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Pubfolio in administration

Pubfolio, the Trowbridge-headquartered pub operator, has gone into administration today. The administration is being handled by accountants PricewaterhouseCoopers, according to the Publican Magazine.

It has been a busy couple of days for insolvency practitioners as a number of companies have gone insolvent. It might have something to do with the rent quarter day being today!

It is believed that the smoking ban has also had a detrimental affect on the mainly community based pubs. In addition, the Anglo Irish Bank which has its own problems, is reluctant to put in more money.

It is not yet clear if some of the Pubfolio pubs will form part of a pre-pack administration.

Firms better at managing cashflow

Begbies Traynor have weathered the recession more than most. Initially they benefitted from the increase in insolvencies following the credit crunch in 2009. However, this year many firms have avoided insolvency as a result of a number of factors. There has been less creditor pressure than anticipated, more support from HMRC time to pay scheme, and low interest rates. Consequently, Begbies Traynor have announced that insolvency activity is down and their shares fell yesterday by 7.7%

But lets give credit where it is due. Many firms are now much better at managing cashflow than they were in the last recession. Reasons below;

Better IT systems and reporting.
Cashflow is now a higher priority for senior management.
Employees have been embracing part-time working and wage cuts!

However, if you need to manage cashflow more effectively then you should think about a daily cashflow system. We have some spreadsheets that can help. Alternatively you could utilise the services of a good book keeping service like

The local bookkeeper
The FD centre
Insight Associates

HMRC Time To Pay Scheme being toughened up.

Archial Architects and 1st Dental laboratories recently went into administration having had problems paying HMRC. Both companies were quoted on the AIM market and these two cases have shown that HMRC is getting tough on businesses that have arrears of tax.

The FT reported today that HMRC says there has been no change in its policy or criteria when offering companies time to pay. However, the paper carries a quote from HMRC saying that it takes “a dim view of debtors who reach agreement with us to pay their tax debts over an extended period and then fail to comply. In such cases they should expect HMRC to take firm action to recover the debt.”

At KSA Group we have had a number of companies contact us in September that have had problems with keeping up payments on a Time to Pay Deal.

We have been able to help a print finishing business in the Midlands that owes £160,000 to HMRC. A pre-pack administration was discussed by the board but a CVA is now the preferred route. A Scottish construction company with debts of £300,000 to tax man and the trade, this is a CVA. A South East based recruitment company, owed £60,000 to PAYE and VAT, again a CVA is now being proposed.

All of these business and many more that we have taken under our wing in September have one thing in common. Their TTP deal was not affordable, after bad cashflow payments were delayed under the deal and HMRC withdrew the TTP deal. Then the HMRC Enforcement and Insolvency Department issued 7 day warning letters for winding up petitions to all of them.

If you foresee any problems paying HMRC on a Time to Pay Scheme then you must ACT. If the HMRC issue a seven day letter or a winding up petition as a way of getting their money owed then your options are limited. Your bank account will be frozen once the bank knows a winding up petition has been served. Prior to a winding up petition you can enter into a CVA which HMRC will generally support. Talk to us to or visit our pages on CVAs

Elphinstone Estates in administration

Elphinstone Estates, the East Renfrewshire-based property developer, and several connected companies have gone into administration reported the Estates Gazette.

KPMG, the administrators, hope to sell the company's 18 sites and properties across Scotland.

In a statement KPMG said: “In common with many developers Elphinstone has experienced very challenging conditions in recent times. It has been impacted by the reduction in construction, particularly residential, activity, with demand for development sites dropping significantly with a consequent impact on land values."

Lloyds TSB Scotland Business Monitor has reported an improvement in the fortunes of companies in the region with 30% of companies in the region reporting an increase in turnover in the three months to August.

The Scottish property market did get somewhat overheated, so I expect to see more problems for construction and property businesses. KSA Group have rescued a construction company using a CVA and we have rescued a Scottish recruitment business using a CVA. Many people in Scotland assume that a CVA will not be approved by HMRC. On the contrary the HMRC team that deals with Scottish CVA’s attended the meeting and took part in the process. The CVA vote was 100% in favour and the CVA was accepted by creditors in December 2009 paying 33p in £1.

OFT Targets Debt Management Firms

The Office of Fair Trading (OFT) have found 129 debt management firms are
not meeting current standards. They have mainly been found to have misled consumers in their advertising by implying that their services are free.

In addition, customer advisers were found to be lacking in competence and to be providing poor advice based on inadequate information.

