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Directors who are having a new start in 2013

Here is a liquidation that we are doing in the first couple of weeks of January giving the directors a new start in 2013.  Businesses sometimes do not succeed but that does not mean that another venture will as well.

In many cases, which we deal with, the directors have gone on to full employment doing something similar without the stress of a struggling company.

Henderson Sowerby Golf Limited

Meeting of the Creditors of the above named Company will be held at Hexagon Business Centres Limited, Hexagon House, Station Lane, Witney, Oxfordshire, OX28 4BN on 15 January 2013 at 12.15 pm

Full notice below.


Redundancy consultation period to be reduced from 90 days to 45 days

The consultation period required for large scale redundancies is to be changed from 90 days to 45 days under new rules being introduced in April 2013.  This will bring the rules into line with other EU countries.  This will only apply where more than 100 people are being made redundant.  Currently if you are to make redundant less than 100 people then the consultation period is only 30 days.  Less than 20 people and there is no need for any consultation period.

The move from 90 days to 45 days in bigger businesses has been broadly welcomed by restructuring experts as companies in difficulty need to be turned around quickly and any delay can exacerbate the problem.  It is often the case that the required consultation is carried out before the 90 days are up anyhow i.e. the consultation does not have to take 90 days prior to making redundancies.

Whilst there is a duty to consult, an employer is not prevented from making redundancies if after meaningful consultation has taken place, no agreement can be reached.

How this will actually impact the world of restructuring and saving companies it remains to be seen but it could help focus minds to effect a rapid turnaround of a distressed business.

Construction companies face a difficult 2013

The construction industry has always been exposed to downturns due to the time lag between inception and completion of projects and the need for working capital.  Also many are reliant on public sector contracts.  2012 started as a bad year and the fall in output in construction was to blamed for the negative GDP figures.

Despite the recent collapses of Speymill's contracting arm and Swift Horsman which has resulted in 600 redundancies there is more optimism about 2013.  This is mainly due to the hope of more public sector contracts.

The construction industry is a vital component of the UK economy and it directly and indirectly employees many people and it should be preserved where possible.

So what can be done for struggling construction businesses?

In construction the smallest mistake culminating in a cost overrun could be critical. A business may no longer be viable going forward so liquidation might be the only option.
If a business is fundamentally viable then a company voluntary arrangement could be the answer
One particular building company we rescued had an overdraft of £150k with RBS. This bank is known for blocking pre-pack administrations where the business is sold to the encumbents. So after a meeting with KSA Group a rescue plan was put together.

For details of how this building company was rescued please read our case study; CVA Rescues Building Company in the North East

Last Comet stores to close down

The administrators at Deloitte have confirmed that all the UK Comet stores are to close tomorrow just days before Christmas.  This marks the end of the chain on the High Street.  It is possible that the brand may continue online as the website did a great deal of business.  Appliancesonline.co.uk has expressed an interest in the website and Currys may buy a couple of the stores at the 11th hour.  Dixons has hired 1000 staff from Comet in order to help process the Christmas rush.

According to a report by the administrators, the treasury is a loser in all this as the company owes some £26m to HMRC.  In addition, the company has unsecured creditors which included ITV and Google, which are owed £1.2 million and £602,000 respectively for unpaid advertising bills.  There are also £4.2m worth of unredeemed gift cards.

However, an estimated £40 million of payments will be made to suppliers and £2.1 million of holiday and back pay owed to staff will be paid in full.  However any redundancy claims will need to be met by the government for all 6000 staff.  This is likely to amount to a further £25m.

For further information see our page on employee redundancy in insolvency situations.

How to help your client in 2013

If you have a client call you up in 2013 saying they are really struggling and have just received a winding up petition what will you do?

a)   Say;  "I am sorry to hear of their situation but we are not insolvency practitioners so can't really help"

b)   Say; "please pay my bill first and then I can talk to you."

c)  Request an insolvency toolkit from KSA group, if you haven't already got one, and discover how you can stop your client and perhaps others going into liquidation and not paying your bill.

C is the right answer!

Our insolvency toolkit will demystify the jargon and help you understand all the options open to a struggling business, which, by the way, is not just administration or liquidation!

The toolkit will also show how you can earn EXTRA income from a client who is being rescued by us by providing services that are essential in any turnaround situation.

