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Construction Companies have had a difficult November

November has been a very difficult month for construction companies. First of all Rok plc surprisingly went into administration and since then there has been a string of failures.

Last week, the Midlothian-based ERDC Group, went into administration. At its peak the company employed 0ver 200 people. The administrators have made 73 out of the 79 people redundant.

Also last week, two Hull based construction companies went into administration resulting in the loss of 90 jobs. Quibell & Son (Hull) Limited and Humber Joiners Limited were both part of Quibell Construction Group. The Hull companies, provided construction services mainly to the public sector, and according to the administrators have been loss making for a number of years. Margins on work was getting very tight and the slightest delay in payment has been the the last straw.

Finally, Irwins, a Leeds based construction business, went into administration with the loss of 56 jobs, leaving school, university and national trust sites with building work unfinished.

In a further blow to the construction industry, a major Austrian customer of Costain has gone into administration owing it £22m for the work done on the Belvedere energy-from-waste facility in London.
Other construction businesses to enter administration in November have been DB Russell Construction and Lowry Homes.
Apart from some knock-on effects from the failure of Rok plc it appears that many construction businesses are finishing off projects but have not won enough contracts going forward to keep them going.
There is another way for some of these companies. A company voluntary arrangement should be considered instead of administration if the business has a viable future and a proportion of their debts can be paid off over a 3-5 year period. A cashflow problem can be solved!

If you don't want to leave your construction business in the hands of the administrators then call us. A CVA can be a very effective rescue tool. If you have worries or doubts about the process read our mistruths page on CVAs

HMRC Time to Pay

Having talked to our contacts in the insolvency world, and worried company directors, it is clear that companies are finding it hard to secure an HMRC Time to Pay (TTP) deal.

To have a good chance you will need to have had a previously excellent tax compliance record and be putting forward a convincing case that you can stick with the arrangement. This would need to be backed up with credible financial forecasts and a business plan.

It should also be noted that many companies' TTP deals are coming to an end in 2011. Nonetheless, it should not be presumed they will get a new one.

If you think that the company is viable and the HMRC reject your application for a TTP then a company voluntary arrangement may be the best option

Liquidation reports now online

We are now publishing the liquidation reports pertaining to companies to which we have been appointed liquidators.

A liquidation report contains the following; Notice of our appointment, a report to the creditors outlining the circumstances, a statement of affairs (SOFA), estimated deficiency account, summary of recent financial history, and a list of creditors.

These documents are sent out to all creditors as required by the insolvency rules 1986.

Please find below the latest published reports

JB&V Ltd
Liquidation Report

Adjamiba Clubwear Limited
Liquidation Report

Taylor Woodworking Castleford Limited
Liquidation Report

Del Stone London Limited
Liquidation Report

Search and Secure Limited
Liquidation Report

Zero Group Limited
Liquidation Report

N.M. Digital Services Limited
Liquidation Report

Blogged by Robert Moore

Its the economy stupid!

Went to an interesting event this morning, courtesy of Gorkana, at Nomura's headquarters called "Its the economy stupid".

Taking questions and generally discussing the UK and world economy were the following;

Hugh Pym,
Chief Economics Correspondent, BBC
Iain Martin,
Deputy Editor, Wall Street Journal Europe
Neil Hume
Editor, FT Alphaville
Sam Fleming,
Economics Editor, The Times
Michael Wilson,
ex Sky News (Event Chair)

Big discussion topic with some big names in the media industry!

It hasn't escaped people's notice that the media have had an important role to play in the modern economy and the constant flow of news and opinion, has affected market sentiment and consumer confidence.

The overriding theme was we are all in this global economic turbulence together but there is no consensus what to do about it!

To expand on that point Hugh Pym pointed out that the Japanese were saying that Quantitive Easing (QE) was not a panacea and that deflation was the biggest risk to the global economy. Whereas other economists thought QE was "lighting an inflation bonfire" He also mentioned that many large corporates were hoarding cash and thus stunting growth. So it isn't just the banks not lending.

The panel also felt that the US was not showing economic leadership as it had in the past so the sovereign debt crisis was, in part, being fuelled by market fear. This fear mainly due to the fact that, as above, there is no consensus.

Neil Hume of the FT felt that unless countries are prepared to live by Germany's rules then there was a danger of collapse of the Euro. However, as the Euro was mainly a political project then if the political will is there then it can survive.

Interestingly, the panel said that the government were very worried, despite the "banker bashing", about the movement of capital and financial services out of the City towards Asia,
All in all, so much to discuss and so little time. I think that is how many of the politicians feel at the moment as well!