The OFT is therefore updating its guidance to take “explicit account of new and emerging unfair business practices”.

Ray Watson, director of the OFT’s Consumer Credit Group, said: “Debt management firms must be clear about their charges and the options available to customers.

In our view it is essential that these firms are brought to book. Many businesses and consumers, who are in need of help, may be discouraged from taking advice to try and solve their problems if they think that any advice is not value for money.

Insolvency practitioners have for years been pointing out that there is a large difference between insolvency work, that is regulated and licensed and by the authorities, and businesses in the debt management sector who are not regulated in any way.

Cathco goes into administration

Cathco, the construction business based in Leicester, has gone into administration with Begbies Traynor acting as administrators. The cause of their demise appears to have been a sudden drop off in orders. It is not clear who their major clients were but the government is likely to have been one.

Work to build a 50,000 sq metre Tesco store and shops on Station Yard in Denbigh was due to begin over the summer.

Denbighshire’s leader Hugh Evans said the council still wants to make the project work, adding: “We are committed to supporting this development in Denbigh and are prepared to hold discussions with anyone who wants to push it forward.”

As well as Station Yard, Cathco is responsible for the new Menai Shopping Centre in Bangor which houses several large chain stores such as Debenhams, Body Shop, and River Island.

So this is another construction company that has gone into administration recently. The knock on effects of construction companies going into administration can be quite serious as many other industries and people benefit from construction activity. The construction industry has always been vulnerable to downturns in economic activity as they often cannot react quickly due to the capital intensive nature of their business.

Dundee face administration for the second time

Dundee, the Scottish football club, face administration for the second time in seven years after it emerged that they owed HMRC £250,000.

The club have fallen behind in payments over the last 2 years and have been hit by a demand for the balance to be cleared. I suspect that they were threatened with a winding up petition.

Dundee survived going into administration in 2003 with debts of £23m after fans' group Dee4Life helped raise funds.

Calum Melville, the club's director, told a Sunday paper that the HMRC used the words, 'wanted to bring Dundee to account and bring the rest of Scottish football to heel'.

If this is true then we can expect HMRC to start getting serious with overdue tax and make examples of high profile businesses! The time to pay scheme must be adhered to and any attempts to renegotiate terms are being rejected.

Centrepoint landlords in administration move

Centrepoint owners, Targetfollow, have slammed Lloyds Banking Group's threat to appoint administrators over a £700m debt. It is understood that the company is unable to meet interest payments. Part of the problem is that there is a disagreement over the value of the company's portfolio. Lloyds reckon it is worth only £450m whereas the company values their portfolio at, funnily enough, £680m. It should be remembered that following the last recession valuations for banks by chartered surveyors are regulated by the Royal Institute of Chartered Surveyors (RICS). Of course, some have argued that they have been overly pessimistic about values following the credit crunch.

Lloyds Banking Group are under pressure to repay loans from the taxpayer. However, I expect to see much more of this sort of action if patience starts to run out with commercial property owners. Especially, if values start to soften a little.

Targetfollow have said they are taking legal advice on the matter.

Archial Architects in administration

Archial Group went into administration, last night, after HMRC rejected a payments deal for tax owed from previous years. HMRC issued a winding up petition that marked the end for a firm that was listed on AIM and shares were worth some £1.89 in 2007. Before shares were suspended last month they were worth 1.5p. The firm blamed public spending cuts on its demise.

The administrators from PricewaterhouseCoopers are looking for a quick sale of Archial as a going concern.

It isn't clear exactly how much tax was owed, but HMRC will generally listen sympathetically to requests for VAT and PAYE owed to be spread out over time under the HMRC Time to Pay Scheme. However, on corporation tax they are less flexible.

If you are having problems with paying tax then talk to us and we can talk to HMRC for you.

Liquidation likely for Britannia Land Management Ltd

Britannia Land Management Ltd, the sellers of plots of land, has been issued with a winding up petition. The petition presented at the High Court by the Secretary of State for Business, Innovation & Skills was made on the grounds of public interest. The court date is set for the 18th October 2010. A provisional liquidator has been appointed to ensure that the company's assets are protected.

We do not have any further details at this stage but will keep you posted. The petition to wind up the company follows an investigation carried out by Companies Investigations branch of the Insolvency Service. Selling plots of lands from a telesales operation in Spain was always going to attract the interest of the authorities. No doubt some people have not had a satisfactory return on their investment!

Receiver, Public Interest Unit, 2nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN, or alternatively people may ring 0161 234 8531.
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