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

Friday, 31 August 2012

Another Vauxhall dealership in administration

Approach (UK) ltd  with dealerships in Andover and Salisbury is the second Vauxhall dealership to go into administration in the last week.


Previously,  Stevens, the two-site Vauxhall, Network Q and Chevrolet dealer in west Sussex went into administration after attempts to find a buyer failed. Smith & Williamson were appointed as administrators.

Stevens, sponsored by Vauxhall, had been running at a loss for some time and the manufacturer - also a shareholder since Stevens' founding in 2000 - said it has provided "significant funding" to try and turn the business around.

In a statement Vauxhall said: "Due to the current economic climate, notice of intention to appoint an administrator has been given in relation to Pearl (Crawley) Ltd (Stevens' legal entity).

Stevens has sites in Horsham and Crawley. It sold around 2,000 new and used cars and vans a year and was established in 1963.



Thursday, 30 August 2012

JJB Sports - Possible prepack or administration on the cards

Update:  Sports Direct have expressed an interest in buying parts of JJB Sports as the firm looks likely to go through a pre pack administration.  If a prepack does go ahead it is likely that there will be many closures and job losses.  Given the huge success of Sports Direct and the dominance that it will  have in the sportswear market, the OFT are likely to look into it.  Other suitors include JD Sports and the French company Decathlon.


JJB Sports has admitted that it is likely to need extra funds, which have not so far been forthcoming, to carry on with its turnaround plan.  As such, the firm has put itself up for sale with KPMG advising.

This is a backward step for the company that has seen it go through 2 CVAs to vacate poorly performing stores but it seems that the sales slide continues.  JJB Sports has been under serious pressure from the other retailers in the sector Sports Direct and JD Sports who seem to have the right product, at the right price, at the right time.

JJB Sports was once the largest retailer in the sports market.  It now has a stock market value of less than £10m.  The retailer added that in the six weeks to August 26 like-for-like sales have decreased by 3.3% and like-for-like cash margin has decreased by 9.5%.  Last year we blogged that the sales had dropped by 17% http://companyrescue.blogspot.co.uk/2011/10/jjb-sports-reveals-drop-in-revenue-of.html  so this trend needs to be reversed quickly if the company is to be saved.

So what does the future hold?

One likely outcome is that JJB Sports will sold in a pre pack administration or be put into administration to protect it from further creditor attacks.  The assets will be sold off and the best performing stores retained in a smaller company.

Some commentators may argue that the CVAs don't work as the business may fail.  However the extent of  the falling revenues are a sign of the market and the company's positioning not a flaw in the CVA process.


Wednesday, 29 August 2012

Independent Financial Advice Industry to change in 2013

It seems that more and more industries are having to make some big changes in the next few years.  Lawyers have had the new "Tesco Law" which enables non-lawyers to set up and own practices and now we have the Retail Distribution Review for Independent Financial Advisers (IFAs).

This review will mean that from January 2013 commissions will not be paid to advisers by insurance companies and banks or any other provider of a financial product.  Instead, the adviser will have to charge an upfront fee to the client.   In principal this means that the advice will be trusted more as it will not be paid for only if the adviser "makes a sale"  Also all advisers are having to pass additional exams.

So what will be the impact?
Many observers have said that the public will be unwilling to pay the £200 per hour that some IFAs believe is the true cost of advice and as such many IFAs will simply leave the industry.  Margins are likely to be squeezed, especially for the bigger firms that claim to be independent some may become "restricted".  The term restricted refers to the fact that no adviser can really know all the products as there are simply too many so they prefer to concentrate on a few providers.

Some reports have suggested that as many as 3000 firms will go out of business but given the  overall demand for GOOD financial advice should not change much then we think this is unlikely.  Indeed it may even encourage consumers to talk to people knowing that they are not always going to end up buying a product or switching from one to another.

It will be interesting to see what happens in 2013 but it depends entirely on the adaptability of advisers and the perception of the consumer at large.


