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Rowecord Engineering in administration today

Rowecord Engineering the biggest steelwork company in Wales is due to go into administration today putting 400 jobs at risk.

The company is best known for high profile prestigious projects such as the roof for the Olympics aquatics centre.  The problem appears to have been a drying up of large scale projects in the region of £500k upon which it depends.

Newport-based Rowecord Engineering says it has exhausted every option to sustain the business.

The company has a production capacity of 50,000 tonnes per annum and a total workforce of 600.

This is obviously a blow for Wales and highlights that the construction sector is still struggling.  It was reported earlier that construction activity shrunk by 2.5% in the first quarter of 2013 which was only offset by the services sector's strong growth which prevented the economy slipping back into recession.

Interestingly there appears to be an unusually high incidence of construction and engineering businesses featured in the latest Winding up Petition List from HMRC click on the link to see.

AGS Home Improvement in administration but buyers are waiting

Newton Abbot-based AGS Home Improvement Ltd, which was one of South Devon's biggest employers, and was established for almost 40 years, has gone into administration with a loss of around 125 jobs.

‚ÄčThe company  specialises in the supply and installation of aluminium and PVCu windows, doors and conservatories in South West.

The insolvency practitioner, Mark Bowen of MB Insolvency is now looking to sell parts of the business.  He also said; "We had to make the employees redundant as we couldn't pay them while in administration. Purchasers of the business will help resecure the employment for a considerable amount of former workers."
Mr Bowen added that buyers should be secured on Monday.

This all looks quite positive if the employees can be re-employed.  So what has happened?  The administrator had to make the employees all redundant as he cannot run the business at a loss.  However administration is a powerful rescue technique and so all onerous contracts can be terminated and debts, including secured debts can be compromised.  If a buyer can  be found then the business will be rescued.

Why not a pre pack?

Well, an administration sale should be able to get around the TUPE issues, which are where the employees contracts are transferred to the new company so any redundancy costs have to be met by the buyer.  One still needs to be careful as if it can be shown that the new buyer agreed to just wait until the company went into administration in order to pick up the business at a much reduced price then TUPE could apply.  The law is still very fluid on these points so before going into administration and thinking of selling the assets it is essential that you seek legal advice

Blogged by Robert Moore

Scottish business insolvencies fall 62.8% in last quarter compared to last year

The number of people and businesses going bust in Scotland has fallen sharply, according to
Accountant in Bankruptcy (AiB), which is Scotland's version of the Insolvency Service.  The AiB said the number of Scottish companies becoming insolvent or entering receivership fell by 22.7% in the latest quarter and the total was 62.9% lower!! than a year ago.

The overall number of personal insolvencies is now at its lowest quarterly level since the Low Income Low Asset (LILA) route into bankruptcy was introduced in April 2008.

These figures are encouraging but still many businesses continue to struggle.  KSA Group has managed to help a number of businesses in the region with time to pay deals and company voluntary arrangements,  These figures are not included as it only concentrates on administrations and receiverships.

Meanwhile, the quarterly Red Flag Alert statistics, published by Begbies Traynor, indicates that since the first quarter of 2012, combined levels of distress have fallen by over 50% in Scotland.

Scottish Companies needing help can call our Scottish Office on 0131 242 0081 and you can talk to Derek Robinson our Regional Manager

UK GDP shows triple dip avoided

The latest ONS statistics have shown that the UK economy avoided a further shrinking in the first quarter of 2013 with  "growth" of 0.3%.  Whilst this is a relief for the Government it is almost just a rounding error.

The main thing that these statistics have revealed is the difference in performance of different sectors of the economy.  The service sector grew by 0.6% whilst the construction sector continued to shrink by a further 2.5%.  Meanwhile the much hyped rebalancing of the economy appears to not have happened as 0.03% growth is all it has mustered.

Construction is need of a boost as more businesses fail with McArdle, the civil engineering contractor, being the latest to go into administration.

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 Scotland

Harlequin Property in Administration

Harlequin Property, the Essex-based Investment firm, which promoted off plan investments in the Caribbean filed an intention to appoint administrators yesterday. A statement, signed by director Carole Ames,  said: “The company is or is likely to become unable to pay its debts.”  

The firm has taken more than £300m deposits from investors since 2006.  However, only some 300 properties appear to have been built and there is currently an investigation by the Police.  The firm promoted its investments through many celebrities such as Pat Cash and Gary Player.  It is understood that around 40 investors served statutory demands on the firm for monies owed to them.  The next step would have been a winding up petition.

It has prompted fears over the future of at least 6,000 investor’s deposits, many paid through personal pensions, and around 40 jobs at the Basildon head office.

It is unclear as yet what will happen to the Caribbean registered companies which own and planned to develop the resorts.

HMRC increases its use of Distraint in 2012

HMRC has almost doubled its use of powers to seize businesses’ assets in order to settle late VAT bills in the last year.

According to Syscap, the finance providers, HMRC has used its powers of distraint to seize business assets – 4,746 times to collect VAT in 2012.  This represents a 98% increase on the 2,401 times it used these powers to recover overdue VAT in 2011.

