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MPG has gone into administration

Building.co.uk has reported that a £2m dispute between main contractor, Galliford Try, and subcontractor MPG who worked on the Athlete's village at the London Olympics has resulted in MPG being forced to work on a company voluntary arrangement to allow it to have some relief from its debts.  MPG owes £10.2m to creditors but it says that the dispute with Galliford has left them with a big hole in cashflow.

The disputes relate to delays on the final two plots of the village, which together are worth £80m and contained 423 units, according to construction data company Barbour ABI.

MPG - had last reported turnover of £46.3m in the year to 31 December 2011

However, it does look like there was a  company debt problem even without the issues with Galliford as the CVA is expected to offer "at least" 32p in the £1.  So in order to survive it is needing to write off in the region of £6m.

MPG’s creditors will vote on accepting the CVA proposal at a meeting on 4 December. If they reject it this could force MPG into administration.

Several firms have gone bust on the athletes’ village project, including contractor P Elliott and subcontractors United AG and Trent Concrete.

Walmsley Furnishing in administration for third time.

Walmsley Furnishing, the Midlands-based furniture store chain, has gone into administration for the third time in seven years because of the economic climate.

The firm has 24 stores around the country, including Bradford Street in Walsall and the Mander Centre, Wolverhampton, employing 105 workers. Insolvency practitioners at  PCR have been appointed as joint administrators. The stores are still trading and there have so far been no redundancies.

SKG Capital bought Warmsley in September 2011 in a pre-pack deal for £250,000, which resulted in a number of store closures.  Unibrook bought the business in 2005 when it went into administration the first time.  At that time it had 100 stores nationwide.

Mr Phillips, a licensed insolvency practitioner at PCR, said: “Unfortunately Walmsley has, like so many other retail businesses, suffered from the economic recession that has blighted the British high street.
“We are currently investigating to what extent we will be able to fulfil orders, however this is dependent on our ability to acquire stock from third party suppliers. I would, however, stress that it will take some time for us to assess the situation.”

A customer helpline has been set up by the administrators to answer questions on 01922 704113.

Insolvency rate falls in SMEs apart from construction

Fewer firms are becoming insolvent according to the latest figures from Experian.  Almost all business sizes showed a fall with some 23% fewer businesses which employ 26-50 people falling into insolvency. It was only the larger firms with 500+ employees that saw an increase.   This is despite continued economic pressure on business.

Just 1,685 firms went insolvent during October, according to data from Experian, down 8.7 per cent on October 2011, to make up just 0.08 per cent of the total business population.

Leisure and business services saw a fall in insolvencies but building and construction firms were in trouble, with 5.4 per cent more of them becoming insolvent.




DRL in line to buy Comet's online business

It was only a few weeks before the collapse of Comet that I was admiring the website www.appliancesonline.co.uk which is run by Bolton-based DRL limited.  Their website was cited at an online content marketing conference on how to do it!  It is not surprising then that their turnover has increased from £50m to £150m in the space of just 4 years to 2011.

Funnily enough they have now emerged as the front runner in buying Comet's online operations for a "seven figure sum"

John Roberts, who set up Appliances Online in 2000 said he would hope to run the Comet brand online, but said a deal would depend on whether he could rescue the brand before too much damage was done through the administration process.

 Administrator Deloitte is also understood to have received a bid for 140 of the 195 Comet stores, which could save more than 2,000 jobs, according to a report in The Sun newspaper.


What does voluntary liquidation mean ?

Creditors voluntary liquidation or compulsory liquidation means the end of the company and its assets are then "liquidated" or turned into cash for the creditors, if possible. Creditors voluntary liquidation (CVL) is the most common form of liquidation in use in the UK.

Usually the company has run out of cash, it cannot pay its debts on time and the directors are concerned that the business is simply not viable. They are also very  worried about wrongful trading.

A CVL brings an end to worry, if you have acted properly as directors, and it will allow you to get on with your life. Yes, you can be a director of another company after a liquidation!

What is a "Phoenix"?

You can liquidate a company and start the same business again, but only under strict rules and conditions. This is a potential legal "minefield" and you need to take proper advice.

Call us or read our Experts Guide to Creditors Voluntary Liquidation (see link below) if you want more details. This FREE guide tells you all you need to know about liquidation or call us on 0800 9700539 for a free chat through your company's issues.

http://www.companyrescue.co.uk/documents/KSAExpertsGuidetoCreditorsVoluntaryLiquidation.pdf

Recruitment company exits CVA 4 years early


Read about how our client did so well in their first year of the turnaround that they exited their CVA early.

The managing director who is a self confessed sales man and not really a great financial controller had built up sales to £4.5m pa in 2009 with clients like Morrisons, Sainsbury's etc.

The company provided mainly eastern European workers to warehouses in the Midlands on fixed rates. Working with Gangmasters licence and high quality standards was of course vital to work with blue chip customers.

His accountants advised that he needed to grow the management team and set up a  platform for a £10m sales business. This he duly did but had very poor luck with the management recruits. At the same time as recruiting and growing the management  team they opened a new branch in East Midlands.