Public Sector Jobs Website in administration.

Pearson Advertising & Marketing Ltd, the Stockton-based recruitment and marketing business, has appointed administrators at KPMG after a sudden fall in sales.

The business was heavily exposed to public sector recruitment as it ran the public sector jobs site at www.sector1.net

As such, the administrators at KPMG said due to the spending cuts next year the business was not viable going forward and could not be sold as a going concern. All 60 staff have been made redundant, except one who is assisting the administrators.

Turnover in 2009 was £15.4m but fell to £10.3m in the year to the end of March 2010. Pre-tax profits more than halved to £74,000 from £164,000 in the same period.

This latest failure is not a great surprise, given the spending cuts, but as we have said before recruitment is vulnerable at the moment as many companies have relied heavily on public sector contracts.

Company Voluntary Arrangements (CVA) Seminar announced

KSA Group are going to be holding the first of a number of CVA workshops in London on the 15th December 2010.   Are you interested in attending a 4-5 hour CVA training workshop with tests and prizes?

This will be held in the Liverpool Street area City of London on December 15th 2010.

Starting with pastries and coffees at 9.30am we will host a workshop for up to 15 people only. We will take you through a live case study from the intial enquiry, assessment of the options, why CVA and not pre-pack was used, the restructure deal, forecasting processes, the law surrounding redundancies in CVA, landlord and tenant issues, how we closed several retail stores and restructured a disfunctional board.

The day will be presented by Keith Steven, Wayne Harrison and Andrew Hunter of KSA Group. We have designed three tests for the attendees with prizes for the best scores! Lunch and refreshments are included.

Attendees will take away a CVA training manual with our compliments. The price for the day is £50 plus VAT to include all meals and refreshments and the venue cost.

If you are interested in attending then please get in touch via this email link or give our London office a call on 0207 877 0050.

If you cannot attend, please still get in touch for future seminar dates.  You can keep up to date with further announcements by joining our linkedin group for CVA's at the link below.  We will also be making announcements on our blog here and our twitter account


Look forward to seeing those who can attend.

DB Russell Construction in Administration

DB Russell Construction, the North Somerset-based building firm which developed social housing, affordable housing and general building for local authorities,  has gone into administration. 

This is yet another builder exposed to the social housing and local authority market that has collapsed. This follows Rok and Connaught.  The events in this particular sector of the construction industry is one of the public faces of the spending cuts that are starting to bite.

The previous government was very committed to social housing projects but it now appears, given the information coming out of the other failures, that the margin on such contracts were so thin and in some cases loss making.
DB Russell Construction reportedly owes £900,000 to companies it has sub-contracted work to, £370,000 to suppliers and £620,000 to banks.

Christmas. Are you prepared?

Unfortunately, Christmas can be a difficult time for struggling businesses. Fixed costs are still there and wages have to be paid at the end of December. The rent, that if payable quarterly in advance, is due on Christmas Day. If you haven't negotiated with your landlord for monthly payments of rent then perhaps think about it now.

Some customers who are a bit slow at paying might think "I might wait until after Christmas to pay that invoice!" Factories are not producing for a couple of weeks so there may be cashflow pressures.

The recent poor weather has not helped businesses, especially if you have a debtor book to collect. One client we have spoken to today has had to drive around and collect cheques in person from customers, as five of his staff have been unable to get to work!

Sheffield Wednesday given time to pay taxes. Lucky them!

Sheffield Wednesday have been given 28 days to pay their tax bill by the High Court. The Judge said that the company had been trading whilst insolvent but had allowed the stay of execution due to exceptional circumstances.  What circumstances?  Other companies, if they are trading whilst insolvent and a winding up petition is being heard, are not usually so lucky.  I suspect that the learned judge believed, as many others do, that a rich investor will step in at the last minute! However, this does not mean that other companies should rely on such unlikely outcomes.We often find that companies delay taking action because they believe that a big contract is on the way. However, even if that hope is there this should not prevent the directors taking advice.

The co-operative bank, to whom the club owes £23.5m, has been very patient throughout and is the main reason the club has survived for so long.

Cashbox in pre pack administration

Cashbox plc, the aim listed firm that runs ATMs, has gone into administration. In a statement the firm said, "InfoCash had reached an arrangement with the administrator, Deloitte, to purchase the assets of business." As such, the business is to carry on with all existing contracts and operations so as to safeguard the company's customers.

This process, whereby a firm goes into administration and is sold at the same time, is often called a pre pack administration. If you are considering a pre pack administration of your business please give us a call on 0207 877 0050
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