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Oddbins to go into administration

Oddbins will enter administration next Monday after HMRC refused to back the CVA at the creditors meeting held today.

Administrators at Deloitte have said they have been talking to interested parties hoping to buy the chain.
A statement released by Oddbins said: “Unfortunately, despite ongoing discussions with HMRC over the last four weeks the decision was made late yesterday not to support the CVA. They went on to say "As HMRC is a significant creditor this means that the CVA cannot proceed."

Officers Club in Administration

The Officers Club, the Men's clothing retailer,  has gone into administration with 46 stores being sold to Blue Inc immediately after the appointment by the administrators at Grant Thornton.  The warehouse and the remaining 56 stores have been closed.  The high street chain employed 900 people but the sale to Blue Inc has saved 400 jobs.
Joint administrator Joe McLean said: "The Company experienced particularly challenging trading conditions in 2010 with raw material costs rising significantly. It was not possible to pass these increases on to customers given the extremely price sensitive nature of the UK retail arena. "

The stores being bought are expected to add between £25 and £30m of sales to Blue Inc's turnover, bringing its revenues up to about £80m.

In an ideal situation the whole of the business could have been sold but it seems this was not possible. 

Have a look at our page on pre-pack administration this outlines how a company can be be put into administration and then the business and assets are sold at the same time.  An alternative would be a trading administration where the business would have been put into administration, continue to trade and then a buyer found as quickly as possible.  Alternatively, the business could be saved by going into administration and exiting via a CVA.

There must be one (or two) of three "Objectives" for the Administration:
In the application to the Court the proposed administrator must state which is his or her main objective of the following three:
  1. Company rescue, as a going concern, should be the primary objective. This usually means that the company proposes a Company Voluntary Arrangement or a scheme of arrangement.
  2. If that is not possible (or if the second objective would clearly be better for the creditors as a whole), then the administrator can achieve a better result for the creditors than would be obtained through an immediate winding-up of the company, possibly by trading on for a while and selling the business as a going concern.

    2.1. In English this means trying to sell the business for more than a liquidation would raise (see Creditors Voluntary Liquidation).
  3. Only if neither of the first two objectives is possible, can the administrator realise any property to make a distribution to secured and/or preferential creditors.

    3.1. This means collecting and selling the assets for the best price to pay the bank.

We give free advice on the options

As we have always said it is important to know your options if your business is in difficulty.  We received a nice email today from a business we met that did not need to go down a formal insolvency route but are now completely aware of the options and will act promptly if the need arises.  They were not charged for any of this advice!

To read the testimonial and the others please take a look at our testimonial page.

KSA Group uses CVA to rescue a recruitment business

KSA group uses a CVA to rescue a recruitment business!

They had a seven day warning letter of a winding up petition from HMRC and decided to get in touch.  If this warning letter comes you must act.

Read the full case study by clicking on the link below;


Trade deficit highlights more difficulties for the UK economy

New economic figures out today
Britain's goods trade gap has widened to its highest level ever to £26.8bn over the last three months of 2010. However, in better news, the final revision of GDP for the fourth quarter has been reduced to a fall of 0.5%, down from the previous 0.6%

Meanwhile house prices showing further declines in February when compared to the same month last year.
The Land Registry figures shows prices fell 0.8% month on month, compared to a 0.2% rise in Jan. Annual rate of decline increased to 1.7% from 0.9% in Jan.

Low interest rates are still heavily influencing the figures with the low exchange rate ( caused in part by low interest rates) pushing up the prices of imported goods and thus contributing to the trade gap.  Meanwhile manufacturing industry is doing well as their goods are cheaper abroad.  But of course, low interest rates have helped stop a crash in the housing market.  It certainly is a fine balancing act!

But we need GROWTH!