If you need urgent advice we will talk to all advisors for no charge.  To request a toolkit then please send an email to robertm@ksagroup.co.uk or for urgent advice on insolvency issues then call us on 0800 9700539 or 07974 086779

We have huge amounts of resources online as well at http://www.companyrescue.co.uk

HMV shares plunge on debt warning

HMV Group has announced that it may breach its banking covenants by early next year.  Consequently, the shares fell nearly 40% on the news.  The company has seen a 13.5% reduction in like for like sales in the 26 weeks to the end of October and net debt has risen to £176m.  The company has undergone a number of new initiates to try and boost sales such as showcasing technology in a number of revamped stores.

So far the banks have been supportive while so many commentators have predicted its demise.  
The company is still hanging on to their credit.  It is interesting that Comet went into administration despite having stable sales but a huge debt whereas HMV's debt is growing and sales have been sliding for the last 2 years.  One reason is because HMV occupies a unique place in the market and it does not have any direct competitors on the High Street.  There also appears to be a plan in place to turn the business around albiet slowly.  They have sold off the live music businesses to try and trim debts.

Previously HMV have not ruled out the use of a company voluntary arrangement or CVA to try and rescue the business.  However in the recent statement they have said they do not wish to close down any stores which a CVA can do.

Begbies sees falling insolvency revenues in first half

Leading insolvency firm Begbies Traynor reports sales down 11.2% in its first half and net profits fell too.

Pre-tax profit reduced to £2m from £3.4m before.

Commenting on the results, Executive Chairman Ric Traynor said: "Challenging market conditions have persisted with lower levels of activity in the insolvency market over the summer months."

"Overall, this led to a group performance with lower revenues and profits than the comparative period. In spite of this, the business remained profitable and continues to generate good operating margins through on-going management of the group's cost base."

Begbies said it expects UK insolvencies to remain broadly stable. With sales down 11% in the first half it expects a rise in revenues in half 2 to deliver profits in line with forecast.

Looking ahead the group added: "We anticipate an improvement in activity in the second half of the financial year during the traditionally busier winter months. Given this, we currently anticipate that the group's performance for the year as a whole will be broadly in line with last year."

Net debt stood at £18.3m from £20.1m in April this year and down from £27.3m the same time last year.

Drive Assist in administration rumours

It has been reported in some of the car dealer press that Drive Assist, the UK’s fifth largest accident management company, with a £100m turnover has gone into administration.   The press have been contacted by a number of car repairers and others that the business was "going into administration"  No one is answering the phone at the company and there has been no official announcement so it is not certain what is happening. Also a number of the dealers websites are down such as Nottingham Autopark.  As such it appears something is going on.

It is possible that the firm is trying to arrange a pre pack administration to try and ensure business continuity or are in talks with the banks to try and renegotiate the debts.  The balance sheet of the company is showing negative £325m at the last reported accounts in mid 2011.

Either way we will keep you updated if we hear anything more!

If you work for Drive Assist and are worried then you can look at our help for employee pages

update:  A number of employees have emailed me to say that they have been made redundant following Drive Assist going into administration and see comment below.  The company's website still has no announcement which is unusual.  We understand that Zolfo Cooper have been appointed the administrators.

90 Stead and Simpson stores to close down

Shoe Zone (owner of Stead and Simpson) the retailer with 227 stores around the UK has announced that it is going to close down 90 of its Stead and Simpson stores by winding up the company, Tyler Ltd, that operates them.  It is expected that there will be some 500 job losses.  The company announced the move as it needs to increase its profitability so it needed to cut back its loss making stores. Tyler ltd will probably be put into voluntary liquidation but it is interesting to see that according to credit checks it has a rating or 93 out of a 100.....

The landlords may have guarantees from the parent company Shoe Zone but that is not necessarily certain.

The Shoe Zone bought Stead and Simpson out of administration in 2008.

Alternative methods of raising finance - Credit Card Factoring

With the banks no longer lending money in the same volumes as in the past there are now an increasing number of new ways that businesses can raise finance.  Some methods of providing finance have been around for a while such as single invoice discounting ( where a provider will advance money on the back of just one, usually large, invoice to a good credit risk debtor ) but new methods are gaining in popularity as bank lending decreases.  Asset based lending has grown some 100% since 2007.

A new form of finance has come to the UK from the US which is being called credit card factoring or credit card merchant advances.  This is simply an advance on money that the company is expected to take from credit and debit cards in the future.  The provider just needs some historical financial information and some references and then they can advance the money.  This is set at 1/12th of the takings but could still be invaluable if a pressing bill to HMRC needs to be paid.  The money is then recouped for a set fee from the credit card takings.  See our page on credit card merchant advances for more details.
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