Tuesday, 28 August 2012

Partnerships and an Individual Voluntary Arrangement

In a partnership all partners are jointly and severally liable for the partnership's debts.  As such, the partners may need to enter IVAs as a way of limiting their individual exposure to the business debts.  This can be done in conjunction with a Partnership Voluntary Arrangement. 

See a flowchart below that shows how the process of an IVA for a partner works in principal.


Company Bankruptcy - What does it mean?


The insolvency world is full of misnomers like "company voluntary liquidation", "creditors voluntary arrangement", "going into receivership" "company voluntary agreement" (when they really should use phrases like administration, administrative receivership, company voluntary arrangement or creditors voluntary liquidation).

What about the word bankrupt and bankruptcy? This only applies to individuals, a company cannot go bankrupt. So when anyone, often jounalists, say a company is going bankrupt they are showing that they know little about insolvency!


Friday, 24 August 2012

Mouchel Group Plc close to administration

update:  The shareholders of Mouchel have rejected the restructuring and the board have expressed the intention to appoint administrators.  The assets will be sold to affiliates of its lenders and management.

Mouchel Group Plc struck a deal a couple of months ago that would allow the lenders to take control of the company to stop it defaulting on its debts.  This meant the lenders, Royal Bank of Scotland, Lloyds Banking Group and Barclays, releasing £87m of Mouchel's existing debt for a majority stake in the company.

However, the company has suspended its shares today in order to "clarify the company's financial position" which is often a prelude to the business going into administration.

So we wait to see what has actually happened.  The firm was going to de-list anyway after it was to pay a special dividend to long suffering shareholders.

Invoice finance firms face regulation calls

Francis Coulson, the former president of the insolvency trade body, R3, has pointed out, in the Telegraph, abuses by certain invoice finance firms and banks that profit from putting companies into administration.  Invoice finance providers are able to lend money to businesses by advancing cash secured against their sales ledger.  The Telegraph has been

The providers are exploiting contractual fees, and their preferred creditor status to make money from struggling businesses, she said.

They are "preferred" as they are secured lenders.  See our page on creditors ranking in insolvency for further information.

Of course, these companies take on a certain level of risk when they are lending to a business and the ongoing fees should reflect that.  However, it has come to light that the termination fees, i.e when the business fails, can be huge.  In one case we were involved in,  the fees were £200k on a £700k lend.  The bank still appointed administrators despite 2 written offers of replacement finance within 2-3 days and a shrinking liability.  This effectively scuppered any chance of a rescue and unsecured creditors including HMRC lose out.

The other issue that arises is a conflict of interest. Brokers who pass leads to lenders are often owned by insolvency practitioners. This can create a conflict of interest since the invoice finance provider, as secured creditor, can choose which administrator to appoint and when.

A campaign group called http://www.rabf.org.uk/ or Regulation of Asset Based Finance are pushing parliament to consider the industry.

Given the banks are reluctant to lend alternative forms of of financing are seeing large growth with even Wonga.com getting in on the act.  In our view it is important that this industry is monitored and bad practice and conflicts of interest stamped out..







Thursday, 23 August 2012

Greenstar in Receivership


One of the Northern Ireland's biggest waste companies, Greenstar, which employs 800 people, has been put into receivership by its bankers.  The directors said that they demanded immediate payment of the loans which was regrettable considering that they "had not missed any scheduled repayments and were in a strong cash position"

Greenstar is part of the NTR Group and it supplies 12,000 businesses and 80,000 households.

In a statement, the NTR Group said: "Greenstar Ireland, its board, management and shareholders have made every effort to reach an agreement with the banks to secure the future of the business and its employees. At this time, the banks have made their own decision about how they want to move forward and the future of the company is now in the hands of the receiver."

So what happened?

Their are always two sides to every story and the company was up for sale for over a year but given that there were no buyers then perhaps the banks became nervous.  The problem is that a company can  be in a "strong" cash position and be making repayments at any time but that does not mean that it is sound in the long term, especially as a situation can deteriorate quickly.

If you are based in Northern Ireland and your company is struggling then you can contact our Northern Ireland Regional Manager, Derek Robinson

Wednesday, 22 August 2012

Seminar on how to deal with past company debt.


