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Friday, 28 March 2014

KSA Group Insolvency Notices

Justgo Music and Entertainment Limited Creditors Voluntary Liquidation Notice

Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 10 April 2014 at 11.15 am.

See full notice below:

The Heatherslaw Bakery Limited Creditors Voluntary Liquidation Notice

Meeting of the Creditors of the above named Company will be held at the Berwick Workspace, Boarding School Yard, 90 Marygate, Berwick upon Tweed, TD15 1BN on 10 April 2014 at 11.15 am.

See full notice below:

Latest KSA case studies - a CVA and a CVL

This first case study coincided with its sister company going into liquidation. What started out as a CVA, turned into a CVL as the company realised it was no longer viable after a few months. See the full case study below:

The second case study involves a company that was in the middle of CVA proposals when a winding up petition was issued by HMRC. KSA managed to stop the petition from being advertised (and later stopped it altogether) once the CVA was aprroved by creditors. See full case study below:

Tuesday, 25 March 2014

Albemarle & Bond in administration move

The UK pawnbroker has filed a Notice of Intention (NOI) to appoint administrators today after it was unable to come to an agreement with lenders over alternative restructuring plans. Only yesterday it was reported shares were to be suspended after lenders confirmed they could not support the proposed restructure.

The company has struggled financially over the last couple of years with falling gold prices against growing debt.  According to reports, Albemarle owes £50 million to its creditors, Barclays and Lloyds. They have rejected a restructure, therefore the company will soon fail to meet its liabilities.

Albemarle has said it wishes to appoint joint administrators from PricewaterhouseCoopers LLP.

As the company enters administration, there will be over 1000 jobs at risk across 230 stores. Creditors reportedly felt selling the business would not be a feasible option, however there aren't many options left now for the company.

UPDATE: Joint administrator, Mike Jarvis, of PwC has said "Our priority is to keep all pledged items safe and available for redemption as normal. We plan to sell all or part of the business to protect as many jobs as possible and we have already paid, or will be paying all staff - including accrued bonuses - as normal in March. Also, all landlords have been paid. However, some redundancies may be necessary depending on the outcome of efforts to sell the business. Every branch will initially remain open as sale discussions progress. This also enables customers to continue to redeem their goods as normal as they pay off their loans."

We are not involved in the administration and questions should be directed to PwC who are expected to be handling the administration.

If you are an employee of the business, and you're worried about what might happen in the future, then please listen to the video below as it will tell you your rights as an employee of a insolvent business.  There is a link at the end of the video to the Government website which expands further on what you need to know.

Friday, 21 March 2014

March Quarter Day - negotiate with your landlord

The 25th March is the March Quarter Day when rent is due on commercial properties up and down the UK.  This is always a nervous time for retailers as they have to find three months rent in advance. In the current economic climate many landlords will be open to negotiation and may allow tenants to pay on a monthly basis, so ask!  Landlords of shopping centres who may be seeing rising vacancy rates may be more open to this proposal.

So if you are a struggling multi-site retailer, you can use a CVA to jettison stores that are putting the viability of the whole business at risk. The landlord does not automatically have the casting vote in any proposal even though rent may be the biggest cost.  The reason being that rent is in advance so they can only vote in relation to the arrears of any rent.  Of course if you have run up large arrears then that situation may change. However, given the somewhat antiquated legal remedies for rent collection, such as distraint and forfeiture, high levels of rent arrears are rare in commercial cases.

Wednesday, 19 March 2014

Top 20 cost-saving tips for businesses

1. You should set up a daily cashflow to control all cash in and out. This may protect you from wrongful trading, as it helps manage cash and stops bounced cheques. If you don't have a daily cashflow forecast, please ask for KSA’s free model (PS don’t bounce cheques it's bad form!).

2. All purchases are approved by you as MD/FD/Operations Director/Owner. You should sign all cheques or approve all BACS/CHAPS payments in writing.

3. No purchases are approved unless signed by you, which will make “them” produce a purchase order. Then you can check if they are doing their job, is the price fair, are they and your supplier ripping you off, or are they just lazy and not getting the business best value?

4. No petty cash is drawn from the bank unless you personally go and get it… makes you question what every pound is spent on when people ask for cash. If not possible because your business is too big, why not make a trusted person do it. NOT a big issue if cash is king?

