but they didn't really seem very busy. 

Cecil Jacobs is a family run firm and the administrators are looking to sell the business as a going concern. 

The last reported accounts showed that the business managed to grow turnover and profit with the business having revenue of £28m and a pre tax profit of £150,000.  This is a slim margin but a profit nonetheless.  So it looks as if there was not much headroom for the business if there was a fall in turnover.  There has not been much information released by the administrators so it is not clear what has precipitated their appointment.

UK Banks Sitting on £40bn Losses, No Provisions Even When Covenants Breached

According to PIRC the shareholder advisory group, the UK banking sector is sitting on £40billion of  losses that have not been provided for. We call this "extending and pretending" with the debts of failing companies simply being rolled up and hoping for a better day.

The UK has thousands of companies breaching bank covenants (which are borrowing rules agreed with their lenders) but these are not being closed down or broken up. Instead the banks ignore covenants, there is little hope of getting the loans back in the current stagnant market, hoping that asset values will somehow improve in the future. Then when there is a future market to mark values to, the banks will place companies into pre pack administration in the hope that this process, which is hugely costly, leads to recovery of more than the current expected losses.

If your company, your client or your investee is breaching covenants act before the banks, get specialist restructuring advice from KSA Group.
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