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Debt management firms to be banned from social media?

The Office of Fair Trading (OFT) is looking at whether the use of social media or google adverts is an appropriate medium for debt management firms.  They are looking at ways at tackling "unfair business practices"

The OFT do not regulate the debt management industry but do issue licences and guidance so their views are important.  They are not proposing a complete ban on the use of social media networks as long as their information is "balanced and adequate".  The problem with social networks is the amount of information given is often short.  However as long as any posts, tweets, etc are pointing to a legitimate and "fair" website there should not be any problem what is more internet users have come to expect this.

In general, any attempt to regulate their use of the internet is fraught with difficulty.  The public and other professionals are more likely to welcome proper oversight or regulation to stamp out any cowboys out there, no matter how they come to the market.  Social media is an increasingly important channel for companies to reach their customers.  Also social media can be useful in exposing scams.

La Senza to restructure and may sell or close stores.

According to reports over the weekend, La Senza, the lingerie and clothing chain with 180 stores, is looking to restructure its business.  The owners, Lion Capital, have been speaking to advisors about how they can close or sell some of their underperforming stores. 

It is understood that as many as 66 of the stores are leased via Contessa, the sister lingerie chain, that was acquired in 2004.

This could mean that there is the option to put any unwanted leases into Contessa and sell or close them, at a time of dreadful trading on the high street. Up to a quarter of the lingerie group's 180 branches could be offloaded.

Of course, the landlords would have to agree to any assignment of the leases into Contessa.  However, if it was just the Contessa leases that are poorly performing then it could be argued that Contessa could be put into liquidation or administration and the leases disclaimed.  However this scenario is unlikely.  There are issues of whether these leases have been novated into La Senza as they have been paying the rent on them. 

Other options could be a CVA which will allow the chain to offload underperfoming stores.

The outcome very much depends on the position of the landlords and whether the poorly performing stores are leased via Contessa or not.  Matters will be brought to a head on the rent quarter day on 29th September 2011 no doubt.

Is Buffet bailing out Bank of America like he did with Goldman Sachs?

Read the book; “Too Big to Fail”, great analysis of the 2008 Credit Crisis. Buffet was the lender of last resort in 2008, when Berkshire Hathaway bought equity with an aggressive coupon in Goldman Sachs. Same again for BOA?

Empty shops and falling footfall making retailing tougher

The British Retail Consortium have published figures that has shown a fall of 1% in the number of shoppers on the streets in the last year.  This comes as no real surprise as high street retailers have been suffering.  But the footfall figures are broken down by region that shows some interesting trends.

Wales, has seen a footfall fall of 9.2%. The West Midlands has shown a 6.6% fall. However, London has seen an increase of footfall by 1.6%, while Scotland has had a rise of 0.2%.

The number of shops empty does not look good either with almost one in 10 shop premises empty.

The overall vacancy rate stands at 11.2%  with Northern Ireland experiencing a terrible 17.1% vacancy rate, Wales looks bad as well with 13.4% and the north of England has 13.1%.

The problem with vacant shops is once a parade starts looking empty no shoppers go there and the rest suffer.  In shopping centres this can be more easily managed over time by relocating tenants but on the streets this is simply not the case

Remember our page on Retail Rescue that shows how you can close down underperforming stores and take action to save your business.

Legal Aid Cuts Point To Lean Times for Lawyers

Lawyers, law firms, and law centres are in for a tough time as the government introduces plans this week for an additional 10% cut in legal aid fees.  This is on top of the already annnounced 12.5% cuts which has been blamed for the collapse of the legal centre, Law for All,  and the going into administration of the Immigration Advisory Service ( IAS)

The proposal is being put before parliament by the Ministry of Justice to reduce costs in what it alleges is the "most expensive legal aid system in the world".  However, it is possible that the proposal will be voted down by MPs as a cut too far.

For many firms some legal aid work was viewed as a back up in lean times.

There are solutions for law firms that find themselves in difficulty.  Please see how we rescued an LLP Law firm

Partnerships can be rescued using a Partnership Voluntary Arrangement or PVA

We are currently advising law firms at the moment on how to survive difficult times.

