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Thursday, 29 August 2013

Are you putting money into your business?

Are you putting your own money into your business to make it grow or to stop it collapsing?

This is the question that owner/directors of companies have to ask themselves.  Of course, many successful businesses have benefited hugely from the owner stumping up the cash as the bank or potential investors haven't bought into the untried business model.  Consequently, the owner doesn't owe anything to anyone and when stellar performance comes along they are sitting pretty.

What if the business has been going along time, it is in an established market, plodding along, and does not have a unique product or service but the directors are not drawing any funds or are funding the business to pay the wages.  Our advice is to be very wary and do a thorough cost benefit analysis of what you are doing. Could it be that the company could restructure some of its debts, ask for more time to pay debts, cut costs etc?  There is a huge amount of information on our company rescue site about this but readers might be interested to hear about a recent report the ICAEW commissioned by the BDRC Continental ( downloadable from the link ) that has pointed out that  40% of SME's were being funded by way of personal monies.  Interestingly, 20% of those respondents said they felt that they HAD to make this investment rather than using it to fund growth or new projects.  It also showed that the higher the credit risk rating of the company the more likely they were to use personal funds.  This statement stands to reason in the case of start ups but is also true for respondents that said they HAD to make the injections of capital.

The research also looked at other forms of finance for SMEs and concluded that there was an uplift in the external finance such as credit cards, loans, factors, and personal monies in Q2 2013 when compared to Q1 from 39% to 44%.  Also perhaps unsurprisingly we have seen that the use of bank overdrafts has declined.

So if you are putting in lots of money into your struggling company it may be worth considering how you can protect your position if the business fails.  It may be that you take out a debenture ie some sort of security over the business.  For more information on charges see our pages on fixed and floating charges.  It would be advisable to seek legal advice before lending money to your own company.  We know lawyers who can help with this.  But before you do this talk to us for a reality check to see if you are risking too much as you are emotionally attached to your company.

Wednesday, 28 August 2013

Cavern Walks Shopping Centre owner is in administration

Warner Estate Holdings, the owner of Liverpool’s Cavern Walks shopping centre, has announced that it is to appoint administrators today.  It said that it has suffered as a result of the 2008 financial crash.

"The Board having considered those implications has resolved to appoint administrators from CCW Recovery Solutions, over the Company's business as there no longer remains a reasonable prospect that the Company can avoid insolvent liquidation and the procedure of administration would be in the best interests of creditors as a whole," it said.

The group operates a wholly-owned fund comprising 42 commercial sites as well as units in the Ashtenne Industrial Fund.

Administrators are expected to sell Warner’s asset management business to Hansteen and Warner will sell its 5.3% stake in Ashtenne to Hansteen.

All 95 Warner staff should be able to transfer to Hansteen, the group said today.

This should not have any implications for the shopping centre merely a change of ownership.

Tuesday, 27 August 2013

KSA Group Insolvency Notices

Accounting Freedom Limited Liquidation Notice

A meeting of the creditors of the above named Company will be held the offices of KSA Group Ltd, Tower 42, Level 7, 25 Old Broad Street, London, EC2N 1HN on 2 September 2013 at 10.00 am

See full notice below

Academy of International Sport Limited Liquidation Notice

A 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 11 September 2013 at 3.15 pm

See full notice below

Abuse of winding up petition process by unregulated debt collection agencies

Ali Akram of LexLaw has written a good piece on his blog about using a winding up petition as a debt collection tactic being an abuse of process.

He points out that an unregulated debt collector used the winding up petition process to extract payments without really understanding enough about the procedure.

Examples of wrong doing include the following;

  • Not allowing enough time for the debtor to pay the amounts due
  • Not giving sufficient warning of legal action
  • Threatening to publicize the petition which is not in accordance with the regulations i.e. sending a copy to your bank.
  • Adding unreasonable costs to the application to put on further pressure.

