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Wednesday, 31 October 2012

Partnership Overdrawn Current Accounts

For limited companies, overdrawn director's current accounts are a common problem when facing an insolvency situation.

To recap, an overdrawn current account is when a company stops making profits but the directors continue to take out drawings which will be later voted as dividends, so effectively owing the company moneyuntil the dividend is voted.. Efficient and correct in good times for a company, but this approach can cause problems when losses are made, there are insufficient reserves to cover the dividends and directors can find themselves with personal liability problems.

What about partnerships then?
Partnerships of course have their own tax benefits, but if the partnership has not been making any money and there are overdrawn current accounts, then the unique situation arises where the partners are joint and severably liable for the account. In an insolvent situation this could be very damaging on top of the personal liabilities of the partners to the creditors.

In a limited liability partnership the partners will not be joint and severably liable for the overdrawn account but it will be, in effect, the same as a directors overdrawn current account. So in an insolvent situation the same rules apply. An LLP will not offer complete protection against creditors and we have blogged on the subject before on what you need to know about limited liability partnerships
So for a partnership what are the Solutions?

Well, options include:

Repay the debt you personally owe to the company.

Offset any loans the partners have made to the company (this is called set off).

Make a lot of profits in future periods to offset it!

A company can use a Company Voluntary Arrangement to reverse the current year directors drawings into the PAYE Scheme if there are insufficient reserves to pay a dividend. However, for a partnership that may not operate a PAYE Scheme this is not possible. A partnership voluntary arrangement or PVA may be an option, which will allow the partnership to continue to trade with money owed to creditors paid off over time and the partners will need to pay off the overdrawn account as they are in effect debtors of the partnership.

What happens in a winding up of a partnership if there are overdrawn current accounts?

In any liquidation the liquidator can demand that partners repay their overdrawn current account to the partnership for the benefit of the creditors. They can take legal action to make partners pay this or even make them bankrupt.

So, partners may be at risk of losing their home if their current account is overdrawn and not recovered.

The important thing is to take advice on this matter from professional advisors before it becomes an unsurmountable problem.

Tuesday, 30 October 2012

Yellow Pages Winding up Petition?

Will Hibu, the oddly renamed  former "Yell", formerly "Yellow Pages" (confused!)  survive?

It is according to the FT, facing threats of a winding up petition from creditors who were to be paid £65m this week. This 6 year old debt is probably unsecured and therefore the debt holders have few options, but to threaten the blunt winding up petition approach

Should Hibu be wound up? Well we don't know the intricacies of the £2bn - yes two billion - of debts it is carrying, but one thing is probable. If the company is served with a winding up petition, then the secured debt and bond holders may appoint an administrator.

As so called zombie companies go, this would be a massive failure and one that would hurt a great many banks.

Friday, 26 October 2012

Could bankruptcy get you out of paying maintenance following a divorce?

A case is going through the courts at the moment, where a former company boss, who has been declared bankrupt, is arguing that he should have his debts to his ex-wife wiped out too. His divorce settlement gave her the family home, and £500,000 in installments. So far she has received £211,000, and he says that should be enough.

If he wins, it could have far-reaching effects.

Alexander McRoberts, aged 54, of Datchet in Berkshire was divorced in 2003. He fell into financial difficulties shortly afterwards and was declared bankrupt in 2006. This was discharged in 2007, but Mr McRoberts is arguing that the bankruptcy should have cleared the debt.

His lawyer has pointed out that he is not in a financial position to repay the debt. And that his ex-wife, Mandy McRoberts, is a company director in a £500,000 home in Windsor, which makes her considerably more financially comfortable than her husband. He also says that if the debt still stands, Mr McRoberts is concerned that he will have to declare himself bankrupt again.

Mrs McRoberts has argued that £349,000 is still outstanding from their divorce settlement nine years ago. Her lawyer has highlighted that if the court finds in favour of Mr McRoberts, it will create a legal loophole, which would enable spouses to dodge their responsibilities through bankruptcy. He said it would mean "opening the door to all the bankrupts out there who don't want to pay their lumps sums in family proceedings."

