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Sports Direct has bought 114 Republic Stores

Sports Direct, the sports and fashion retailer, has confirmed the acquisition of 114 of the 121 stores of fashion retailer Republic.  This is excellent news for all  the staff and it is expected that 1,500 jobs will be saved.  In addition all the stock and the website of Republic is also part of the deal.

Republic was owned by private equity firm TPG which purchased the chain in 2010 for £300m

The latest deal sees Sports direct add to its current estate of 400 stores.  Earlier last year it bought a number of JJB Sports stores.

Sports Direct was founded in 1982, listed on the London Stock Exchange in 2007 and is a constituent of the FTSE 250.

This goes to show that for some retailers there is over capacity and for others there is an opportunity.  Many HMV stores are still trading with Hilco looking to rescue a chunk of the company.

This news comes on the same day as PWC published a report that found a reduction of nearly 1,800 shops for the whole of 2012, a 10-fold increase on the year before.  Much of this was due to companies shedding stores as the leases came up for renewal.  But retailer collapses have certainly played their part.

For more information on how to close down stores see our retailer pages

Government keen to stop suppliers holding insolvent companies to ransom

The Government has tabled proposals for an amendment to Enterprise and Regulatory Reform Bill which will force companies to continue to work with Insolvency Practitioners at their normal rates. This is in response to the actions of suppliers who are holding struggling business to ransom, when entering insolvency procedures.

Currently a supplier, such as a utility companies, can force a termination of a contact if a business enters insolvency proceedings such as administration, and demand higher fees for the same service. This results in reduced payments for creditors. The plan is that essential suppliers such as IT and utilities will need to continue supply unless released by the court.

 It will also stop those suppliers from seeking an unfair advantage over other creditors by increasing charges and payments as a condition of their continued work.

Consumer Affairs Minister Jo Swinson said: "Businesses are currently closing down because restructuring professionals are unable to secure the essential supplies they need to continue trading whilst they restructure or seek a buyer. This measure will ensure they can secure the supplies they need to deliver the best outcome for creditors and employees."

Under the changes suppliers will have a right to request a personal guarantee from the IP for payments due post-administration appointment.

Of course, this sounds a good idea in theory but you can't really force a company to supply another company. If the business is trading in administration then there is a risk to that supplier of not being able to continue business going forward or maybe not being paid at the end.  So they should be entitled to some sort of "risk premium".  It is always more complicated than first imagined and in reality this is not the main reason that businesses are unable to be rescued.

Cresta Furniture Director Disqualified for 8 years

David Topping, the former director of Cresta Furniture based in Preston, which went into administration owing creditors £1.14m has been disqualified from being a company director for 8 years

He received the directors disqualification for failing to keep adequate accounting records for Cresta Furniture.  In addition he transferred the entiree shareholding of the business in 2008 to a Cyprus registered company where following his resignation he continued to control the company via a stand in director.

When Cresta went into administration in February 2010 owing £1.14m to creditors left many customers without the furniture they had ordered, according to the Insolvency Service.  When the financial records of the company was eventually handed to the administrators the most recent entry was in 2005 and only £56k of £266k of deposits could be identified and verified.  Also the directors loan account was £233k overdrawn.

Obviously having a directors overdrawn account is not a reason to be disqualified but if the company is insolvent then you will need to pay it back.

Salford City Reds seek Company Voluntary Arrangement

Salford City Reds, the Super League rugby club, have said they will try and enter into a company voluntary arrangement in order to pay back its creditors in full over a five year period.  A 100p in the £1 is always popular with creditors so if successful would be a much better alternative to administration.

One main creditor Salford City Council that part owns the stadium will be paid off over a longer time period if the CVA is approved

As always this is an example of trying to do a deal.  It is not usual that some creditors agree to a longer period to be paid back but in the case of the council they perhaps felt there were other benefits to keeping the Reds going...  The council had already invested around £1.5m in the club.

The Reds have lost their first three matches of the 2013 season and lie bottom of Super League.

Deane Amos Group goes into liquidation

Deane Amos Group, a shop-fitting business based in Northampton has collapsed resulting in the loss of 150 jobs.  

The company which has factories in Kingsthorpe,  Queens Park and Round Spinney Industrial estates, has been placed in liquidation.