Read the whole article here;

Friday, 23 August 2013

The Rise and Fall of RSM Tenon

Amazing isn't it, the seventh largest accountancy and insolvency practice in the UK goes bust, one year, or so, on from finding a massive hole in its published accounts, and there is virtually no fuss?

The bank sweeps away up to £80m (we will never know how much of that debt it recovered), the same bank (Lloyds) then funds Baker Tilly's purchase from pre pack administration of the assets, namely the subsidiary trading companies.

One could say that this is a sign that the bank feels it was a good opportunity to recover some of its exposure, now that growth is picking up in the economy. Perhaps a more cynical observation may be that it is merely rolling over the debt and hoping Baker Tilly management is better than the clowns who led to the collapse of this £200m accountancy firm?

Either way, how many clients will desert the former RSM Tenon? How many will have to go for conflict reasons? How many will stay and accept the new "Baker Tilly Tenon"? Finally, how many new clients will be attracted to this newly enlarged entity?

Will the RSM Tenon staff all be employed? How many duplicated offices will close? Don't tell me they will keep all offices and all employees?

Surely many redundancies on areas of overlap will have to follow? Many have seen the writing on the wall and jumped ship including 7 former midlands corporate finance partners to Mazaars. Watch for more defections and other firms picking up teams.

Is this the end of the consolidator firm?  There is only one such firm left quoted on the (AIM) stock market; Begbies Traynor, which is mainly an insolvency and turnaround firm, and its sales are declining overall.

Or will the accountancy world see more "solvent" mergers to end up with larger and larger monolithic firms?

Author Keith Steven

Thursday, 22 August 2013

Insolvencies continue to decline in July 2013

According to Experian compared to July 2012 the insolvency rate for July 2013 has fallen from 0.09% to 0.08% of all registered firms.  There has been a rise however in the number of larger firms i.e 500+ employees but given there are relatively few larger firms failing then one should not pay too much attention to just one months figures.

Regionally the picture is interesting. Scotland maintained its low insolvency rate of 0.03 per cent for the eighth month running. Outside Scotland, companies in Yorkshire saw a drop in insolvencies compared to July last year from 0.11 per cent of the Yorkshire business population to 0.09 per cent – making this the eighth month that the region has seen a year-on-year fall.  A similar drop was seen in the West Midlands, from 0.11 per cent to 0.09 per cent.

Only companies in London and the South East showed a slight rise in their insolvency rate.

See below a chart of the areas and companies by size

By sector shows that construction is seeing better times specifically with its insolvency rate falling from 0.17% to 0.13%

Wednesday, 21 August 2013

Montgomery Tomlinson Limited in administration

Montgomery Tomlinson Limited of Flintshire, the curtain and accessories supplier,  has gone into administration with KPMG appointed as administrators.  This follows a collapsed deal to sell the company.

530 redundancies have been made across its 123 department concessions  Also, the salaries for August are not going to be paid.

Wright said, “Despite the tireless efforts of the directors to secure a sale of, or investment in the business over the last four weeks, it has been impossible to find a workable solution to enable the company to continue to trade and they have made the difficult decision to appoint administrators.

“As a result of an increasingly competitive marketplace, a fall in sales left Montgomery Tomlinson critically short of cash and unable to meet its liabilities.

“Given the cash position of the business, unfortunately there are insufficient funds to make payments for August salaries and we will be working as hard as possible to assist employees in their claims to the Redundancy Payments Office.”

Ok, so if you are an employee and would like to know what you are entitled to then read this page on help for employees.  Effectively you will be entitled to arrears of pay, holiday pay and lieu of notice up to a maximum of £450 pw.  You will also receive redundancy as per the statutory limits.

HMV creditors to lose some £250m

The HMV pension fund and a number of other creditors will lose more than £250 million as a result of the entertainment retailer's collapse into administration earlier this year.

The Telegraph has reported that an update from administrators Deloitte shows that bank lenders have recovered £38.6 million from HMV while advisers are set to receive up to £15 million.

