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Clinton Cards considers CVA as part of strategic review it's reported

Clinton Cards is due to announce its plans following its strategic review over the coming days as it appears that the attempted sale of the Birthdays chain of shops has come to nothing.  Two sets of advisors have tried to sell the 139 store chain without success. 

Clinton cards has seen its profits fall sharply recently down to a £3.6m loss in the 6 months to January.  The 629 strong chain has hired KPMG as advisors to help turnaround the business.  KPMG (along with KSA Group) are experts at company voluntary arrangements (CVA) and will no doubt be looking at a CVA as an option to jettison some of the stores.   

Should Clinton Cards use an insolvency procedure, such as a CVA, then Keith Steven of KSA Group will be happy to comment on the procedure itself to journalists but of course will not have any specific information on Clinton Cards itself.

Haulage Companies - A CVA means you can hold onto your Operators Licence

One of the advantages of a CVA for a haulage company is that it can retain its Vehicle Operator's Licence (OL) as there is no change of ownership that would be the case in an administration sale or pre pack. 

Please read our new page on Operators Licences and insolvency issues

Port Vale CVA proposal is accepted by creditors

I suppose it is fitting that our 1000th post on the Company Rescue Blog is to report the fact that a CVA has been approved by the majority of creditors.  In this case it was Port Vale's proposal and it was accepted by 87%.

 The club ran into trouble when it was unable to make a loan repayment to Stoke on Trent City council and was then placed under a transfer embargo.  In a separate instance HMRC had issued a winding up petition for unpaid taxes to the tune of £85k.  The loan from Stoke-on-Trent was for £2.25m.  We blogged about this back in February.

Since then the business was placed in administration and the administrators have found a likely buyer in Keith Ryder.  However the preferred route given that they wish to retain their  Football League registration is to exit the administration via a CVA.  The club can then be sold without having to re register.  In some ways it is similar to a pre pack administration.   The news paves the way for the transfer of Football League shares which the administrators anticipate will take place before the end of June.
At the time council leader Mohammed Pervez said: “The stark choice we were faced with was liquidation or administration "

Portsmouth FC CVA approved yesterday.

Along with Port Vale, Portsmouth Football club have also managed to get their CVA approved.  This means that the club can now be restructured and a buyer be found for the club.  The administrators at PKF have also made 4 redundancies and renegotiated some of the wages. The club owes £58m and it is the second time they have got into financial difficulties.

For a CVA to be successful it is important that the company and its management have to change.  There will often be redundancies and contracts renegotiated.  Obviously Portsmouth have gone into administration and are looking to exit via a CVA just like Port Vale.

UK in recession according to statistics

So the "double dippers" are having their day!  According to the GDP statistics, the UK economy shrank by 0.2% in the first quarter of 2012 indicating that the UK is back in recession.  This is bad news for the government as they try to force through more austerity cuts.  The argument that cuts are holding back growth or essential for economic prosperity will run and run. 

It is our view  that these statistics are perhaps not accurate given the overall volatility of the market and certain industry sectors like construction.   What is more the purchasing manager's indexes are showing growth and retail sales rose strongly in March.

Also, as 0.2%  is such a small figure could it be within the margin of error given that surely any statistic on the whole economy is only looking at a sampled data.

Fitness First in debt deal

According to reports in the Telegraph, Fitness First has struck a deal with its lenders over its £560m debt.  The lenders have signed a waiver over its quarterly interest rate bill of £18m but the shareholders will receive nothing and the company will be controlled by its lenders.  Oaktree and Marathon have acquired 77pc of the company's debt for an estimated 55p in the pound.  However it is understood that in order for them to inject the £100m into the company to keep in going there will need to be a radical restructuring of the business which will result in the closure of gyms and redundancies.  A company voluntary arrangement has not been ruled out as a way of achieving this. 