Total Fitness denies CVA rumours

Graham Hallworth, the chairman of Total Fitness, which has a chain of 20 Gyms, has told the online news service, the Business Desk, that it is "definitely not" looking at a Company Voluntary Arrangement (CVA) process as part of its restructuring despite some press reports.  He went on to say that "It's true that we pulled out of a club in Lancaster last week, but that was just because we couldn't agree terms with the landlord."

The Gym chain closed 3 clubs last week in Ireland as the state of the economy meant they were losing money and the landlords were not prepared to lower the rents Graham Hallworth said.

Graham Hallworth became chairman of Total Fitness following a pre-pack administration deal last October.
He said that the restructuring exercise embarked upon since had looked at all of the business's overheads - of which rent is a substantial part.

In a conciliatory statement Graham said that he was not going to use a CVA, like JJB Sports, to shed liabilities but was going to talk to landlords as rent was a substantial cost for them. 

Gyms have been struggling recently as many people have cut back on memberships as their disposable income falls.  However Gym operators have tried to lure customers with ever cheaper membership fees.  Some offering membership at £20 a month, with no contract.

Oddbins has applied to go into administration ahead of creditors meeting

Oddbins has lodged a "notice to appoint administrators" to protect it from aggressive creditors ahead of the vote on the CVA proposal.

Read the full news article on Oddbins here

Longbenton Foods in Administration

Longbenton Foods, that runs a frozen food factory in North Tyneside which employed 150 people, has gone into administration.

Administrators at Grant Thornton are looking for a buyer of the business. Managing director, Geir Frantzen, said: “It is sad news. Nobody wants to be out of work in the current economic climate. We tried so hard but didn’t succeed. I hope the factory can be taken over as a going concern.”

The managing director said it all.  Sometimes you can try as hard as you can and do everything right but the business doesn't succeed.  So it is important to take advice on the business issues, dust yourself off and start again or do something different.

If you want advice on your options if your business is facing difficulty then have a look at our pages on administration, company voluntary arrangement, prepack,  or even creditors voluntary liquidation.

Please give us a call on 01289 30943 if you have any questions.  If you are an employee then please take a look at help for employees

Budget for Growth?

George Osborne has delivered his 2011 "budget for growth" with no real surprises. However it needs to be growth centric with the 2011 growth forecast downgraded from 2.1% to 1.7% and 2012 forecast also down from 2.6% to 2.5%, Inflation set to remain between 4% and 5% in 2011.

The main thrust of the budget has been to try and reduce the burdens on business so they can deliver growth and jobs. Corporation tax will be reduced by 2% instead of the expected 1% and there are a raft of measures to try and ensure that small businesses are not strangled by red tape and complex tax affairs.  Mind you we have heard the one about red tape a thousand times before.... Business rates relief has been extended and the creation of 21 enterprise zones will probably help the regions.

There has been the usual tinkering with investment schemes and reliefs but all in all it may be that "events" in the global economy and outside influences such as commodity prices will have the bigger impact on the UK economy than Osborne's Budget. 

JJB Sports CVA Approved

JJB Sports second CVA has had the backing from the creditors.   In an announcement they said that the deal was approved by more than 75% of the creditors.  Must have been close!

Using a CVA solely as a way of dumping unprofitable stores was no doubt debated.  It is our view that this was not the purpose of the CVA rescue mechanism.  JJB wanted its landlords to accept a cut in rents by up to 55%. It also plans to close 43 stores by April next year and possibly another 46 later, and hopes to raise around £65m with an equity issue.

Commenting on the approval of the CVA Proposal by creditors, Mike McTighe, Chairman, said:

"I am delighted that our CVA proposals have been approved at the creditors' meetings held earlier today. JJB continues to develop strong relationships with its landlords who have supported the Company in this process, and we look forward to working with them, alongside all our stakeholders, as we continue to achieve crucial milestones in our turnaround"

This demonstrates again what a powerful rescue tool the CVA is.  However we understand that landlords can be compromised unfairly so it is important that they buy into the proposal and can benefit if the retailer's fortunes improve.

A further announcement is expected today giving more details.
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