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Insolvency rate reaches a 5 month low

The latest Insolvency Index from Experian  has shown that the rate of insolvencies dropped to 0.08 per cent in August, its lowest point since February.   This should be seen in the context of the insolvency rate in the first quarter of 1992 when 0.82% of businesses were failing.  So 10 times as many! The highest insolvency rate so far recorded, post credit crunch, was 0.24% in the construction industry in the first quarter of 2009.

The North East and West Midlands had the highest rate of insolvency in August at 0.11 per cent. Yorkshire and the East Midlands were the most improved with an insolvency rate going to 0.13 per cent from 0.10 per cent and 0.09 per cent to 0.07 per cent respectively.  The best performing region with the lowest insolvency rate of 0.06 per cent was the South West.

The North East is perhaps more dependent on public sector spending than other areas which may go some way to explain the differences.

If your business is based in the North East and you are struggling then speak to Eric Walls our Director of Turnaround and Insolvency based at our Gateshead Office 0191 482 3343.  We will go through all your options.

Begbies Traynor reports trading in line with expectations

Begbies Traynor, the insolvency and restructuring specialist, said its first quarter trading has been in line with expectations.

Begbies Traynor, who are based in Manchester, make 90% of revenues from insolvency and restructuring activities, said it expects to see some margin improvements throughout the course of the year as the benefits of cost saving measures filter through.

It seems that insolvency revenues are not rising for Begbies Traynor as the insolvency market is still very flat. This is in part due to low interest rates and the continued time to pay support from HMRC.

The firm is still keen to sell its Red Flag Alert service. The Alert service is a credit risk database with 6 million records on businesses in the UK, from sole traders through to limited and quoted companies. It reports quarterly on how many companies are facing "critical", or "significant" financial problems. The last report on Q2 showed a fall of 48% in the numbers of companies with "significant" financial problems compared to Q2 and year on year only an increase of 1%. However, those with "critical" financial problems increased by 12%. Without knowing the exact amounts of "critical" and "significant" distressed companies it is hard to make comparisons.

It is our view that the market will remain flat for the foreseeable future and when the recovery comes in ernest we will see the expected rise in insolvencies, as the weaker companies lose business to stronger rivals and run out of cash.

Alexon pre pack administration likely

News has leaked that Sun European Partners are the most likely to buy the assets of Alexon Group plc in a pre-pack administration.  This morning Alexon's shares were suspended while the company clarifies its financial position.  However, there are other possible buyers in the frame who will have submitted bids by September 16. 

Alexon Group plc has suffered on the High Street, issuing a profit warning on September 5. Earlier this month we blogged that prepack administration was an option for Alexon and that it had appointed KPMG to advise on its restructuring options.

Alexon operates 78 shops and 1,071 concessions and it employs 2,800 staff.  In the event of a prepack administration is used the contracts of the staff will most likely be taken on by the new owner under the Transfer of Undertakings (Protection of Employment) or TUPE rules.

We will keep our readers informed of future developments.

Making Employees Redundant in a CVA

Having to make employees redundant is probably one of the hardest part of any turnaround plan but it can be done at low cost as part of the CVA process in order to save the business. 

Please read our new page on employees redundancy in a CVA

Company Rescue Website Now Online Again

Please accept our apologies for the outage on our website http://www.companyrescue.co.uk/ today.  This was due to a network issue at the server centre and it appears to have lasted some 75 minutes.

We can now start showing you solutions to casflow problems again!

Sony Centre Owner in Administration

The High Street electronics retailer, Sonex Communications, which operated 15 Sony Centre stores in the UK, has been placed into administration. The company made a pre-tax loss of £2.7m in the 12 months to March on a turnover of £23.8m. The firm has cut costs by withdrawing its concessions from 13 Debenhams stores.

In a statement the company said, "The company is faced with an increase in competition, particularly via the internet and major retailers on the high street, the company's gross margins came under pressure during the financial year."

Sony Europe confirmed that it was "business as usual" for the Sony Centres and said that all orders and warranties relating to Sonex will be honoured.

However, administration can  terminate lease obligations and allow the company to move out of premises.

Truro City FC Served Winding up Petition

Truro City Football Club have been served with a winding up petition from HMRC  The hearing date for the petition is the 31st of October.  The owner Kevin Heaney, who is part of a consortium to buy Plymouth Argyle FC, has said there is "no problem whatsoever" with the tax bill, which was "less than £100,000".

The advertisment of the petition will be a problem for the club as not only will it be bad publicity for Truro City FC and Kevin Heaney but it is likely that their banks may freeze their accounts. 

Football club's tax affairs are going to be back in the spotlight as HMRC are challenging the "football creditors rule" in November.  The rule is whereby the players, the leagues and the FA ie certain "football creditors" get preference over other suppliers and the HMRC.

KSA Group Launches Insolvency and Cashflow Advice Pages Specifically To Help Law Firms

If you are a law firm, do any of the following apply?

  • Is your practice experiencing cashflow problems?
  • Are you worried that insolvency may affect your ability to practice in the future?
  • You don’t want to risk the SRA Intervention
  • Are you concerned about paying your professional indemnity premiums?
  • Could Legal Services Act (LSA) be a threat to your business model?

If so then you should take a look at our Help for Lawyers Pages

On these pages we will help you distill all of these problems and the options available into a recovery plan. It will set out the preferred non insolvency route and a one or two pronged back up approach. 

We have specific options set out if you are LLP, Partnership or Sole Trader.

We are currently advising 4 law firms, types ranging from LLPs to Partnerships, on how to restructure for recovery.  We have also launched our dedicated telephone number for law firms 0845 519 4930 

Highland Toffee Makers in Administration

New McCowans Ltd, which produces the Highland Toffee bar, has been put into administration despite selling more than 140 million bars a year.  103 jobs, based near Falkirk, have been put at risk but the administrators at Grant Thornton have said that it has received interest from potential buyers.

McCowans as it was known In March 2005, collapsed, but was saved a year later after a deal was struck with an investment company.

If you need advice on how we can rescue a Scottish company then see our Scottish Company Rescue page or give us a call on 01289 309431.

Administration or liquidation are not the only options available to distressed businesses!  Come along to our Seminar on the 12th October and find out.

Pre pack administration for Alexon Group?

Alexon the womenswear retail group is so short of cash it does not have sufficient to stock up for Christmas! 

This is our intepretation from the company's carefully worded statement; The company is "operating with limited headroom against its existing facilities and accordingly there is a clear requirement for additional funding in the short term as it enters the seasonal peak in working capital requirements".  Net debt for the company currently stands at £12.9m.
Alexon has invited proposals to acquire one or more of the Group's brands. Currently the board is considering one offer and it is understood that it is at a "significant" discount to share value.

Brands at the group include:  Anne Harvey, Dash, Eastex, Kaliko, Minuet Petite and Lazy Lu They can be found in 990 stores around the world according to the corporate website.

Is pre-pack administration looming for Alexon Group?
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