5. Review all expenses claims by the staff; reject all that are not really necessary. If you get complaints or murmurings (they may be too scared to act professionally and debate with you), then meet with them and explain the position. Bluntly, tell them survival is now the main aim.

6. Remember survival is key, if you lose people or profits that’s not vital, cash is king for now. Profits will soon flow from very tight cashflow management.  If people sue for unfair dismissal, call us and we can help - we may be able to kill off their claims with straight talking. Or perhaps a CVA can kill these claims too.

7. Ask every supplier for a review of their prices, can they cut you a better deal? Ask them to for a few extra weeks payment grace. They may object but they will welcome smart business people staying in business. That’s better from a creditor’s point of view than people putting heads in the sand!

8. Ask the landlord for a breather on rent. Can you please pay monthly not quarterly for a while? This helps cashflow. It actually puts you in arrears but that’s maybe OK at this stage. Again they want a paying tenant, not an ostrich who won’t talk.

9. Ask your accountants to accept monthly payments. If your accountancy fee is £10,000 pa, then ask to pay over say 10 months that’s £1,000 per month. The same applies for anyone else that issues a big annual fee note.

10. Manage cash every day!

11. Get someone else’s view; do you have a trusted friend? If so talk to them about your business, actions and get them to sanity check you. They may suggest cost savings, test your closeted views and make you think about changing ways.

12. Do you need that company car; can you use your own and give it back?

13. Can you sell any assets, will it raise cash? Make sure they're not owned by a leasing company first.

14. Ask your factors to cut their costs, only drawdown weekly. Using your daily cashflow model will of course help with this.

15. Cut all overtime to the bone, why do you need it? Is your production planning so poor or weak? If you need more people hire them, at lower rates.

16. Did we say “Manage cash every day"?

17. Use the internet to buy or price everything; you can get fantastic value over the net.

18. Work all hours, to build the recovery plan and set out the Time To Pay Deals with TAX AND VAT.

19. Keep minutes or notes of all decisions. If you’re a partnership or sole trader, keep notes!  This will help protect you.

20. Finally be aware that people will be less organised than you - if a customer is not paying, find out why!

Monday, 17 March 2014

Lloyds to give an extra £1billion to SMEs

In response to falling lending figures and negative feedback, Lloyds is pledging an extra £1 billion to small businesses to help improve the lending process and increase opportunities for SMEs seeking finance.

SMEs aid economy growth and banks, like Lloyds, are recognising this quickly among the many other alternative lenders that help businesses continue to expand.

According to the Bank of England, SME loans fell by £300million in January. Small businesses are increasingly finding it difficult to raise capital through traditional lenders and are turning to alternative funders like peer to peer lending and crowdfunding.

In a recent Office of Fair Trading report, major banks have been failing to obey with competition regulations by stopping customers from accessing alternative lenders. Lloyds is planning to rectify this by recommending such lenders if they prove to be a better fit for customers.

An independent report, the SME Finance Monitor, revealed small firms are likely to be accepted for business loans more than they think. Figures showed 38% of small businesses felt their business loan would be approved, when in fact 67% of SMEs were approved. This is due to the poor perception of banks.

The Better Business Finance (BBF) campaign, organised by the Better Business Association (BBA) and the five leading high street banks, aims to improve confidence within the SME sector as well as improve the reputation and perception of bank lending.

The BBA are now working with alternative lenders to ensure businesses are given a wide range of options to best suit their financial needs.

Llloyds are keen to help small firms too when they are in financial hardship. As their figures show 70% of struggling firms they lend to, are helped back on their feet by the bank. Tim Hinton, Managing Director of Lloyds’ SME and mid-market banking says, “We want to help our SME customers at all stages of their journey, including when they are in difficulty.”

Banks are now realising the overwhelming competition they face when it comes to financing small businesses and are trying to get back in to customers’ good books. Will schemes like this work? Only time will tell!

Thursday, 13 March 2014

Director banned for 7 years due to poor keeping of accounts

Director, Timothy Lynch, of Blackburn vehicle recovery business, TJ Recovery, has been disqualified until 2021 due to failing to keep up-to-date accounts and records.