The impact
The judge said: "I don't want to do anything that suggests that so long as you go into bankruptcy that is the gateway to avoiding the family court's orders. There are lots and lots of husbands and wives who are company directors."

However, he added that there may be an argument that the bankruptcy court could take the changing needs of both parties into account - and that the case "raised some curiosity as to the relationship between the bankruptcy jurisdiction and the family jurisdiction."

He added that the case needs further consideration, and the decision has been reserved for a later date.

Thursday, 25 October 2012

Bowen Travel Group in administration

Update 26/10/2012;  It has been confirmed that the Boden Travel Group has gone into administration and all staff have been made redundant.

The Bowen Travel Group has 38 travel agencies across the West Midlands, Lincolnshire and Northamptonshire. It also operates three coach holiday brands - Bowen's, Appleby's and York's - under umbrella brand BGT Travel.

It is understood that Deloitte have applied for an administration order.  The website has been suspended and all staff were told that the business was in administration. according to the reports.

A Deloitte spokeswoman was unable to confirm its involvement at this stage.

If you are an employee of the business then you can refer to our help for employees pages but please do not call our office.  Any holidaymakers should direct their enquiries towards Deloitte.

UK " out of recession " if ONS is to be believed.

No wonder that David Cameron could not contain his excitement after seeing the GDP data and let slip that "good news was on the way".  After an "Annus Shambolicus" for the Government this is a great news.

Britain left recession in the third quarter after posting its strongest quarterly GDP growth in five years!  Official data released today showed that the economy grew by 1%.   That is 30% more than the most optimistic economists were predicting.   The Office for National Statistics said Britain's gross domestic product rose by 1.0 percent between July and September after shrinking by 0.4 percent between April and June. On the year, the economy was flat.

 Of course, there is the usual comments that these figures contain one off events like the Olympics and an extra day working etc etc but overall it is still a better picture.   Industrial output was 1.1 percent higher, the strongest rise since the second quarter of 2010. Construction - which accounts for less than 7 percent of GDP - contracted by 2.5 percent.

 Other indicators have pointed to an improving picture.  The Markit's purchasing indexes have shown an improvement, unemployment has been falling, retail sales have been improving and the insolvency rate has been falling.  

 Now wait, that last one, the insolvency rate, is an interesting one.  Historically, if the economy improves after a recession then the insolvency rate actually rises....

Why is that?  Simply because creditors get tougher when they think there is a better chance of getting the money and banks look to call in loans when there is a market for assets if the business cannot survive.  Also if they want to lend to a growing company they will need to stop lending to a failing one.    Finally there is the issue of overtrading.  This is when orders are made but the money from customers is not called in fast enough to fund the expansion.  We have a great page on why profitable firms go bust here.

Wednesday, 24 October 2012

Electrical services company issued with winding up petition but survives using a CVA

An electrical services contractor, working in the industrial and commercial building and construction sector based in Kent saved by a Company Voluntary Arrangement.

The director contacted KSA Group  after reading the website.  A meeting was held between the director and KSA Group regional manager on 6th August 2012.

KSA Group were appointed to assist the company on 10th August 2012. The company encountered financial difficulties because of considerable sums owed by two main contractors. The company was owed c£85k in certified payments and some of the debtor days exceeded 16 months. The director had cut costs prior to KSA Group's appointment via one redundancy. However, a winding up petition was issued by one of the trade creditors.

Find out what happened by reading our CVA case study

Tuesday, 23 October 2012

Barkley Alexander and Associates Limited in Liquidation

KSA Group, the authors of, always watch our space for competitors.

The internet has low barriers to entry and companies can make all sorts of claims. So it is interesting to see an advisor, BARKLEY ALEXANDER & ASSOCIATES LIMITED, advertising on Google as  have actually gone into liquidation as of 17th October 2012.  So who is paying for the website and the online advertisements and why?