A Seminar on how to manage company debt
Thursday, September 20, 2012 from 5:00 PM to 8:00 PM (BST)
HSBC's offices in Crawley.



Where

Map data ©2012 Google - Terms of Use

Map


HSBC Global House
High St 

Crawley RH10 1DL 




How does a company deal with its past, by acting in the present,
to secure its future?

The time to act is now: procedures and expertise are in place to deal with inherent corporate debt, as is the support going forward.

HSBC, Crawley are kindly hosting this evenings event and the sponsors and presenting companies are KSA Group Ltd and Advantage Business Partnerships Ltd.

The presentations will contain critical information for company directors and corporate advisors at all levels: accountants, lawyers, stakeholders, interims, NEDs and turnaround practitioners. Time will be given over for questions and answers and there will be networking opportunities during the complimentary refreshments provided.

KSA Group are experts at company rescue and restructuring and  Advantage Business Partnerships are able to advise and mentor companies to improve their future performance.   

Please arrive by 5pm for a prompt 5.15pm start.

If you want to come along then please register for this event



What is the acronym CVA short for?

A CVA most commonly can mean the following;

Cardio Vascular Accident ( heart attack)

Credit Value Adjustment  ( Banks do this as part of their risk management processes )

Company Voluntary Arrangement 

Note that it is NOT Company Voluntary Agreement, Corporate Voluntary Arrangement or other deviations.

A recent article in the Evening Standard criticized the British Property Federation (BPF)  for using the term Company Voluntary Agreement when asking for a change in the process.  This is what he said;


The only problem is that BPF has got the name of the process wrong, as the correct term is a company voluntary arrangement. Surely, if a trade body is going to call for a change to regulations, a good starting point is to get the most basic facts right.

But Wait.  The BPF actually used the term "CVA"  It was the journalists that interpreted the CEO Liz Peace's comments as referring to a Company Voluntary Agreement.  

Hats off to the Evening Standard journalist who knows the difference but unfortunately it is invariably the press that gets the term wrong

Other less well know acronyms


Cis-vaccenyl acetate ( A male pheromone in insects!)
Christian Vegetarian Association.

I think I will stop there.....









Tuesday, 21 August 2012

Retail Insolvencies - 50% of Jobs Saved

An interesting bit of research from R3, the insolvency trade body, has shown that since 2011 large retail insolvencies have resulted in 50% of the jobs being saved.  I suppose it depends on whether you are a glass half empty or half full sort of person but this is generally better than many people expect.  R3 has been tracking the staffing impacts at major retail collapses such as Blacks, Aquascutum, Clinton Cards and Game Group.


In general, it can be said that the more flexible insolvency regime since 2002 has helped business survive.   The use of CVAs and pre pack administrations have also helped.

R3 said that many retailers have portfolios that are too large and the rents agreed were at the pre 2008 crisis.  This has meant that many companies have had a debt burden that they simply have not been able to maintain.    Woolworths was the most high profile collapse where all stores were shut down.  It should be remembered, of course that there are many smaller retailers that are simply not going to be bought up or have the ability to restructure and landlords need to be more flexible in their approach

The figures are as below.



Major Retail failures 2011/12
Pre-Insolvency
Post-insolvency
Company
Stores
Employees
Stores
Employees
313
3,885
224
2,750
Focus DIY
180
4,000
55
1,000
Habitat
33
750
3
150
Homeform+
160
1,300
50
740
Jane Norman
89
1,600
33
1,200
La Senza
146
2,600
60
1,300
Past Times
47
1,500
Nil
Nil
Peacocks
614
7,500
388
4,320
Oddbins
139
600
43
150
TJ Hughes
57
4,000
15
1,800
Stylo Barratt
191
3,840
90
2,240
Hawkins Bazaar
65
380
8
80
GAME
610
6,000
333
3,896
Alexon*
75
3,000
50
2,700
Clinton Cards
784
8,000
400
4,500
Updated figures
Julian Graves (Deloitte)
189
755
n/a - still trading
n/a
Allders of Croydon (Duff & Phelps)
1
330
n/a - still trading
n/a
Group.