It goes to show how important it is to collect money in from debtors as VAT is often payable when the invoice is issued rather than when it is paid.  You can opt to pay only on receiving payment but then you can only claim back VAT after you have paid your suppliers - This is known as cash accounting

For help on how to collect debts in refer to our pages on debtor collections

What can you do about distraint?

Effectively if you do not reach a deal or pay in full the field officer or their agents can remove and sell the assets in 5 days. To sell the assets, after they are covered in this way is a criminal offence. If the bailiff has obtained a walking possession he can force entry to recover the goods after the 5 day period.

Threats of distraint or legally taking possession of goods should not be ignored. If you do not agree that you owe the tax demanded, you should tell the HMRC officer, but you will find that he/she is in a non-negotiable position once he/she is on the premises.

So, if you have a distraint threat or have been visited by an HMRC officer or bailiff , then you must ACT.  In the event that the business is not viable going forward call us and we can put the company into liquidation quickly and lower the risk of personal liability.

It may be that you will be able to negotiate time to pay VAT going forward but you will need to pay the outstanding very quickly

Scottish Coal in Liquidation

Scottish Coal has gone into liquidation, with the loss of 590 jobs, the vast majority of which are in Clydesdale. All operations have stopped and Blair Nimmo and Tony Friar, of KPMG, were appointed Joint Provisional Liquidators on Friday.

Some 590 employees were made redundant and all operations ceased immediately following the insolvency appointment. 142 staff remain to help the liquidators secure the sites and help sell any assets.  Scottish Coal operates six open cast coal mines  in East Ayrshire, South Lanarkshire and Fife.  The business employed a total of 732 people.

Blair Nimmo, Joint Provisional Liquidator and Head of Restructuring at KPMG in Scotland said: “In light of Scottish Coal’s poor trading and financial position, we have had to cease trading with immediate effect.

“It is extremely regrettable that we have had to make so many redundancies but have been left with no other option.

The problems at Scottish Coal were well publicised as 450 staff were placed on notice of redundancy back in March as the directors tried to restructure the business.  Falling coal prices, and increased operational costs (mainly fuel) have put a strain on cashflow.  Finally the prospect of dwindling reserves was the final straw.

Any parties with an interest in acquiring the business and assets should contact Blair Nimmo in KPMG’s Edinburgh office on 0131 222 2000 or in writing at Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EG.

KSA Group Insolvency Notice

Wallwood Independent Limited Creditors Voluntary Liquidation Notice

Meeting of the Creditors of the above named Company will be held at The Rutland Square Hotel, Nottingham, St James Street, Nottingham, NG1 6FJ on 1 May 2013 at 1.15 pm.

For full details see the notice below


Lending to businesses continues to fall

New data released by the Bank of England shows that lending to businesses fell by £4.8 billion in the three months to February.

The fall in business ending accelerated from an annualised rate of 3.6 per cent in December and 4.0 per cent in January.

Interestingly, I was talking yesterday to a banker at our seminar held in Bromley  who is involved in the lending band £1m to £25m and he was saying that the banks are generally willing to lend but there is a lack of demand.  Given the problems that debt has brought in the last few years it is not surprising that some small firms are not willing to borrow money given there does not seem to be an end in sight to the flat lining economy.  However, the Bank of England’s latest Credit Conditions survey said that “credit demand was expected to increase across all firm sizes in the second quarter, with significant increases expected for small and large companies”.  I am not sure what they think will be the driver for this??

Overall, net lending fell by £2.8 billion after a £0.3 billion decline in January, according to the central bank’s Trends in Lending report published today.

The Bank of England and the government set up the FLS in August 2012 to encourage banks to lend more to businesses and individuals but recent data has shown that it has not had a positive impact on lending to businesses.

Perhaps the new incoming Governor will have some fresh ideas!

Warning signs of insolvency for directors.

Top Ten Directors Insolvency Warning Signs ?

  1. Fire fighting - you don’t get your work done because of lack of focus. 
  2. Lack of information or wrong information and concentrating on non-essential issues. 
  3. Compartmentalising" problems - in other words do you deal with one creditor problem and ignore others? 
  4. Do you blame the bank? Your creditors? The customers (debtors)? Your accountants? Your advisors? In other words do you blame everyone except yourself for your cashflow pressure? 
  5. You don’t have a business plan. 
  6. You don’t have regular team, management and board meetings or up to date financial information. 
  7. You don’t like changes. 
  8. Directors are taking big salaries and expenses. 
  9. You think that one more sale, one more contract, one big customer payment will solve the cashflow problem? (It won’t)! 
  10. Really number one)! You have an overdrawn director’s current account. See a guide to this issue here: directors overdrawn current account in insolvency. 

Listen we know that it is a lonely place to be when a business becomes distressed. If you want to learn more about the situation you face use this site for full details of the options available, the legal obligations you face and the best way to deal with the problems the business faces.

DO NOT ignore the problems they will not go away unless you take proactive steps to deal with them. Please read Is my company insolvent? below or on the site.

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