BEWARE of companies that claim to offer all sorts of easy solutions like CVA for debts of just £15,000 - Check them out first. Are they regulated, licensed and experienced? Then look at their testimonials, can they give you referees?

Here is a quote from their website.

Do you want to write off 100% of the current companies debts?
Do you want to ‘buy back’ the companies assets?

The fact that they can’t write good English ( err company’s perhaps)  should be a warning!

CAVEAT EMPTOR - buyer beware. These claims are misleading and may be dangerous for your company in difficult times.

Given that they are actually in liquidation DO NOT PAY anything over until they have done a job of work!

Always seek out good practitioners.  They should have a clear address, location, pictures and bios of people who work for them, and genuine testimonials.   They should also NOT be in a insolvency mechanism themselves!

KSA Group Liquidation Notices

UK Bailiff Company Limited Creditors Liquidation Notice

A Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 2 November 2012 at 10.45 am

For the full notice see below

Reds Technologies Limited Creditors Liquidation Notice

A Meeting of the Creditors of the above named Company will be held at The Elstead Hotel, 12-14 Knyveton Road, Bournemouth, Dorset, BH1 3QP on 7 November 2012 at 1.00 pm

For the full notice see below

Monday, 22 October 2012

Manganese Bronze the London black cab maker has filed for administration

London black cab maker, Manganese Bronze, has filed an intention to appoint administrators.

In a filing dated today the firm announced: “that discussions with various parties to secure funding on acceptable terms to address the Group’s financial needs have proved unsuccessful. The Board has therefore concluded that the Group is no longer a going concern and has filed notice of intention to appoint administrators.”

The difficulties mostly stem from a production problem that resulted in a fault with the steering column of the car.  This has meant that as many as 400 cabs had to be recalled.  The firm had been hoping for an injection of £15m from the Chinese car-maker Geely, which would have transferred production to China.  For the first six months of 2012 the firm recorded an operating loss of £3.1m on revenues of £34.3m. In August it revealed it had understated past losses by £4.25m.

However the filing does state that they think the business has a viable future.  This is at some odds with the company's opening statement.  

So what has happened?  
It is possible it faced a winding up petition that would have meant that the company would have been unable to trade.  However more likely it is viable if someone would inject £15m into it!  The failure of that money coming forward put it into an impossible position.

Thursday, 18 October 2012

30 shops a day closing down

According to research by PWC and the retail data provider Local Data Company (LDC) shops on the UK high street are closing at a rate of 30 a day in August and September.

High-profile administrations such as Game Group, Peacocks, Past Times and Clinton Cards helped push the number of closures of town centre chain store outlets to 953 in the first half of the year.  This compares with 174 in the whole of 2011.

The changing face of town centres can be seen by looking at which types of retailers are doing well.  There are 7% more discount stores in the UK  the first six months and  11% more payday loan outlets, and  8% more pawnbrokers....  The lack of expansion plans by the more established retailers has also been blamed in as one reason the High Street is floundering.  Expansion plans need the banks to lend and they have not been keen to do this.  Especially since some well known brands such as HMV are heavily indebted.

Despite these figures the vacancy rate has remained fairly stable at 1 in 7 and this in part has been helped by new independent shops opening.  However, they tend to pick their spots and so some parades can decline quite rapidly.

The most common factor that the large multiples have is that they have too many shops that were opened during boom times and are stuck in long leases at relatively high rents.

However even for smaller multiples there is a way out.  A Company Voluntary Arrangement or CVA can help a retailer close down stores that are dragging the whole company down.  Read our page on retailer CVA s

Wednesday, 17 October 2012

Zombies and Company Rescue feature in the Telegraph Business Supplement!

Business Turnaround Experts featured in the Daily Telegraph. 

