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CVA Case studies

Any company directors or professional advisory firm, looking for a reliable turnaround advisor should look past the often baseless marketing claims made on glossy websites and in media adverts. Look for substance, experience and free quality information. Can you, by reading the website, actually see who the company is? What professional bodies are they members of? Does the site give contact details of the senior people? If not it is probably not a reliable, regulated firm.

KSA Group works on rescues and turnaround projects every day, many of the websites purporting to do the same are in fact marketing "fronts" set up to convince people that there is a genuine firm behind the claims. ALWAYS ask what experience the principals have when making contact.

We recently published the 40th CVA case study on our main advice website; www.companyrescue.co.uk - the truth is we could publish many more if we had more time! All of our case studies are based on real rescues, real directors, real employees and real debts. We cannot publish the client's names very often because the CVA approach is discrete and the company doesn't want to have their name all over the internet. But we guarantee that every one of our near 50 online case studies is based on a real case.

If you or your client are looking at the company voluntary arrangement path as a possible solution we strongly recommend that you read as many of our successful case studies, as well as about our failed CVA case studies as you can. This will help you get a rounded picture from real life case studies.

Our aim in 2011, will be to publish 1-2 new CVA case studies every week, so we suggest setting up the following web page as a favourite in your web browser: http://www.companyrescue.co.uk/cva-case-studies

Posted by Keith Steven

KSA Group takes on two regional managers

KSA Group are pleased to announce that Gary Weber and Malcolm Gray have joined us in 2011 to help us expand our services to struggling companies in the South East. Both are passionate about helping companies survive, rather than be closed as a first option, in these difficult times. Gary and Malcolm can give free and impartial advice on a meeting with any company director or professional.

Malcolm Gray - Regional Manager - London East.

Malcolm is passionate about helping companies having been a director of a
building company that found itself in difficulties when public sector contracts were hard to come by. Therefore, he knows what some companies are going through. He wishes he had better knowledge at the time of the rescue tools available for struggling companies. He now wants to inform and advise other companies facing similar problems.

Malcolm divides his time between his young children, work outs at the Gym and a little Golf. Malcolm covers the region East of London including Kent, Essex, East Sussex, Cambridgeshire, Hertfordshire and Suffolk.

You can call him on 020 7877 0050 or 07739 325 009
or email on malcolmg@ksagroup.co.uk

Gary Weber - Regional Manager - London West

Gary joined KSA Group in late 2010 to help us expand our services in the South East. Gary is passionate about helping companies having been an owner and a director of a number of businesses in industries including pubs, catering, road haulage, and retail. Therefore, he has a very broad business experience and will listen to directors with empathy and offer good advice on how a business could be turned around. He is particularly keen on the company voluntary arrangement mechanism and how it can help struggling businesses. Gary covers the region west of London including Surrey, Hampshire, Oxfordshire, West Sussex, Berkshire and Buckinghamshire.

Gary divides his spare time between walking his dogs and spending time supporting his son's rugby and scout activities.

You can call him on 020 7877 0050 or 07739 325 008
or email on garyw@ksagroup.co.uk

GDP figures show contraction of 0.5%

The latest GDP figures for the UK confirm the belief that many have held that we are not out of the economic woods yet and that 2011 will be a tough year.  We have seen a rise in the number of struggling companies contacting us which reflects these latest figures of a 0.5% contraction.  The impact of the December snow did weigh heavily however. 

The picture is mixed in that some regions are struggling more than others and some industries are fareing better.  Scotland in particular is struggling whereas bigger businesses are doing better.  However smaller firms in all industries are feeling the pressure.

About a year ago in the City business people would ask each other whether they were "double dippers" meaning, of course, do you believe that a second recession is likely.  So could that happen?  If we have another quarter of negative growth, Yes.

Richard Lambert of the CBI was berating the Coalition for concentrating too much on deficit reduction and not enough on growth.  Perhaps he saw these figures early...   It is easy to snipe as both of them are dependent on each other and it is politics, as opposed to economics, that determines which side of the coin is favoured. You can't have some growth without deficit reduction and you can't have some deficit reduction without growth.

We shall have to see what happens.  Unfortunately for companies just "seeing what happens " is not really an option.  It is important to have a plan, incase you find yourself in difficulty, and so know your options. 

The longer you leave it the less options you have, especially if the bank or creditors start legal actions such as winding up petitions.

Business insolvencies predicted to increase

Begbies Traynor have published their Red Flag Alert that paints a decidedly gloomy picture for businesses going into 2011.  The report forecast a 10% rise in insolvencies in 2011, which would lead to 23,500 firms being affected.

Compared with the July to September quarter, there was an increase of 20% in the number of companies experiencing "significant" or "critical" financial problems according to the report.

This has been reflected in our enquiry levels.  However, the regional breakdown is of significant interest but Begbies Traynor are no longer publishing this data.  We are finding that Scotland is feeling the pressure at the moment.  This could be due to a whole host of reasons - More aggressive creditors, actions of HMRC and perhaps the weather could have been the last straw. 