The expansion was funded out of working capital and invoice discounting facility from  IGF Invoice Finance who were and remain very supportive. After 6 months the MD realised that the 6 extra managers, 6 PC’s, 6 expense accounts  and 6 extra cars had not been covered by increased sales and margins. Indeed the margins were under top down pressure and losses began to mount. Managers and their staff costs were mounting up and the new branch had also failed to cover its costs.

After losing £350k in the 2009 financial year the business started building up PAYE and VAT liabilities to cover cashflow problems. A time to pay deal was arranged and the company began paying £20k per month to catch up.

The MD decided that enough was enough and fired 5 out of the 6 managers. The cars which were on short term hire were returned and the laptops sold.

But still losses mounted.  

Read our recruitment case study to find out how this company was turned around and exited a CVA 4 years early!

Hampson Industries to go into administration

Hampson Industries, the Brierley-Hill-based aerospace group is set to call in administrators after struggling with debts of £55m. Hampson, which makes tools used in the production of the F-35 Joint Strike Fighter, is expected to appoint Simon Kirkhope and Chad Griffin of FTI Consulting LLP as joint administrators later today.

The firm recently sold its entire share capital of BHW(Components) for £2.4 million as it looks to repay its debts.  The firm had been up for sale as a whole but there was not much interest and the plans were shelved

Earlier this year Hampson Industries' shares were suspended after the company admitted it was not in a position to publish its annual accounts in the timeframe required by listing rules.

Dissolved companies owe £4.7bn to creditors

Experian, the credit reference firm, has done some research and discovered that each year companies that are dissolved or closed down without going through a formal insolvency process owed £4.7bn to creditors.  This compares to the £11.7bn owed by companies that have gone into administration, or liquidation.

The credit ratings company analysed firms which closed down voluntarily since 2000 and found that taken individually, the debts left behind are small – around 35pc of these firms had less than £10,000 of total assets.

However, Experian said the “sheer volume” of businesses using this apparently benign route are generating a significant combined loss to creditors.

Max Firth, of Experian, said: "Most firms that apply to be struck off tend to have little or no debt owed to other businesses. However, hidden among these seemingly harmless business closures is a level of debt that has previously gone undetected.”

Not sure what the point is of this research/statement as it is inevitable that thousands of businesses are going to close owing small amounts of  money that  they can't pay and it is not cost effective for creditors to recover.  But the largest such creditor is almost certainly HMRC.

The cost of employing an insolvency practitioner to put a company into a voluntary liquidation when the debts are small sometimes does not make financial sense.  But as a director simply waiting until your company has completely run out of money is not good management. If the dissolution is rejected by say HMRC, then the company may be wound up by the Courts initiated by HMRC.

Then you will meet the Official Receiver and have to explain why the directors apparently drained the company of cash and left creditors with nothing. Does this sound like directors acting in the best interests of creditors? No, well it won't to the OR either. Thus personal liability for the HMRC tax debts or other creditors may become a real possibility.

When a company stops trading and owes nothing, or very small amounts of money then dissolution is one of the ways to bring matters to an end.  However, if the company has larger debts, then any creditor can oppose the dissolution and a compulsory liquidation may occur.  In any liquidation the conduct of the directors will be investigated.  So if you want to close the business make sure you do it properly.

The smart options is to ensure that before there are no funds left, you should place the company into creditors voluntary liquidation.

Harley Medical Group in administration

The Harley Medical Group, which specialises in cosmetic surgery, has been forced into administration following the claims made by women who had the PIP breast implants fitted.  1,700 women were seeking compensation which ran into millions of pounds.   The firm said that it could not afford to replace all the patients implants free of charge, unless it actually ruptured and so the NHS has been doing the operations where there was deemed a significant risk.

It has emerged that all the doctors and directors have been transferred to another firm and are carrying on performing surgery.  Documents filed at Companies House reveal Aesthetic and Cosmetic Surgery Ltd was set up in September with the same directors as Harley Medical Centre and based at the same address near Harley Street.

This, of course, has raised questions about the process and left many people angry.  There is always a risk if you employ a private company to do anything let alone a surgical procedure. However, questions should be asked as to why this company's insurance or PI cover is not involved in paying for corrective surgery.  I would have thought that this would offer some recourse.  Why are they not paying out?  Did they actually have adequate cover?  The latter is surely the main question.




 

Retail sales in surprise fall prior to Christmas

Yesterday was a bad day for statistics and figures for the economy.  Retail sales figures saw a 0.8% decrease in sales volumes in October which follows the bounce back in growth which was recorded for September of 0.5%.  This comes on the same day as the Eurozone falls back into recession.

One of the main reasons for the decrease was the fact shoppers have cut back on food and clothing purchases according to the Office of National Statistics. Food stores reported the biggest monthly decline in sales since November 2011.  However the quantity of goods had increased by 0.6% when compared to last year.

This trend is a little alarming so close to Christmas and follows the demise of Comet last week.  However Comet's sales figures were broadly stable prior to the administration it is believed.


Christmas time will be a make or break sales period for many retailers and they must get their online stores working well and able to deliver!

If you are struggling and are looking for a plan B visit or retailer rescue pages
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