Please read the supplement by clicking on the picture.  This flat lining economy has resulted in thousands of businesses that are carrying large debts, no growth or declining sales but are managing to continue to trade.   Good people are tied up in these unprofitable companies that means that other more lean companies are having to work harder says John Moulton of Better Capital.  This situation is not helping the economy recover and grow.

Mild cashflow problems? Serious threats by creditors? Winding up petition threats from the tax man?  

It is, in our view, an abdication of management responsibility not to ACT when the pressure is building.  Hence the lack of confidence that banks may have in the board.

When pressure from creditors starts to mount and the threat of legal action comes along, then there is a powerful alternative to terminal insolvency.  Keith Steven writes that a company voluntary arrangement is often the best option for companies that are struggling with debts and need to stop firefighting and allow the turnaround to get under way and allow existing or new directors to get on with running the business.  Read the Telegraph article here

Of course, business turnaround needs more than just a single mechanism like a company voluntary arrangement but also the need for turnaround experts in finance and operations.  Management often need to change and they should use tools like daily cashflow forecasts, get up to date financial reporting from experts like Insight Associates, also featured in the supplement and set out a recovery plan with stakeholders such as banks, employees, creditors, investors and shareholders. Often it is necessary to bring in interim managers to help them move forward.  KSA Group has close connections with experienced quality people who can help in this regard.
Phone us on 01289 309431 for details.

Insolvency Practitioners Hoping For Increased Business

An article in Accountancy Age today highlights the strangely quiet world of insolvency  in the UK.

At a recent Pinsent Masons conference over 450 practitioners and staff were questioned on their expectations for the insolvency market in the next 12 months. Over one third predicted a rise in insolvency appointments.

Well they would, wouldn't they!

Seriously though, experience shows that once a recession has firmly ended and a recovery begun, the number of insolvency appointments rises quickly as "zombie" or failing companies are closed down and assets and businesses sold to stronger players.

So we guess that, with two thirds of respondents NOT expecting a rise in appointments, a firm recovery is not expected either?

Tuesday, 16 October 2012

KSA Group and Company Rescue featured in Telegraph Business Reporter Today

Keith Steven writes in the Business Turnaround Supplement of  the Sunday Telegraph.  Below is a scan from the paper.

If you cant read it - here is the text.

The legal sector is in trouble. The introduction of the Legal Services Act has led to the option of forming alternative business structures (ABSes), meaning a number of distressed firms with failing businesses may be snapped up by larger players.

But as is customary in any marketplace, whenever you see consolidation, you also see failure. Businesses close down, other companies purchase distressed assets and a consensus between stakeholders is rarely reached. If the Solicitors Regulation Authority (SRA) thinks a firm is a risk to the clients, then it may instantly intervene. “Effectively the business dies there and then,” says Keith Steven, managing director of KSA Group.

“To put a company into liquidation takes three weeks, but the SRA can intervene in a flash – if they’re ready to go, they can be there “today”. In most cases, the SRA will give prior warning by writing to distressed firms requiring the management to seek external insolvency advice. But often if it gets to this stage, it’s already too late.

“Smart lawyers should be thinking about turnaround options that are available before it’s imposed upon them by the SRA,” explains Steven. “The aim should be, even before the SRA gets them on its watch list, to get advice before insolvency options are required.”

Common warning signs such as poor cashflow, falling sales or not being able to meet payments to HMRC should be taken seriously by partners and directors. Struggling with PAYE and VAT payments are indicators that management must act. “A new pair of eyes coming in can spot the issues,” explains Steven.

“The reason management doesn’t address structural business problems is fear of change. But change has been forced upon them by the market and smart directors must act to turnaround the business.” The KSA Group offers a variety of solutions including plans “A”, “B” and “C” to the distressed firm, and works with it and the SRA to prevent regulatory intervention.
Plan “A“ can be used while it’s still possible to defer creditor payments, restructure bank debts, chase debtors, cut costs and turn the business around.