It is estimated that a third of the  gyms are not profitable.  A CVA will enable the firm to vacate these premises and any past or future lease obligations being bound by the arrangement.   However it will need the support of their landlords if they are a major creditor for the firm.  However, of course, the first option is to try and renegotiate the rent with the landlords as they will not want to see gyms close.

So our advice is if you have difficulty paying the rent then talk to your landlord!

Insolvency Advice from Company Rescue

Read our hundreds of pages of guides to insolvency in the UK.  We set out all the options for a company director that faces cashflow problems.  www.companyrescue.co.uk is simply the best resource for insolvency advice

If you have ANY worries about your company's viability then we will be happy to talk to you and we offer a free meeting followed up by a solutions report.

Call our freephone number 0800 9700539

Number of distressed companies fall year on year

According to Red Flag Alert, which looks at the health of the UKs companies, the number of businesses that faced "critical" financial problems fell year on year.  The first Quarter of 2012 saw a fall of 17% when compared with The first Quarter 2011.  The Manufacturing industry has been the main winner with a 49% fall in critical distress. 

However, the weak property market and low consumer confidence has hit other sectors. Property Services saw distress rise by 113 per cent in the first quarter and Construction saw a  94 per cent  but they fell 16 per cent and 13 per cent year on year. In total 154,370 companies were distressed, compared with 186,554 a year ago.

So what is the outlook for UK companies? 

Well, it is difficult to say but many businesses are able to take advantage of our flexible labour market.  As such, the recent reduction in the number of unemployed is mainly due to the increase in part time working. 

In our view much will depend on the actions of HMRC.  If last year is anything to go by, they will become more aggressive at collecting unpaid tax in late Spring and early Summer.  It is important that strong competitive companies are not undermined by companies that are carrying around an unsustainable debt to HMRC.

If however your business is viable if a proportion of your debt is written off then we can help you restructure using a CVA.  If you recieve a threat of a winding up petition then call us urgently as HMRC will move fast and we will need to persuade them that your business can survive.

Stuarts Industrial Flooring employees to be paid in full.

Following the collapse of Stuarts Industrial Flooring, the largest in situ concrete flooring specialist in the UK, the administrators at KPMG have reported that the employees will be paid in full all their arrears of pay.  The firm had a turnover of £22m but it owed trade creditors £1.5m.  It is unlikely that that unsecured creditors will receive any dividend.  Remarkably the company also had £4.1m of debtors but the surveying firm charged with collecting this in have only recovered £244,320.    Of course it is not known if all these debtors are still trading or indeed if the amounts in dispute that might explain the low collection rate but KPMG have said "a significant proportion" is uncollectable.

Employees were owed £78,000 and as they are preferential creditors they come before the trade creditors. 

So how do creditors rank in line when a business becomes insolvent?  See our page on creditors rights in insolvency

The business and its parent company Stuarts Holdings provide a cross guarantee to secure a £2m debt owed to Lloyds Banking Group by Stuarts Properties, a related company with common ownership which is outside the group.

"Should the cross guarantee be called upon by Lloyds, Stuarts Industrial Flooring will have a subrogated claim against Stuart Properties in respect of the bank's security held over the assets of this company," the administrators' report said. It is not yet know if Lloyds will call on the guarantee.

Expensive Partying.....?

Bankrupt Derek Carlyle has been handed the longest ever Bankruptcy Restriction Order (BRO) by a Scottish Court - 12 years.  A restriction order is granted if the court feels that the creditors need to be protected from an irresponsible or unscrupulous debtor.  The activities of the debtor are "restricted" for up to 15 years.

This particular order was granted after Derek Carlyle, following a court petition from Jewsons, sold a property for £584,000 and then within a year became bankrupt. He deposited the money into his fathers bank account which he controlled and then managed to withdraw most of it in cash.  At the court  he said under oath that he had given money to his mother, paid some legal fees and spent the remainder on an extravagant lifestyle including travelling, drinking and partying.  So he managed to blow most of it in a year!?   Although the trustee will be assuming that this money is more likely to have been moved offshore or spent on moveable assets.
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