We are happy to meet with Partners, followed up by a 20+ page solutions report setting out the options.  All this for absolutely no obligation charge. 

Adroit Construction Services in Administration

Adroit Construction Services, based in Bromsgrove, which employed 80 people at its peak and had a turnover of £10m has been placed into administration.  The business operated in the water and energy sector performing process and M&E services.    

Their website states - "Our five key areas of activity are in the Water, Energy, Infrastructure, Renewable Energy and Process sectors. Arguably the water sector is our dominant industry and our services include virtually all aspects of waste and potable water installations, and focus on pumping station applications in particular."

No reason for the demise of the contractor has been given to the Construction Enquirer who originally broke the story.

The contractor is part of the Adroit Group which has taken on the lease at Donnington Park to revitalise the racetrack venue.

Administrator Mark Bowen of MB Insolvency in Birmingham is handling the affairs of Adroit Construction Services.  You can contact them on 01213 596 455.

A testimonial about our professional approach

Client Testimonial!

"After a previous restructuring which made it very difficult for the company to proceed in a profitable manner, the board asked KSA Group, and others, to summarise and review our corporate situation. The plans laid out by KSA Group were clear, professionally presented and in a sympathetic manner for management to understand. It was unfortunate in hindsight that the board decided to work with another insolvency practitioner but it soon became obvious that KSA had a better approach with more reasonable fee structure and a much stronger ethic to succeed.

The result is a company now able to return to profitability and provide the creditors with a reasonable chance of receiving a dividend. Because it is now free of short term cash flow problems management are able to focus on rebuilding the business.

Any insolvency or CVA procedure is fraught with emotion and difficulty but at the end of the day the approach by KSA Group was superb. We did experience many technical difficulties but the calm manner and expertise with which the whole KSA Group team dealt with them was excellent.

I would thoroughly recommend them."
For more testimonials on how we have helped our clients please see our testimonials page

Stephen Hunt of Griffins takes Bridge Insolvency Cases

Failed insolvency firm Bridge Business Recovery cases that were overseen by James Bradney have been tarnsferred by the court to Stephen Hunt and Tim Bramston, of insolvency practice Griffins.

Insolvency Today reports that a block transfer of Bradney's cases has been made to Griffins where Bradney was the lead partner on those appointments.

Where the remaining partners at Bridge were the lead partners on their cases, these appointments have transferred to them in their respective new roles at Leonard Curtis and Harrisons.

The transfers follow the appointment of Samantha Bewick and Colin Haig of KPMG as joint administrators of Bridge in July.

The ICAEW has revoked the insolvency licence of James Bradney.

TJ Hughes Administration uncovers £350million unsecured debts

Whilst the administrator has closed down many of the stores with closing down sales this weekend across the NW for example, the shocking scale of the debts has been revealed.

Including landlords claims and secured debts, this company had debts of more than £430m  of which £350m is unsecured.

With last accounts showing sales of circa £230m this is a huge debt mountain. Likely recovery for unsecured creditors is nil to a few pence in each £1.

What is a winding up petition? What does it mean for my company if we get one?

A frequently asked question and with HMRC, builders merchants, suppliers and other creditors claiming down on slow payment there are signs that the use of winding up petitions is on the rise.

See here for a guide to winding up petitions and winding up orders

We are often told, "well a creditor has threatened a winding up petition but we don't think they will do it". Wrong, HMRC in particular is moving from 7 day warning letter to petitions quickly now.

So if you have a threat of a winding up petition act fast - get advice from a  professional turnaround or insolvency advisor and make sure you maintain a dialogue with the creditor. We suggest that you make modest payments on account if at all possible.

By not acting, the directors may allow an irate creditor (such as the Crown for taxes) to issue a winding up petition.

This can lead to greater risk for the directors and any shadow directors. The Official Receiver or subsequent liquidator will interview the directors and officers of the company to examine their conduct.

Most often there is little return for the creditors.

Once a winding up petition has been served on the company the board may not

  • Sell any of the assets or
  • Propose a creditors voluntary liquidation and
  • Cannot appoint an administrator without an expensive Court application
  • Once a winding up petition has been advertised the company’s bank account will be frozen.

We would urge directors to avoid this at all costs. You must make a decision to act.
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