If creditors choose to reject this informal deal, then Plan “B”, may be used, this is often a formal Voluntary Arrangement (CVA or PVA) to pay creditors over a fixed period while continuing to trade. Debts are substantially discounted on the way through. If it gets to the stage where it is impossible to turn the business around, that may mean plan “C”, when a break-up sale to buyers or a prepack administration becomes necessary. “That’s not desirable for all parties, but it can sometimes be the only outcome” said Steven.

The KSA Group also offers a free online guide at which has served as a crucial aid for companies feeling the pressure of a tough economic climate, with thousands still trading with its help.

020 7877 0050

Uniglaze in administration and up for sale

Uniglaze the Norwich-based  the toughened glass and double glazing firm, has gone into administration despite doing a deal with its creditors last year.  At the time a new management team, led by managing director Philip Davis, was drafted in to oversee a CVA (Company Voluntary Arrangement) –  The move kept the firm afloat, saving some 280 jobs at the time.   

However, Administrator Chris Pole the director of KPMG's restructuring said; " In spite of the company’s efforts to find a resolution to its problems via a CVA, the company’s cashflow has been substantially impacted by a further decline in turnover and the insolvency of a key customer. “In the context of a persistently difficult market for businesses supplying into the construction sector, the company has been unable to restructure further or to attract additional funding, leaving the directors with no other option than to seek the appointment of administrators."  

A total of 88 staff have lost their jobs and KPMG are looking for a buyer. 

So, it is pretty clear that this is not ammunition for those that say that all CVAs don't work.  Yes, some do not work and are misused and in order to facilitate discussion and debate in this area we have a new website at where anyone is free to discuss the mechanism.  Lawyers, landlords, funders, employees, insolvency practitioners, directors are all invited to contribute.  

Details of how to contribute are on the site or you can just email 

Monday, 15 October 2012

CVA Case Study for an IT Services Company

IT services to the Education sector based in the North West.
The directors of the company contacted KSA Group as they were having cash flow problems due to 3 particular factors.
1. Business model used to focus on low margin hardware sales
2. Bank reduced overdraft and paid down the company's credit cards thereby reducing the available working capital and pushing the company past the new overdraft limit.
3. Due to the academic year the company experiences seasonal fluctuations.
The company had recognised the problem and had tried to restructure by making 4 redundancies saving c. £120k pa, 4 directors of the business had left and the business tried to refocus its efforts on technical service and maintenance to increase cashflow.  However, cashflow problems continued as a result of the loss making in the past , SO they thought that a CVA may be needed to provide some relief of the cashflow pressure and buy the business some more time. After looking at all the options KSA Group agreed.
Following our instruction from the directors, HMRC tried to levy distraint on the goods of the company but were persuaded by KSA not to do this pending the outcome of the CVA negotiations.  This was the same strategy that KSA used with all the creditors and we kept them informed of all the developments and work that we were doing to try and restructure the company.
To keep cash flowing we need to persuade the secured creditors,  such as the factor and the bank, to support the company.  The factor undertook to maintain the facility throughout the CVA process and the bank agreed to provide a credit card facility and convert the existing overdraft into a term loan.
At the creditors meeting, held in August, the HMRC and trade creditors voted 100% in favour of the CVA and accepted a dividend of 54p in the £1

Friday, 12 October 2012

TC Bathrooms in administration despite denials of financial problems

TC Bathrooms has finally entered into administration following denials by the Managing Director that the business was in trouble.

Ernst and Young are the administrators for the company which includes distribution arm TC bathrooms, Ossett-based showroom business Victorian Bathrooms and retail network bathrooms4all. The majority  of these stores are in London and the M25 corridor.  8 of the 17 Stores have been shut down.

Joint administrator, Hunter Kelly added: "The company's trading performance has been impacted by the economic downturn and the contraction of the new housing and refurbishment markets. In addition, whilst the business remains profitable, it has been unable to service the debt taken on to fund its recent considerable expansion."