If you are retailer and you would like to find out how you can save your business and jobs read our Retailer Rescue Pages









Monday, 20 August 2012

Insolvencies in July fall by 9.5%


The latest insolvency index produced by Experian shows that since last July the overall insolvency rate fell by 9.5%  with 1,776 companies failing in July 2011 against 1,962 companies a year earlier.
Scotland's insolvency rate is now the lowest in two years after a 25.3% fall on the number of businesses failing since last July.
This has shown an improving picture for the month of July but as always it is not very scientific taking just one months figure.  However, it is yet more evidence that the country is not in quite as bad a state as the GDP figures seem to suggest.  
The study found the biggest improvements across the UK came from the non-food retail sector, which saw the rate of insolvencies fall the furthest - to 0.1% in July from 0.2% last year.  This is still a lot less than the 2.5% insolvency rate that was witnessed in the early 90s
Once cited reason are the number of rescues using the company voluntary arrangements (CVAs), where firms avoid going into administration by asking lenders and creditors - such as landlords - to renegotiate their debts.  This, in our view, is a preferable way to manage insolvency as opposed to pre pack administrations or simply liquidating a viable company.  
Travelodge is the latest firm to launch a CVA, announcing a deal last week to walk away from 49 loss-making hotels and write off £700 million of its debts.

Friday, 17 August 2012

KSA Group Insolvency Notices

Miles Findlay Limited s98 Creditors Voluntary 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 31 August 2012 at 12.15 pm

See full notice below
http://www.companyrescue.co.uk/insolvency-notices/miles-findlay-limited-s98-creditors-voluntary-liquidation-notice


Leamside Services Limited s98 Creditors Voluntary Liquidation Notice

Meeting of the Creditors of the above named Company will be held at the offices of KSA Group Limited, C12 Marquis Court, Marquis Way, Team Valley, Gateshead, Tyne and Wear, NE11 0RU on 21 August 2012 at 14:15 pm

See full notice below
http://www.companyrescue.co.uk/insolvency-notices/leamside-services-limited-s98-liquidation-notice



Sard Systems Limited s98 Creditors Voluntary 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 31 August 2012 at 11.00 am

See the full notice below
http://www.companyrescue.co.uk/insolvency-notices/liquidation-notice-sard-systems-limited


Pedal Pushers Limited s98 Creditors Voluntary Liquidation Notice


Meeting of the Creditors of the above named Company will be held at The offices of KSA Group Ltd, C12 Marquis Court, Marquisway, Team Valley, Gateshead, NE11 0RU on 6 September 2012 at 11.15 am

See the full notice below
http://www.companyrescue.co.uk/insolvency-notices/pedal-pushers-limited-s98-creditors-voluntary-liquidation-notice

CVA saves furniture company in the South East



CVA Case Study - Furniture company based in the South East


This is a small family owned company in the South East of England. It faced problems that will be familiar to many retailers across the UK; sales declining, margin pressures, rising non domestic rates and lack of bank support.

KSA Group was able to help as follows;

The managing director contacted KSA Group via the www.companyrescue.co.uk  website.  Earlier this year (2012) and we gave him general advice. Nothing further was heard from the company.

The company was then served a winding up petition (WUP), unfortunately this had also been advertised by the petitioner which was HMRC for £238,941 NIC, PAYE and VAT arrears. Total creditor debt is £244,893. So the Crown was by far the largest creditor.

The director had been taking unqualified advice from a “family friend” which led to a delay in contact with HMRC and the issuing of the petition. Had they ACTED SOONER perhaps the WUP would not have been issued. As you can imagine failure to communicate with any creditor leads to suspicions and regrettably the family friend thought it was best NOT TO TALK TO HMRC! Wrong.

Find out what we did by reading our CVA Case Study on our Company Rescue Website.


Moral of the story here is WHY RISK YOUR BUSINESS and take advice from lay people or poor quality websites?


GET QUALITY insolvency and turnaround advice, we provide this free of initial charges and the free first meeting is always followed up by a written solutions report.