However, the newspaper says that Deloitte has warned that HMV’s defined benefit pension scheme, which is entitled to £26 million, and unsecured creditors such as suppliers and landlords, who are owed £157 million, are not expected to receive anything from the administration. It is thought that the pension fund has applied to enter the Pension Protection Fund.

HMV went into administration in January after struggling against tough high street conditions and the rise in internet downloads in recent years. The retailer was subsequently rescued by specialist restructuring firm Hilco.

Monday, 19 August 2013

Hearts looks to exit administration via a company voluntary arrangement

The Foundation of Hearts (FoH) have been given preferred bidding status for administration hit Hearts FC.
They aim to use capital raised by the Edinburgh business community to complete the purchase via a company voluntary arrangement (CVA).  So far they have received 6,700 pledges of support.  Hearts owe some £28m.

Bryan Jackson, of BDO, the administrators, commented: "We all still have a lot of work to do to demonstrate to the major creditors that the bid can offer them the best possible outcome. Let's not get carried away - now is the time for everyone to get behind FoH to make this bid work. "This is a positive development but does not guarantee that a CVA will be successful. That will require a considerable combined effort from FOH and BDO to ensure that all interested parties are satisfied.

The Lithuanian investment company UBIG owns 50% of Hearts shares and, until the court makes a decision on the future of the company, no sale of Hearts can be completed.

Any deal to exit administration via a CVA must be agreed with the major creditors of the club

Lithuanian bank Ukio Bankas, itself in administration, is Hearts' other main creditor.

The Edinburgh side started the season with a 15-point deduction due to their insolvency problems, but have managed to pick up four points in their opening three Premiership games.

KSA Group Insolvency Notice

1st Choice Window Company Limited

Meeting of the Creditors of the above named Company will be held at the Holiday Inn Express, Emerson Road, Washington, NE37 1LB on 4 September 2013 at 11.45 am

To see full notice see below

Thursday, 8 August 2013

Credit ratings for companies in a CVA

It has always been a problem that companies in a CVA end up without a credit rating.  This is not the same as having a low credit rating they simply aren't rated.  This seems strange as prior to a CVA the company is very likely to have an adverse rating and will be on the brink of collapse under its debts. Following a successful proposal the creditors have agreed to write off some of their debts and hence improve the company's balance sheet.  Surely this would put them in a better position??

Read Keith Steven's article in Credit Today on how to assess the credit rating of a company in a CVA.

Wednesday, 7 August 2013

Interest rates to remain low

The new Governor of the Bank of England, Mark Carney, has caused quite a stir by setting out the conditions that will need to prevail in order for interest rates to rise. Speaking at the Bank’s quarterly Inflation Report he said interest rates would rise "more slowly than market assumes”.

He went on to say;

"In particular, the [interest-rate setting] MPC intends not to raise Bank rate from its current level of 0.5% at least until the Labour Force Survey headline measure of the unemployment rate has fallen to a threshold of 7%."

So given that the current unemployment rate is 7.8% then it is not going to be happening anytime soon. Current estimates put the time taken for the level of unemployment to reach that target at 3 years.  Of course, there are some get outs mentioned over whether rates would remain low such as; "provided this does not entail material risks to either price stability or to financial stability”.  So basically if inflation starts to go out of control then they can increase the rates.

The new benchmarking on interest rates is really a way of providing some certainty for businesses if not the markets.  However, Carney did stress that despite the recent favourable economic statistics and surveys any recovery in the UK economy was still fragile.  He pointed out that productivity was very low and there were still many people "working less than they would like"

What does this mean for the so called "Zombie Companies" only paying interest on the loans but no capital repayments?  Well they probably have more life or should we say death in them yet!

Monday, 5 August 2013

Winding up petitions in July fall again but distraint is on the rise.