So this sounds like it was the their bank that put it into administration.  As a secured lender they have the power to appoint administrators.

Thursday, 11 October 2012

Gemini Riteway Scaffolding in administration but new company taken on business.

Gemini Riteway Scaffolding is in administration it was revealed last night.  The official notice can be found here

The firm is one of the largest scaffolders in the South East.  However it appears that it has restarted operations from its Horsham office trading under the name ANT Structures according to the Construction Enquirer.

So what has happened?  

Looks like a pre pack administration where the assets were sold to the new company at the same time as the company went into administration.  

British Property Federation defends CVAs !

The British Property Federation (BPF) have in the past been critical of CVAs as they believe that they unfairly penalise landlords.  However they appear to have warmed to the process a bit.

Speaking at the Insolvency Today Annual Conference (ITAC) 2012, the BPF’s director of real estate policy, Ian Fletcher, said; “Our members tend to like the transparency of the CVA and I take on board the point that they don’t always work.

“With JJB, there has been some criticism but landlords received rents on units that they may not have done for another two years. We have to remember the situation that the business was in at the time.”

This is a bit of a turnaround in the BPFs view but they appear to be looking at the broader picture.  What would have been the alternative?  KPMG the main proposers of CVAs said at the conference that the mechanism had to be shown to be a better outcome than an administration.  An administration would no doubt have a bigger impact on the ability of the company to pay rents and keep trading in existing premises.

It was also mentioned that the continuing weakness of consumer spending meant that companies that were already struggling and in CVAs were facing an uphill task and so the failure of a company in a CVA was a reflection more on the company and its market than the CVA process itself.

Of course we always say that the CVA needs to be well structured to ensure that it is fit for purpose.  Common mistakes directors and their advisors make when proposing CVAs and implementing them are the following;

Not changing the management's way of doing things
Not cutting costs hard or fast enough.
Not getting all stakeholders on side. Such as the bank and crucial suppliers.
Trying to pay back too much too quickly.
Having over optimistic forecasts of future revenue.

Tuesday, 9 October 2012

KSA Group saves 1760 jobs using CVAs

We have done an analysis of all the companies that we have successfully negotiated CVAs for and which have been approved by creditors and filed at Companies House.  Since January 2011 KSA Group has "saved" 1760 jobs in these firms.

What do we mean by that?  

Well, prior to the CVA being filed these businesses faced being wound up or being put into administration or liquidation as they suffered under the weight of their debts.  The CVA allowed the unsecured creditors to receive a dividend on their debts ranging from 30p to 100p in the £1 and the business to get on with making money and being a useful and productive member of the business community!

So what did we actually do?  

The main thrust is to persuade the creditors that the business is viable going forward.  A special thanks to the team in our Berwick Office who do all the creditor liaison in this respect.   Our corporate advisors talk to the client's bank, HMRC, trade suppliers, and customers amongst others.  We also advise the directors on how they can cut costs to become more efficient using the powerful company voluntary arrangement mechanism.

Of course those jobs are just from CVAs.  They do not include the work we do with pre pack administrations, trading administrations and informal time to pay deals with creditors.

Monday, 8 October 2012

Paramount Foods in Administration

Paramount Foods went into administration over the weekend  following the loss of a major contract with Morrisons, which accounted for 40% of its turnover.

The administrators at Duff and Phelps said; "While the company has incurred trading losses historically, the recent loss of a major customer has left it without any prospect of returning to profitability in line with a turnaround plan embarked upon in July this year."

Discussions about the future of the business are now taking place with customers to find a suitable buyer for part or the whole of Paramount Foods. Duff &Phelps has asked for interested parties to come forward and get in contact.

The company is one of the largest manufacturers of frozen and chilled pizzas in the UK and supplies some of the biggest supermarket names, including  Sainsbury's, Asda and Tesco. It employs 138 people at its Salford bakery, which produces pizza bases, and a further 312 in Deeside.

If you are an employee of the business then please take a look at our help for employee pages.

