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Interest rates may rise soon according to BCC

Could it be the holiday month of August that the Bank of England finally decides to put up interest rates?  The British Chamber of Commerce (BCC) seems to think so.  The "temporary" high inflation seems to be lasting for longer than anticipated.  The BCC said in a report that it believes rates will go up to 0.75 per cent in August, reach 1 per cent by the end of the year and hit 2.75 per cent by the end of 2012. 
This prediction is in fact close to our own poll that showed that most of our readers expected a rate rise to 1% by the end of the year.

The fact that inflation is high is due to one simple fact - Prices around the world for essential items are going up, mainly due to higher commodity prices. What is more the demand for higher wages in the developing world is feeding through as well. 

It is our view that a rise in interest rates will push many businesses over the edge with retail and big ticket purchase businesses being hurt the most.   There are rumours in the City that a big retailer is about to fall into administration.  A few are certainly on the edge!

Inflation over the medium term will be curbed by the subsequent rise in Sterling, following an interest rise, which is one of the current aims of the Bank of England.  However, we mustn't forget that economic stability is another remit of the BOE and lets hope that any rise doesn't upset the economy too much.

Football Creditor Rule - Is it Fair?

So, what is the "Football Creditor Rule" and is it fair?

If a Premier League football club enters into administration, or any other insolvency process such as a CVA, the club is suspended from the league until certain "football creditors" are paid in full.  This includes transfer fees and players wages.  Any remaining monies are paid to the other creditors such as HMRC and trade creditors.  Funnily enough, HMRC are not particularly happy that the wealthy footballers receive all their money whereas the tax payer gets the crumbs.  Mind you, most footballers are paying tax at 50% so they are getting something but that is not the point!  HMRC also argues that it goes against the established principal that "unsecured creditors" should all be treated equally as originally envisaged in the Insolvency Act.

HMRC are taking their argument to the High Court on the 28th of November.  Will they win?  Possibly.

The argument by the Football League and the Premier League is that they are a closed community of businesses and they have liabilities to each other (ie transfer fees) and if one can start shedding these then the knock on effects to other clubs will be to the detriment of the league as a whole.  There is some merit in this argument as the clubs do not operate like normal businesses.  Also the Leagues argue that there are further rules in their regulations that benefit HMRC ( we wont go into them here)

However,  it looks like HMRC may win as the players and managers themselves already feel embarrased that they get full pay while less well off businesses that depend on their club receive precious little if the club goes into an insolvency process.

We will keep a close watch on developments!

Focus DIY Stores to Close as Liquidators Expected To Be Appointed

Focus Update

The administrators at Ernst & Young have said that they have been unable to find a buyer for the remainder of the business having sold off some stores to Wickes and B&Q.  As such, they are expected to appoint specialist liquidators, Gordon Brothers, to sell the stock and then close the stores.  The stores are expected to be kept open for one month.

The resulting closure will mean about 3000 jobs are lost.

Focus DIY suffered from intense competition from Wickes and B&Q and was unable to keep going in the face of reduced consumer spending.

Kinsey Allen in Administration Again

Kinsey Allen, the specialist financial services recruiter, has gone into administration, following a failed pre-pack administration last year. Despite the prepack, where the previous liabilities were reduced, it still struggled on.


Recruiters have managed to reduce their overheads quickly in the current recession but the problem remains of too many recruiters chasing too few client vacancies.

What could have Kinsey Allen done to survive? Could a CVA have saved the business? The problem with a pre-pack is that it is possible that the company thought its problems were over and carried on in the same way as before that got them into trouble in the first place. It may have had to TUPE (transfer of Undertaking Protection of Employees Rights) across to the new company. Ina CVA the employee numbers can be sharply reduced with nil TUPE costs and nil cashflow impact of redundancy costs.

As a condition of the CVA, (well ours anyway), the business must produce monthly management accounts, changes to the board are often made, and a real discipline is injected into the business. Some don't survive it but that is life. Better a leaner and fitter business that can weather the storm and pays a dividend to creditors than one that fails again..