In July 2013 the number of petitions advertised was just 350. This compares with a monthly average of between 500-700 during last year.  So the numbers of petitions are still declining.  Some liquidations are up but these are mostly creditors voluntary liquidations which can't really occur after a petition has been advertised.  Compulsory liquidations are still falling which would make sense as a winding up petitions is followed by a winding up order that puts the company into compulsory liquidation.

However, HMRC are now less inclined to send warnings and are more frequently using distraint.    To see the latest list of companies then go to

So if HMRC threaten any kind of legal action for the recovery of any tax debts it will either be distraint or a winding up petition.  Distraint can be particularly awkward as they will turn up to your registered office and demand goods be taken away in 7 days if the debt is not paid.  In many cases, companies have their registered office at the home and anything belonging to the company, such as car, could be their target.

If you get a visit from HMRC field officer then call us and we will see if we can help.  In many cases it is not too late to save the business.

Friday, 2 August 2013

Insolvency statistics show slight increase in liquidations

In the last year or so we have been used to seeing Quarter on Quarter fall in liquidations and administrations. However, the latest statistics from the insolvency office indicates that this trend has reversed.  Indeed we have seen a slight increase in liquidation enquiries.  See the chart below.  The levels are still below those seen in 2012.


Given the state of the economy this is not surprising you may be surprised.

OK, what we mean is that the economy has been flat lining for a long period and companies were holding on for better times and when the upturn finally came these last few months many companies that had hoped for an upturn in business didn't see it materialise.  Consequently, they decided to throw in the towel and start again. What is more some trade creditors wanting to expand decided that the time had come to be aggressive towards companies that owed them money and so forcing their hand.   It should be noted that the level of compulsory liquidations remain very low and this is reflected in the falling number of winding up petitions being issued which now stand at the lowest levels since pre-recessionary times.  Given that HMRC issue some 60% of petitioners this shows that they are continuing their soft approach.

The level of administrations has also risen a bit compared to last quarter but these still remain at historic lows.  The reversal of the downward trend may be due to the banks being a bit more aggressive in the improved economy.

Table II. Other Corporate Insolvencies in England and Wales (not seasonally adjusted) 1

% change – Q2 2013 on

2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2 p
Q2 2012
Company voluntary arrangements3
Source: Companies House
p = provisional,
1 Longer series back to 2003 are presented in the accompanying detailed tables.
2 Includes Law of Property Act receivers (see “Notes to Editors” paragraph 21).
This includes 104 new CVAs recorded under “Health and Social Work” in June reflecting the fact that on 20 June 2012 156 companies in the Southern Cross Healthcare Group had CVAs approved.

Of course, one should not read too much into one quarters statistics but it will be interesting to see how things move on.

Thursday, 1 August 2013

Railcare has gone into administration with 500 jobs at risk

Railcare, which refurbishes the train fleet and has offices in Glasgow and Milton Keynes, was put into administration yesterday following a failed takeover and the aborted franchising process of the West Coast Mainline.

Bryan Jackson, of the administrators BDO, said: "Unfortunately the economic climate and difficult trading conditions significantly affected the business, together with reduced demand.

"However, we are hopeful of securing a sale and, depending on customer requirements, the company may continue to trade whilst this is explored."

The alarm was raised when the company was unable to pay its staff on the 31st July.  This would have most likely have been because the bank would not allow the staff to be paid or they even froze the account.  The firm could have breached their loan limits or indeed there simply was not the cash available.

The firm is now looking for a buyer.  This if often regarded as giving a "better result" for creditors than just winding  up the business and distributing the assets to creditors.  See our page on trading out and administration sale.

There is alot of pressure from unions on the government to step in with funds as "£1m is all that is needed" and Vince Cable has said;

"This is an important company in the supply chain and it is vital that key engineering skills and jobs are not lost. "My department has been working with the company to try and find a solution. I hope a resolution can be reached soon."

Trouble is that if an "important company" is not making any money has it got it right??  Are HMRC owed money for instance.

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