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Another Vauxhall dealership in administration

Approach (UK) ltd  with dealerships in Andover and Salisbury is the second Vauxhall dealership to go into administration in the last week.

Previously,  Stevens, the two-site Vauxhall, Network Q and Chevrolet dealer in west Sussex went into administration after attempts to find a buyer failed. Smith & Williamson were appointed as administrators.

Stevens, sponsored by Vauxhall, had been running at a loss for some time and the manufacturer - also a shareholder since Stevens' founding in 2000 - said it has provided "significant funding" to try and turn the business around.

In a statement Vauxhall said: "Due to the current economic climate, notice of intention to appoint an administrator has been given in relation to Pearl (Crawley) Ltd (Stevens' legal entity).

Stevens has sites in Horsham and Crawley. It sold around 2,000 new and used cars and vans a year and was established in 1963.

JJB Sports - Possible prepack or administration on the cards

Update:  Sports Direct have expressed an interest in buying parts of JJB Sports as the firm looks likely to go through a pre pack administration.  If a prepack does go ahead it is likely that there will be many closures and job losses.  Given the huge success of Sports Direct and the dominance that it will  have in the sportswear market, the OFT are likely to look into it.  Other suitors include JD Sports and the French company Decathlon.

JJB Sports has admitted that it is likely to need extra funds, which have not so far been forthcoming, to carry on with its turnaround plan.  As such, the firm has put itself up for sale with KPMG advising.

This is a backward step for the company that has seen it go through 2 CVAs to vacate poorly performing stores but it seems that the sales slide continues.  JJB Sports has been under serious pressure from the other retailers in the sector Sports Direct and JD Sports who seem to have the right product, at the right price, at the right time.

JJB Sports was once the largest retailer in the sports market.  It now has a stock market value of less than £10m.  The retailer added that in the six weeks to August 26 like-for-like sales have decreased by 3.3% and like-for-like cash margin has decreased by 9.5%.  Last year we blogged that the sales had dropped by 17%...  so this trend needs to be reversed quickly if the company is to be saved.

So what does the future hold?

One likely outcome is that JJB Sports will sold in a pre pack administration or be put into administration to protect it from further creditor attacks.  The assets will be sold off and the best performing stores retained in a smaller company.

Some commentators may argue that the CVAs don't work as the business may fail.  However the extent of  the falling revenues are a sign of the market and the company's positioning not a flaw in the CVA process.

Independent Financial Advice Industry to change in 2013

It seems that more and more industries are having to make some big changes in the next few years.  Lawyers have had the new "Tesco Law" which enables non-lawyers to set up and own practices and now we have the Retail Distribution Review for Independent Financial Advisers (IFAs).

This review will mean that from January 2013 commissions will not be paid to advisers by insurance companies and banks or any other provider of a financial product.  Instead, the adviser will have to charge an upfront fee to the client.   In principal this means that the advice will be trusted more as it will not be paid for only if the adviser "makes a sale"  Also all advisers are having to pass additional exams.

So what will be the impact?
Many observers have said that the public will be unwilling to pay the £200 per hour that some IFAs believe is the true cost of advice and as such many IFAs will simply leave the industry.  Margins are likely to be squeezed, especially for the bigger firms that claim to be independent some may become "restricted".  The term restricted refers to the fact that no adviser can really know all the products as there are simply too many so they prefer to concentrate on a few providers.

Some reports have suggested that as many as 3000 firms will go out of business but given the  overall demand for GOOD financial advice should not change much then we think this is unlikely.  Indeed it may even encourage consumers to talk to people knowing that they are not always going to end up buying a product or switching from one to another.

It will be interesting to see what happens in 2013 but it depends entirely on the adaptability of advisers and the perception of the consumer at large.

Partnerships and an Individual Voluntary Arrangement

In a partnership all partners are jointly and severally liable for the partnership's debts.  As such, the partners may need to enter IVAs as a way of limiting their individual exposure to the business debts.  This can be done in conjunction with a Partnership Voluntary Arrangement. 

See a flowchart below that shows how the process of an IVA for a partner works in principal: http://www.companyrescue.co.uk/documents/partnersivaflow.pdf.

Company Bankruptcy - What does it mean?

The insolvency world is full of misnomers like "company voluntary liquidation", "creditors voluntary arrangement", "going into receivership" "company voluntary agreement" (when they really should use phrases like administration, administrative receivership, company voluntary arrangement or creditors voluntary liquidation).

What about the word bankrupt and bankruptcy? This only applies to individuals, a company cannot go bankrupt. So when anyone, often jounalists, say a company is going bankrupt they are showing that they know little about insolvency!

Greenstar in Receivership

One of the Northern Ireland's biggest waste companies, Greenstar, which employs 800 people, has been put into receivership by its bankers.  The directors said that they demanded immediate payment of the loans which was regrettable considering that they "had not missed any scheduled repayments and were in a strong cash position"

Greenstar is part of the NTR Group and it supplies 12,000 businesses and 80,000 households.