An investigation from the Insolvency Service revealed Timothy Lynch had also failed to provide evidence of financial deals and exchanges within the business. Turnover for the business was recorded as £36,000, yet £254,000 passed through its bank account, with £83,000 of that sum unacknowledged. No PAYE had been paid between 2010 to 2012 nor had VAT.

Furthermore, Lynch’s wife had been transferred £100,000 to her account and then sold the assets for £85,000, which again could not be accounted for by Lynch.

TJ Recovery was placed into liquidation in April 2012 and owed over £109,000 to creditors.

This is a warning to all directors to ensure accounts are kept up-to-date and filed accordingly. Failure to do so could not only put the company in jeopardy but could put the director at risk of being personally liable for all debt. For more information, read our guide on directors’ disqualification:

Latest CVA case studies

Both of the companies below were rescued by company voluntary arrangements and creditors received a substantial amount in the pound over a fixed term.

The first was a case where the local authority had obtained a liability order in respect of unpaid business rates. Through negotiation, the provision of updates and finally the supply of a draft CVA, KSA were able to gain an undertaking for this order to not be enforced. Read more on the case here:

The second case resulted in working alongside another insolvency firm on the bank's panel due to the debt owed and the bank' potential exposure. The case also demonstrates that a company can successfully propose to exit CVA early if things are going well. See the full case study here:

Tuesday, 11 March 2014

Banks are stopping SMEs from accessing alternative finance, says OFT

The latest report from the Office of Fair Trading (OFT) suggests banks are holding back small businesses from accessing alternative funding.

They are making it difficult for small businesses to get loans from crowdfunders and peer-to-peer lenders by delaying sharing paperwork and important information. Banks are unfairly stopping competition, something which needs to be addressed. According to the report, banks have yet to show they are adhering to the Competition Commission investigation which began 12 years ago.

Known as ‘bundling’, some banks have only let businesses receive loans if they open an account. Vince Cable, Business Secretary, supports the view that banks are not giving enough support to small businesses.

It can sometimes be a complex process if businesses borrow from a number of different lenders as there needs to be a system of priority in place if the borrower defaults on a loan. Clearly more needs to be done though to ensure businesses have as many options as possible when seeking funding.

While banks have agreed to review and change their outlook, if they don’t adopt new ways of thinking, the OFT will impose further action. You can see OFT’s full report here:

The Competition and Markets Authority will be taking over the OFT and Competition Commission in April to look into specific cases.

Monday, 10 March 2014

Institute for Turnaround calls for change in business support banking

A report by the European body, Institute for Turnaround (IFT), has released a report today on the ‘questionable’ processes and practices of business support banking, including RBS’s Global Restructuring Group (GRG). This research has been passed on to the Bank of England and the HM Treasury.

The ‘Benchmarking Best Practice in Business Support Banking’ report calls for new regulations to change the way UK banks run their business support units. Over the last year, IFT have researched more than 250 businesses that have been put into turnaround units across the UK. The research also includes evidence of meetings with certain senior officials employed by the big banks - Lloyds, RBS, HSBC and Barclays.

One of IFT’s main concerns was the correlation between fees charged and bonuses rewarded to bankers (bonuses depended on excessive fees). This often made some businesses stay in the unit for longer, delaying opportunities for extra funding and restructuring because there was a lack of motivation on the bankers’ behalf.

Fees were piled on to struggling businesses that could not afford them, letting them fall deeper into insolvency. A senior executive from RBS admitted, “GRG has a culture of taking aggressive action - not necessarily illegal – and encourages its people to do the same.”

Authors of the report, CEO, Christine Elliott and Chairman, Iain MacRitchie of IFT, have produced a number of principles and suggestions for bank units and troubled businesses to focus on. They want to see banks provide ‘transparent, respectful, documented and open to challenge’ advice and support and not be ‘profit centres’ whereby bonuses mean more than saving a company.

Fees should also be no more than what’s charged for viable companies and the company’s situation must be taken into account when fees are calculated.

Furthermore, the IFT wants companies to have the option of being referred to an ombudsman as well as having a channel for both bank staff and customers to report any concerns or issues.

You can view the full report here.

Thursday, 6 March 2014

FCA confirms new crowdfunding regulations

The FCA (Financial Conduct Authority) has released new regulations for crowdfunding in a bid to protect consumers from lending to businesses without knowing the risks involved.