The company has a number of subsidiary companies, Aluminium Systems, Streets bespoke metalwork, Withey Interiors and Lovell Electrical Contracting, which have been placed in administration.

Gary Pettit, administrator for Marshman Price, said he was hoping to find a buyer for these companies which would save some of the jobs.

Mr Pettit said: “There will be meetings later today as we've had interest from people wanting to buy the companies.”

Deane Amos group and has worked on a number of high profile building projects including the new Terminal Five at Heathrow Airport, Finsbury Towers and the West Hampstead train station.

Axminster Carpets in administration announcement

Axminster Carpets Limited the 250 year old carpet company based in Devon has announced that it intends to appoint administrators following difficult trading conditions and financial problems. 

The 250-year old company - based in Axminster in Devon with more than 400 people at its headquarters - blamed difficult trading and resulting financial problems. They have said that they are working with key suppliers and creditors to try and rescue the business.  

Axminster, which produces several styles of carpet and rugs, uses 90% of British wool in its trademark Axminster carpet which is woven using traditional loom production methods.

We do not have any other information at this stage but the company is still trading so a CVA or company voluntary arrangement after administration might be an option.  A CVA could be done prior to the expiry of the notice and an extension but it would be a tight timescale.  

HMRC Sends Letters on RTI

HMRC has sent out letters to thousands of businesses outlining the new changes that Real Time Information (RTI) reporting of PAYE will mean. 

HMRC have not given companies long to prepare for this as they have to assume that everyone is paying all the tax that is due and that they have good systems in place.

If you do owe more PAYE than you are letting on at the stage then RTI will mean that HMRC will know more about any likely arrears earlier.

Insolvency Service cracks down on rogue operators

There are always some companies and websites out there who encourage directors to break the rules to make a fast fee. These websites tend to not have any proper contact details and are a bit vague as to exactly who they are. However, the Insolvency Service is quick to shut them down.

Generally if sounds to good to be true then it usually is. Just remember that in insolvency situations the directors have a duty to act in the best interests of the creditors. Yes, trying to save the company is often in the best interests of the creditors but it has to be done in a fair way and by the book.

In the end make sure you are dealing with a reputable company who can offer the right advice such as licensed insolvency practitioners.

Directors disqualified following collapse of their printing company

The directors of Media & Print Investments (MPI), Ben Crozier and Mike Dolan have been disqualified as directors for the next 8 years following an Insolvency Service investigation into the administration of the firm. The business had a turnover of £65m but in 2008 it collapsed

MPI went on an acquisition spree prior to its collapse and bought print firms across the South of England, including Borcombe SP, Butler & Tanner, Friary Press and Goodman Baylis.

So what happened?
The Insolvency Service discovered that it has raised two false invoices amounting to £440,461 and had obtained payment from the factoring company on them.  Also some assets that were subject to fixed charges were sold and the chargeholder was not paid.  This  meant that they (the chargeholder) had lost in excess of £500k

The Insolvency Service said; "Transactions at the latter stages of a company’s existence, when it is insolvent, need to be carried out with care with a view to the directors’ duties to all creditors and the company, not just to themselves."

However, in their defence, they said that the untimely death of the MD of the company whose evidence they deemed critical made for the wrong decision.  They also pointed out that they lost a considerable amount of their own money some £3.4m and their actions were motivated by trying to save the business and its 500 employees.

But as the Insolvency Service said they have a duty to creditors once the business is insolvent.

The pair are awaiting opinion from counsel as to whether to launch an appeal.

Cosalt to call in administrators

Cosalt, the marine safety business based in Grimsby,  has today asked  RBS and HSBC to appoint administrators.  In a statement to the stock exchange they said that they had been unable to find alternative sources of funding to deal with their £17m

Cosalt said it expected administrators to be appointed "imminently" and that following appointment, the administrators will look to sell its assets, including the shares in Cosalt Offshore and Cosalt Workwear, in order to minimise potential losses to the company's creditors.

An agreement for the sale of the shares in Cosalt Offshore has been negotiated with Dunwilco (1793), a company backed by NBGI Private Equity, the majority shareholder of ATR Group.  It is understood that Cosalt Offshore is to continue trading as normal.

 The Cosalt Workwear business will be unaffected and will not be placed into any insolvency process. 
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