In a statement, the NTR Group said: "Greenstar Ireland, its board, management and shareholders have made every effort to reach an agreement with the banks to secure the future of the business and its employees. At this time, the banks have made their own decision about how they want to move forward and the future of the company is now in the hands of the receiver."

So what happened?

Their are always two sides to every story and the company was up for sale for over a year but given that there were no buyers then perhaps the banks became nervous.  The problem is that a company can  be in a "strong" cash position and be making repayments at any time but that does not mean that it is sound in the long term, especially as a situation can deteriorate quickly.

If you are based in Northern Ireland and your company is struggling then you can contact our Northern Ireland Regional Manager, Derek Robinson

Invoice finance firms face regulation calls

Francis Coulson, the former president of the insolvency trade body, R3, has pointed out, in the Telegraph, abuses by certain invoice finance firms and banks that profit from putting companies into administration.  Invoice finance providers are able to lend money to businesses by advancing cash secured against their sales ledger.  The Telegraph has been

The providers are exploiting contractual fees, and their preferred creditor status to make money from struggling businesses, she said.

They are "preferred" as they are secured lenders.  See our page on creditors ranking in insolvency for further information.

Of course, these companies take on a certain level of risk when they are lending to a business and the ongoing fees should reflect that.  However, it has come to light that the termination fees, i.e when the business fails, can be huge.  In one case we were involved in,  the fees were £200k on a £700k lend.  The bank still appointed administrators despite 2 written offers of replacement finance within 2-3 days and a shrinking liability.  This effectively scuppered any chance of a rescue and unsecured creditors including HMRC lose out.

The other issue that arises is a conflict of interest. Brokers who pass leads to lenders are often owned by insolvency practitioners. This can create a conflict of interest since the invoice finance provider, as secured creditor, can choose which administrator to appoint and when.

A campaign group called http://www.rabf.org.uk/ or Regulation of Asset Based Finance are pushing parliament to consider the industry.

Given the banks are reluctant to lend alternative forms of of financing are seeing large growth with even Wonga.com getting in on the act.  In our view it is important that this industry is monitored and bad practice and conflicts of interest stamped out..

Mouchel Group Plc close to administration

update:  The shareholders of Mouchel have rejected the restructuring and the board have expressed the intention to appoint administrators.  The assets will be sold to affiliates of its lenders and management.

Mouchel Group Plc struck a deal a couple of months ago that would allow the lenders to take control of the company to stop it defaulting on its debts.  This meant the lenders, Royal Bank of Scotland, Lloyds Banking Group and Barclays, releasing £87m of Mouchel's existing debt for a majority stake in the company.

However, the company has suspended its shares today in order to "clarify the company's financial position" which is often a prelude to the business going into administration.

So we wait to see what has actually happened.  The firm was going to de-list anyway after it was to pay a special dividend to long suffering shareholders.

What is the acronym CVA short for?

A CVA most commonly can mean the following;

Cardio Vascular Accident ( heart attack)

Credit Value Adjustment  ( Banks do this as part of their risk management processes )

Company Voluntary Arrangement 

Note that it is NOT Company Voluntary Agreement, Corporate Voluntary Arrangement or other deviations.

A recent article in the Evening Standard criticized the British Property Federation (BPF)  for using the term Company Voluntary Agreement when asking for a change in the process.  This is what he said;

The only problem is that BPF has got the name of the process wrong, as the correct term is a company voluntary arrangement. Surely, if a trade body is going to call for a change to regulations, a good starting point is to get the most basic facts right.

But Wait.  The BPF actually used the term "CVA"  It was the journalists that interpreted the CEO Liz Peace's comments as referring to a Company Voluntary Agreement.  

Hats off to the Evening Standard journalist who knows the difference but unfortunately it is invariably the press that gets the term wrong

Other less well know acronyms

Cis-vaccenyl acetate ( A male pheromone in insects!)
Christian Vegetarian Association.

I think I will stop there.....

Seminar on how to deal with past company debt

A Seminar on how to manage company debt
Thursday, September 20, 2012 from 5:00 PM to 8:00 PM (BST)
HSBC's offices in Crawley.


Map data ©2012 Google - Terms of Use


HSBC Global House
High St 

Crawley RH10 1DL 

How does a company deal with its past, by acting in the present,
to secure its future?

The time to act is now: procedures and expertise are in place to deal with inherent corporate debt, as is the support going forward. HSBC, Crawley are kindly hosting this evenings event and the sponsors and presenting companies are KSA Group Ltd and Advantage Business Partnerships Ltd.

The presentations will contain critical information for company directors and corporate advisors at all levels: accountants, lawyers, stakeholders, interims, NEDs and turnaround practitioners. Time will be given over for questions and answers and there will be networking opportunities during the complimentary refreshments provided.

KSA Group are experts at company rescue and restructuring and  Advantage Business Partnerships are able to advise and mentor companies to improve their future performance.    Please arrive by 5pm for a prompt 5.15pm start.

If you want to come along then please register for this event
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