Dreamticket in Liquidation Helpline

Dreamticket has gone into liquidation.  Again, there is a very curt message on their website saying it has ceased trading and customers should contact the CAA.  No phrases like "We regret that" or "sorry to announce".  According to reports, at the time of its collapse, it had 600 customers overseas,  and 4,000 advance bookings!  The language used is in contrast to Carvill Group that  made a heatfelt statement expressing its genuine regret at not being able to continue some of its operations.. 

Customers of Dreamticket who are abroad and experiencing difficulties should call the CAA on 0044 161 444 5810.  ( Dreamticket didn't even put the phone number of the CAA up on their website ).
Customers who were due to travel at a later date should go to the CAA website for advice about refunds, or call 08444 933037

We cannot make things in Britain anymore?

Infuriating that so many so called economists and journalists keep chanting the same mantra. Jaguar Land Rover will announce record profits for the financial year of £1.1bn. Seems that this company makes things very well. Coupled with news it is looking to invest £1bn in a new engine plant, this  highlights just how successful the UK automotive sector is.

http://www.thebusinessdesk.com/westmidlands/news/169702-jlr-set-to-reveal-record-profits-in-excess-of-1bn.html

The Business Distress Index

R3, the insolvency trade body, has interviewed senior financial controllers at over 500 companies and has come up with the Business Distress Index. R3 has released some preliminary figures that suggest that businesses are starting to struggle more.  The most noteworthy observation was that 37% of businesses are worried about their crown debts!  So if more than a third of businesses are behind on their tax then there is some cause for worry.  Last time the Distress Index was published in December 2010 the biggest cause of concern by 47% of businesses was falling profits.

HMRC are tightening up on their time to pay programmes and perhaps businesses are worrying as their current deals are coming to an end.

Don't forget that as long as the business is viable in the longer term and the debt can be paid off in part over 3-5 years then a CVA may be an option.

Homecall Plus in Liquidation (Update)

Homecall+ was placed into compulsory liquidation, after a winding up petition was issued against the company, has been rescued by a 21 year old female entrepreneur from Wigan. Homecall+ sells insurance to cover household emergencies such as plumbing, electrical and gas breakdowns.



Brit Insurance was underwriting the policies prior to the 3rd of December 2010 but policies which were taken out after this date remain invalid. The new company taking over Homecall+ are working with a number of underwriters to ensure policy holders can renew their policies with confidence.


Homecall+ was in the hands of the Insolvency Service, the government body that winds up companies in the public interest and all claims made prior to the company being taken over should still be made to the official receivers.


Lauren Dalton, 21 from Wigan has secured funding to buy the assets of Homecall+ and is currently meeting with underwriters, solicitors and various other companies to re-launch the company. Miss Dalton is a recent University graduate and views this opportunity of a chance to establish herself in business. Miss Dalton said "I became interested in this business when the family policy with Homecall+ became invalid and made some early enquiries. I completed some research and populated a detailed business plan to secure some capital to buy the assets of the company. I am now looking forward to the challenges ahead"

Anybody wanting to contact this company can do so by calling 01942 323435.

C&G Concrete in administration

C&G Concrete, owners of three quarries and several plants in Humberside, Lincolnshire and Peterborough, has gone into administration.  The business employed 120 people and produced raw materials for the construction industry.  The administrators at PWC said it had faced "significant challenges" especially following the poor weather conditions last year.

It was placed into administration by its directors in response to an advertisement in the London Gazette publicising a petition for winding-up.  See the winding up petition notice here

I do hope that they tried to stop the petition or sought advice early.  Once the petition is advertised the company's bank accounts are usually frozen and the directors would have lost control.  The administrators would have had to seek a validation order to unfreeze the accounts so that it could continue to trade.  All this is very expensive.  Could the company have used a CVA to save the business?  Possibly, it all depends on the circumstances and the nature of the debts.

PWC have said that they have received lots of expressions of interest so are hoping to sell the business. So it must of been viable but burdened by some legacy debts.

Other divisions of the group including FH Gilman & Co are not subject to any administrators' appointment, said PwC.

Property in receivership - LPA receivers explained

Receivership in respect of companies are appointed by floating charge holders where the security was created before 15 September 2003.  If the charge is created after that date a charge holder can appoint an administrator,  so they are less common these days.

However, the term receivership is still used commonly in connection to property. 

Please read our new page for more information on property receivership and fixed charge receivers
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