The role of the banks could come into the mix as it has been reported that the government's attempts to persuade banks to increase loans to small businesses is hitting trouble. The banks argue that lending targets for what might be weaker businesses could breach rules that say any decision should be in the best interest of shareholders.  Given that the shareholders are in many cases the tax payers, who are also likely to be affected by small business closures, then 2011 could be a very contentious time.

More Scottish Firms Insolvent

The number of companies going into administration or liquidation in Scotland has reached a new record according to figures released by the Accountant in Bankruptcy, the insolvency service for Scotland. 1,098 companies were deemed insolvent which represents an increase of 45.8% on the previous 12 months and a rise of 21.2% on the previous highest figure of 906 from 2002.

Again, this may be due to the fact that there really is no rescue culture in Scotland. CVAs are not usually considered as there is a presumption against allowing the debtor a second chance and there is a mistaken belief that HMRC in Scotland will not support a CVA.

For more statistics and details insolvency in Scotland and help for Scottish based businesses then please refer to our Scottish rescue page

Further difficulties for HMV

With all the reports on the increase in inflation to 3.7% one piece of business news that was pushed down the agenda was the further troubles of the high street retailer HMV.

Robert Peston was brought onto the Radio 4 PM programme to "break the news" that 2 major music and entertainment suppliers had been denied credit insurance for any additional supplies to HMV. The withdrawal of this suppliers credit insurance has, in the past, been a precurser to more serious problems but this is normally because if the suppliers refuse to supply then a collapse is likely. This was a factor in the falling into administration of the Borders book chain.

However, HMV are not purchasing much stock at the moment and it is possible that the credit insurers have changed their attitude to risk. Importantly for HMV, current suppliers have said to Robert Peston, at least, that HMV is crucial for their business and so will continue to supply the retailer.

So, as far as the music and entertainment retail industry is concerned it appears that "We are all in this together"

Dorin Construction in Administration

John W&S Dorin, which traded under the name Dorin Construction, along with four associated businesses, has gone into administration with the loss of nearly a 100 jobs.  The firm was founded in 1981 and was a major employer in the North East.  Last year the company had a turnover of £16m.

Following tight margins and the poor weather last month the directors of the group called in administrators at PricewaterhouseCoopers (PwC) on Monday.

Directors can appoint administrators directly.  For an explanation please take a look at our detailed pages on administration.

The company, had both public and private sector clients, specialising in care homes, rehabilitation centres, school and hospital refurbishments, social housing and commercial developments.

Only four staff remain at the firm, but the administrators have said that they are attempting to secure a buyer for some or all of the business.

We have expertise in the turning around of construction companies having saved one using a CVA.  Although administration can be the right solution as well.  For the details of this rescue and many more cases please view our case studies page

Eurotek Furniture in administration

Eurotek Furniture Supplies, one of Bognor Regis's biggest employers, has gone into administration. The firm had a turnover of almost £10m and employed 130 staff. The company had recently open an show room in London as it sought to expand so the company's problems came as a surprise.

Stuart Maddison, at PwC said: "The company has suffered as a result of the ongoing economic challenges facing the public sector which represented approximately half of its customer base. Due to a sharp decrease in sales, difficulties in meeting the company’s financial obligations, and having run out of alternative options, the directors of the company have placed it into administration."

The business is continuing to trade as a going concern and a buyer is being sought.

Given that half of its custom was public sector it is perhaps not surprising that it has found itself in difficulty.

The directors of any business that is exposed to public sector contracts need to have a long hard look at their business plan and be prepared. Some contracts may have long termination periods whereas others may be informal.

Business owners need to think about private sector clients or customers who are in turn exposed to the public sector. This is not always so easy as many businesses do not like to advertise that they have been making big profits on the back of government spending.

If the worst should happen make sure you have read our cost cutting pages to ensure that you preserve cash.

New Liquidation Report

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.

Tonys Bar Cafe Limited - Liquidation Report

British Bookshops in Administration

British Bookshops, the book chain with 51 stores across the country and employing 300 staff, has gone into administration following difficult trading conditions.

Administrators from Zolfo Cooper said the company would continue to trade as normal, and no job cuts have been announced.

British Bookshops' administration has taken many in the trade by surprise according to thebookseller website. The chain was thought to have had a very poor Christmas, a belief confirmed by its administrator. Its website stopped trading at the weekend.

The administrators are looking for a buyer. It has been reported that publishers have halted all supplies to the chain.

It is not clear who appointed the administrators at this stage or exactly why. However, their banks could have called in their debt and so appoint administrators. To see how the bank can do this have a look at our detailed administration guide page. Alternatively, they could have been served a winding up petition which could have mean't that winding up or administration was the only likely option. Although, no winding up petition has been advertised yet, which is usually the tipping point.

Was a CVA or company voluntary arrangement considered? A CVA will only work if the directors recognize the problems early and take appropriate action. A CVA may well of allowed the company to source books from the publishers going forward and multiple branches could have been closed if necessary. Of course, a sudden collapse in sales over Christmas is difficult to predict but we suspect that this may of been the last straw.
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