Friday, 5 October 2012

We can rescue companies in Scotland!

winding up petition issued by a creditor against a Scottish company is an even more dangerous step than in England as there is no grace period after the petition and before the advertisement.

In effect the moment a petition is served it is advertised on the wall of the Court.  This may lead to the bank accounts being frozen.  This particular quirk of the Scottish system is one reason why there are fewer corporate rescues in Scotland than in England.  However, KSA group are keen to change this!

Derek Robinson is our Regional Manager in Scotland with offices at

66 Albion Road,

Derek has a wealth of business knowledge.  A creative and yet objective thinker, Derek understands very well the challenges of running a business and is keen to advise and help directors overcome challenging financial circumstances.  You can call him on 0771 476 5578 or 0131 242 0081

Please read our new pages on winding up petitions in Scotland to see what can be done.

KSA Group in Birmingham can rescue companies

Russel Mallen, a chartered accountant,  is very experienced in the provision of quality accounting information in distressed situations and he heads up our KSA Group operations in Birmingham.  

Comapnies often have a breakdown of accounting and reporting in the stress that insolvency can bring, Russell will oversee a deep review of the systems and reporting, tidy up the balance sheet and profit and loss and set out meaningful information for the directors and their advisors. He can also set out the options for any recovery plan.

So if you are worried that your business does not have sufficiently robust accounting practices and the business is struggling then call Russell as he can help on both fronts!

Call Russell on  0121 3780671 07989 575933

KSA Group to promote rescue culture in Midlands

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.

We recently held a Seminar in Birmingham about how the CVA mechanism was the best way to rescue struggling businesses.

Free cash-flow 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.

Jemma Kidd Make-Up in administration

Jemma Kidd, the successful model and make-up artist has been the latest to call quits on her business according to reports.  Jemma Kidd Make-up Ltd has collapsed into administration with debts of over £2m.

Jemma Kidd  set up the business seven years ago with her friend Grace Fodor, the star of the BBC business programme Be Your Own Boss.  The business was doing well until it lost its contract with Boots.  She moved to offering  makeup courses to which lots of people went paying £1000.

Unfortunately anyone who has paid for these courses in advance are unlikely to get their money back from the administrators at RSM Tenon. However, it has been reported that on Twitter Jemma has promised refunds.  She will probably need to pay for these out of her own pocket as the company will not be able to afford any refunds after the other creditors have been paid.  30 staff made redundant.

A spokesman for administrators RSM Tenon told the Daily Mail: ‘Unfortunately, the business has suffered from a decline in sales and we are currently seeking a potential buyer.’

Thursday, 4 October 2012

United Carpets in pre pack administration

The listed Yorkshire business, United Carpets, has been bought out of administration in a pre-pack deal.

UCN is the principal trading company of the United Carpets group, owning its corporate stores and also acting as franchisor of the group's franchises.  Once the business was put into administration at the same time the assets were sold to  which was a wholly owned subsidiary of the company.  They owned 72 stores.  They are now looking to agree substantial reductions on the rent at these stores so they can continue to trade.  So why did not they not go for a CVA?  The reason is probably simply that the landlords were the major creditors and they would not have been able to get 75% of the landlords to agree to a CVA.  This meant that an administration process was the only option.  If United Carpets (Franchisor) Ltd cannot agree with the landlords then they will shut the store.  Either way the landlords are between a rock and hard place.

In a statement the company said;  "The board is disappointed at the need to take these steps but is confident that the core of locations remaining once the restructure is concluded will, with appropriately adjusted overheads, provide the foundation for a successful and sustainable business."

If you want to know more about a pre pack administration then look at our site.  A pre pack is one of the options facing an insolvent but viable company but a CVA can often be used in these circumstances depending on the creditor profile.