Thursday, 16 August 2012

Dawson International in administration


Dawson International, the cashmere making company that owns Barrie Mill in Hawick, has gone into administration following a hole in its pension fund.  The company employs 180 people and makes cashmere for some of the worlds best known fashion brands. Blair Nimmo and Gary Fraser of KPMG LLP are the administrators.

The move follows rejections by the Pension Protection Fund of offers to resolve the company's large pension deficit.  It would be able to do this by transferring its defined benefit pensions into the protected fund as the company was unable to meet its liabilities.  In a statement the Chairman, David Bolton said:

“This is a sad day for Dawson International, and for British manufacturing. To see this 140-year-old company forced into administration due to the PPF’s decision is deplorable, a direct consequence of a flawed process lacking in common sense and transparency."

He also went on to say; "It should be noted that there is no intention to appoint administrators for the US knitwear business, Dawson Forte, which is well funded and continues to trade normally.

In a strongly worded statement the CEO blamed quantitative easing and high fees on the deficiency and the inability of the Protection Fund to realise that the outcome in administration would be much worse than the measures the company was proposing to continue funding the scheme. He went on to criticise  the decision process as being flawed and took far too long 15 months from when the company's proposals were submitted.

For more information on pension issues look at our page on pensions funds and insolvency.

Wednesday, 15 August 2012

Unemployment rate falls again

It seems that the number of people out of work has fallen again to 2.58m, a fall of 46,000, and the unemployment rate has dropped from 8.2% to 8.0%.  This is still high by historical standards and the number of part time workers has risen to an all time high of 8m.  Although it has been reported that 1.4m part time workers want full time jobs. However as a percentage of the total workforce this  is not an extremely high figure.  The rise of part time working has certainly helped prevent the recession being as bad as that seen in the early 90s but we are not out of the woods for sure.

It remains to be seen how this backs up arguments that the statistics on GDP are inaccurate.

The insolvency figures will still make interesting reading as a reflection of the health of UK plc. The latest figures have shown there has been an 18.7% year on year fall for compulsory liquidations from the second quarter of 2012 compared with the same period in 2011.

Tuesday, 14 August 2012

Is inflation making a comeback?

The CPI rose to 2.6% today which has caught people by surprise somewhat as the Bank of England had hoped, and indeed forecast, that price pressures were easing. Last month's figure was 2.4% and the rise to 2.6% has been mainly attributed to the increase in air fares.  Also the summer sales started early this year and so there has not been as much discounting on clothes and other consumer goods in the month of July.

The most obvious immediate impact of the latest figures is that the rail fares are now due to rise by up to 11% on some routes as from February next year.  The price of oil has also gone up in recent weeks and the drought in the US is to push up food prices in the next month.  All in all we may be seeing price pressures increase over the next few months squeezing spending even more.

I am not sure if the Bank of England or the Treasury absolutely have to make predictions but they have been so wrong over the last couple of years - Inflation, GDP, unemployment etc.

Monday, 13 August 2012

CVAs in action - Free Seminar in Birmingham hosted by Gateley LLP and sponsored by KSA Group



CVAs have been in the press recently with Glasgow Rangers and Fitness First both proposing them as ways
to rescue and restructure their businesses and even Travelodge are now considering it.

We warmly invite you to learn how they work from both the debtor and the creditor's point of view at our Free Seminar.  As Gold Sponsors of the Turnaround Management Association (UK) our guests attend for free to this CPD qualifying event.

Speakers:

Rachael Campbell, Associate Lawyer, Gateley LLP.
Turnaround Lawyer.

Bryan Green,
CEO & Principal, Tnui Ltd.
Lawyer, Funder and current President, TMA-UK.

Keith Steven,
CEO & Principal, KSA Group Ltd.
Turnaround Practitioner.


Date

18th September 2012

Time
6pm - 8pm


Location
Gateleys LLP
One Eleven
Edmund Street
Birmingham B3 2HJ


Drinks and refreshments will be served
afterwards so there will be opportunities for
some networking and you can take away our USB
Toolkit with the hundreds of guides on
insolvency matters.