Outlined in the policy statement, the UK regulator wants these new alternative lenders to operate in a transparent and fair way by providing clear details of the risks to those looking to invest.

Peer-to-peer lending (a form of crowdfunding whereby investors lend directly to the individual or business) will be regulated from April 2014.

The FCA suggests many individuals are unaware of the risks involved when investing in new businesses and projects, and are proposing new or inexperienced investors to confirm they will not be investing more than 10% of their money on ‘unlisted businesses’.

In the FCA’s statement, the new rules include:

- “Require firms running the loan-based platforms to have plans in place so that loan repayments continue to be collected even if the online platform gets into difficulties.
- New prudential regulations will be introduced over time so that these firms have capital to help withstand financial shocks. This is important as consumers who lend money through these firms will not be able to claim through the Financial Services Compensation Scheme”.

The UK regulator also states there will be the same level of protection for consumers, regardless of how they contact crowdfunders, whether it be online or by phone.

Crowdfunding platforms are fast becoming an alternative to banks for many small businesses and start-ups. They have been a huge success in America and now more and more UK platforms are being set up every month to help those in need of funding.

This is an exciting time for new and alternative lenders coming onto the market. The number of crowdfunders and peer-to-peer lenders will no doubt increase as the year goes on. Already in the first two months of 2014, crowdfunding platforms have raised £5.7 million for businesses.

Should banks be worried?

Wednesday, 5 March 2014

Can I stop HMRC bailiffs coming to the premises

The term bailiff is really the name of someone who has the power to "distrain" on your goods and possessions in order to satisfy a debt. They can be used by any creditor whose debt has been proven by the court. Landlords and HMRC also have distraint powers. In the event that HMRC want to collect taxes an officer of HMRC will arrive at your premises without warning. However they are only likely to come after a number of warning letters have been sent. In some cases they will employ a debt collection company to collect the unpaid tax. So how does the bailiff take the goods? - They can do this by taking what is termed "walking possession"

To find out more visit our page about bailiffs and distraint on businesses

Tuesday, 4 March 2014

MPs back business rates reform

A recent report from MPs admit business rates 'are not fit for purpose' and want the current review extended to look into matters further.

They want an investigation focusing on retail taxes and whether business rates should be based on sales or property value. MPs, backed by George Osborne, would also like to see ideas for a tax system specifically for retailers.

Furthermore, they have called for a 2% cap on increases until there is a proper reform in place as well as a more welcoming rate relief to retailers who occupy empty properties.

We have blogged a few times about this issue and it finally seems like something will be done to help out struggling local retailers and shop owners. David Cameron is supporting a reform and is involved in reviewing the options available.

With sometimes extortionate business rates, many shops are forced off the high street as they cannot keep up with payments.

Let's hope we see some progress over the next few months!

Monday, 3 March 2014

New threat for LLPs

It’s been warned many LLPs (limited liability partnerships) may be at risk of closing come April after new tax regulations have been finalised by HMRC.

HMRC is cracking down on tax avoidance by ensuring LLPs provide evidence they are self-employed and are eligible to lower tax rates. They want to put a stop to those who are giving false information in order to avoid paying taxes.

The LLP business structure was set up in 2000 to protect law firms if they were involved in large losses and lawsuits. They have more protection against personal liability than partnerships and sole traders, yet there is still an element of tax efficiency enabling many to fall in line with the traditional partnership tax structure.

HMRC’s new rules state a partner must pass at least one out of three tax ‘tests’ to continue being classed as self-employed.

A partner will be considered as an employee (therefore face higher tax rates) if 80% or more of their pay is guaranteed, the partner pays less than a quarter of their pay to the partnership profits or the partner doesn't have a significant amount of control over the partnership.

Junior partners are most likely to be affected as they tend to be guaranteed pay and also have less control over senior partners.

If more partners become ‘employees’, LLPs are at risk of going bust as firms will start having to pay higher taxes, like National Insurance. This will add pressure to cashflow and financial resource, sending firms already struggling over the edge.

If you are concerned about your firm and would like some insolvency advice, contact KSA’s expert lawyer, Grant Jones, on 07815 873370 or email him at

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