See our article on accounting web about pre packs and CVAs which seeks to explain the differences and benefits of each mechanism

Wednesday, 3 October 2012

Waverley in administration as pubs continue to close

The latest company to go into administration is Waverley, the largest drinks distributor in the UK, which has collapsed with 830 jobs in the balance.  The company blamed the large numbers of pubs closing down on its demise.  The firm was sold by Heineken in 2010 for £19.2m and taken over in a management buy-in. Waverley posted a pre-tax profit of £4.2m last year despite a 12% drop in turnover.   The company supplies drinks to pubs, restaurants, and attractions such as Madame Tussaud’s.

The administrators at Deloitte are hoping to sell the company and are looking for buyers.  In a statement Daniel Butters, joint administrator, said Waverley was a victim of “tough” trading conditions as well as a tightening of credit terms.

Last years accounts revealed that the company was reliant on invoice discounting for its working capital.  So did the factor put it into administration ? The factor is a secured lender and has the power to do this as the charge holder.  Read our page on fixed and floating charges to understand this better.

Credit Agricole also had lent the business millions of pounds so it is not certain what precipitated the fall.

In the end too much debt and not enough margin is problem that many larger businesses are facing whilst smaller businesses are not getting access to finance at all.

Tuesday, 2 October 2012

Optical Express Files Notice of Intention to Appoint Administrators for a Subsidiary

Optical Express Group has filed a notice to appoint administrators on one of its subsidiaries which could result in the closure of around 40 stores according to Property Week.

Only yesterday some research came out that said that retail administrations were down 15%.  However this recent development does follow the September Quarter day which is often a catalyst for these businesses to go into administration

123 Leeds Limited is the subsidiary that runs 83 of the 170 stores around the country. Bryan Jackson, Anne Buchanan and Ian Schofield at PKF are to be appointed according to reports.

A spokesman for Optical Express said the subsidiary currently holds the leases of 83 stores but the retailer would seek to buy back a number of them, meaning approximately 40 Optical stores will be closed. The spokesman added the retailer did not intend to put any of its other subsidiaries into administration.

The Chairman said that the stores that are likely to close are those in "tertiary locations" as they have suffered from competition from out of town shopping centres and the general cutting back on spending.

JJB Sports shops to close as Sports Direct only buys 20 shops

The administrators at JJB Sports have had to close 133 shops as Sports Direct were only interested in 20 of them and paid £23m.  This deal saved 550 jobs out of 2700.  However it is possible that some of the other stores will be bought up in the coming days.

It was expected that Sports Direct would buy about 60 stores but concerns about the price to be paid for the stock and competition rules appear to have dented Mike Ashley's ambitions to take a larger chunk of the once dominant sports retailer.

Richard Fleming, KPMG’s UK head of restructuring, said all staff made redundant through the store closures have had their wage arrears and holiday entitlement paid in full and would be offered help in finding new jobs.

Monday, 1 October 2012

Retail administrations fall by 15% Year on Year

In the continuing flat economy the actual number of retailers that went into administration fell by 15% in the last quarter.  This is despite the failure of a number of large chains such as JJB Sports, Clinton Cards and Aquascutum.  This is according to research undertaken by Deloitte.

The third quarter of 2012 saw a total of 395 companies across all sectors falling into administration compared with 524 a year before.  However, a company going into administration can be an expensive process and is really only suitable for larger businesses so it is not the whole picture.   That said there is still a downward trend on the rate of companies becoming insolvent.  The position will be clearer once the Insolvency Service's statistics come out in a few months.  

So why is the insolvency rate so low if we are in a recession?  Simply because the banks are not crystallising their balance sheets,  what is more they don't want to loan to other good businesses that would improve their balance sheet if other loans are called in. HMRC are not putting much pressure on businesses. Finally companies may be running on empty but they are not overstretching themselves and so building up cashflow pressures, even if on paper they are profitable.

With regard to retailers they are finding themselves under a great deal of pressure from business rates which has become of particular concern.  Administration is not the only option open to retailers that want to reduce liabilities and leave premises.  Please read our page on retailer rescue.
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