If you would like to come along as a guest of KSA Group please RSVP on
020 7877 0050 or email me at robertm@ksagroup.co.uk

More details are available on the TMA (UK) Web site This is a CPD Qualifying Event

Travelodge looking at a CVA



It has been reported that the owners of budget hotel group, Travelodge, who are Goldman Sachs, Avenue Capital, and GoldenTree Asset Management have appointed KPMG to advise on how the hotel chain can be restructured to manage its £500m of debt.  The debt payments amount to a £100m a year.  The New York based hedge funds are in the process of taking control of the the hotel chain from Dubai International Capital who bought the business in 2006 with £475m of debt.

A company voluntary arrangement (CVA) – is one of the options being considered whereby the creditors agree to write off some of the debt and repay the remainder over a 3-5 year period.  The CVA mechanism is especially cost effective at allowing companies with large real estate portfolios to reduce costs by vacating premises.  Another option is a debt for equity deal whereby fresh finance is injected into the company.
Reducing the number of hotels it operates is also an option if the group can convince landlords to find new operators to take on its leases.

Travelodge has performed quite well through the economic downturn –with a profits rise 20pc to £55m on revenues up 16pc to £370m – the interest on its debts have simply become unsustainable.

A spokesman for Travelodge said: "As part of the ongoing restructuring process, a number of options are being considered. However, no decisions have been taken at this stage and we will update you in due course."

If your company is dragged down by debt then a CVA could be the answer as for smaller businesses a sudden injection of cash is less likely...

Thursday, 2 August 2012

A CVA can stop a winding up petition


A CVA can stop a winding up petition. However, according to our sources at HMRC approximately only 1 in 60 people promising to file a CVA in order to stop an HMRC petition actually do so!

This makes no sense! If you promise to file a CVA then you must be pretty sure that your business is viable going forward. So what is holding people back?

Putting a CVA together is a complex process but KSA Group can make it easier! Within 2-5 days of an initial meeting we can have a formal report of 30 pages setting out the options for the board.

Over the next few days or weeks, following our appointment by the board, we can put together a forecast for the business from our financial director, Andrew Hunter. The CVA proposal is then approved by the insolvency practitioner acting as nominee and then it is filed at the court.


Once this happens all creditors' legal actions are stopped. Even if time appears to be running out prior to the actual filing of the CVA in court we can talk to creditors and ensure that the winding up petition is not advertised as this would kill the company!

If you don't act???



Well, HMRC will send you this letter:


Wednesday, 1 August 2012

Mouchel in debt for equity swap


As we pointed out in our previous blog on Mouchel it looks as if the debt or equity swap was the best option. So Mouchel have allowed the lenders to take control of the company to stop it defaulting on its debts.  This will mean the lenders, Royal Bank of Scotland, Lloyds Banking Group and Barclays, releasing £87m of Mouchel's existing debt for a majority stake in the company.




Mouchel will be left with £60m of outstanding debt and they will be de-listed from the London Stock Exchange.  The shares have fallen from a high of £1.47 to under 2p.   However, the company is proposing a special dividend of 1p a share, contingent on the completion of the restructuring.

Hein Gericke in administration

Hein Gericke (UK), one of the UK's largest motorcycle clothing and accessory retailers with 49 shops across the UK has fallen into administration.  The company has a turnover of £18m and buyers are being sought for the company.  The UK shops are a subsidiary of the German based company that has shops all over Europe.  The firm blamed falling sales due to economic pressures for the failure of the business.

Administrators at Moorfields Corporate Recovery were appointed joint administrators on 30 July.


Hein Gericke, who was a German biker who started a shop in the 1970s  has stores in Birmingham, Nottingham, Leicester, Stoke, Northampton, Lincoln and Dudley in the Midlands.

In the year to 30 September 2011, Hein Gericke (UK) posted pre-tax losses of £1.3m on sales of £18.2m.


But Hein Gericke's administrator said it was confident it would find a buyer for the business, and that some interested parties had already come forward.





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