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Pension unlocking firm faces liquidation

Freedom Capital Partners Limited is likely to go into voluntary liquidation on the 11th of June at a creditors meeting,  according to Insolvency News.

Freedom Capital Partners is one of the types of firms that can "release" money from your pension before you are 55 and avoid a tax charge of 55%.  However, the firm has been criticized following allegations of high transfer fees.

Pensions minister Steve Webb, warned earlier this month that the government was cracking down on pension liberation companies.

He said: “The promise of easy money when times are tough is all too tempting and there are far too many unscrupulous people who will play upon this.”

You can listen to a report on Radio 4 aired in March about these pension liberation schemes.  Funnily enough the report mentions Freedom Capital Partners and Lothbury Pensions Administrations.  Both of these companies are now in formal insolvency proceedings.

Worried about wrongful trading?

What is wrongful trading

The simple explanation is this: If you act badly when you know the company is insolvent, then you may have some personal liability if the company is liquidated.

An example of this is where directors take deposits from customers knowing that the business is insolvent and is very unlikely to be able to deliver the goods or services that have been requested.

The directors of Farepack were accused of this as they took money for the Christmas savings club before it collapsed.  In fact it turned out they were exonerated (in part) as the banks refused to put the money from deposits in a trust.  This case was unusual however.

So to check for wrongful trading first of all you need to establish if the company insolvent? To establish the answer to this there are three tests:

1.Can the company pay its creditors as and when the debts fall due? This is called the cashflow test.

2.Is there more money owed to creditors than assets? This is called the insolvent balance sheet test.

3.Are there any legal actions outstanding;  For instance a winding up petition.

If any of the three tests above are met, then your company is probably insolvent and you must act properly and act in the best interests of the creditors (all of them being treated in the same way).

For the full guide to wrongful trading then read our site.

Boy Band Blue's music company in administration

The Boy Band members' company Blueworld UK LLP has gone into administration.  This is somewhat bad timing as the band are in the middle of a come back tour which has been a sell out.

Blueworld, which officially went into administration on May 1.  The company runs the fan club and the official website.  To join cost £45 and if the business has gone into administration then fans are unlikely to get refunds.  Other creditors are owed reportedly thousands of pounds.

A band spokeswoman said, “Blue have been open about their recent financial struggles and are restructuring their business model.

The last set of accounts in 2012 showed they were owed £431k but only had £76k in the bank.  Obviously these figures are out of date but it could be a case of getting in bookings etc but not collecting in the cash quickly enough.  Having said that they are unlikely to get their fee for appearances until after the show.  Perhaps they should have asked for more upfront??

The official website is still running and presumably the venues for the events will pay the company once they have performed.  This money will be used to pay the creditors.

CVAs explained and Illustrated - Seminar in Leeds 20th June 2013

Venue Bond Dickinson LLP,
1 Whitehall Riverside,
Leeds LS1 4BN
Thursday 20th June 2013      5.00pm – 8.30pm

We have pleasure in inviting you to the following regional seminar, which will provide practical, relevant advice for corporate advisers to local SME companies and their directors. The event will also afford some quality networking time with local business professionals including Accountants, Lawyers, Interims and NEDs. Hospitality will be provided at the event. Parking, if required, is available at the TCS Car Parks, No7
Whitehall Road, Leeds.

The subject under discussion will be:

CVAs  -  Explained, Illustrated and Debated.

The CVA (Company Voluntary Arrangement) process has been enshrined in UK law since the 1986 Insolvency Act came into being; it has been widely used to assist the rescue and recovery of distressed companies. Some of these companies have been high-profile organisations - including high street retailers and famous football clubs - and a CVA can be effective for companies of all sizes and descriptions, from industrial PLC’s to professional ‘LLP’ practices.

It is the aim of this seminar to explain and illustrate this important and effective mechanism so that advisers to SME companies are better equipped to recognise where, when and how a CVA might be applied when an organisation which is in, or nearing, financial trouble.

To assist in this process there will be two key presentations which will include case studies from both the legal and practical point of view; attendees are encouraged to enter into the subsequent debate.

The speakers will be:

Keith Steven

Founder and CEO, KSA Group Ltd. Keith is a member of the Turnaround Management Association, an experienced turnaround practitioner and a recognised exponent of the CVA process.

Partner, Bond Dickinson LLP.

John is a main board director  of the Institute for Turnaround and Chairman of their North region, and a recognized authority on the legal aspects of  Turnaround , Corporate Recovery & Restructuring. He is also a licensed insolvency practitioner and an adviser to the CBI and the Law Society on insolvency matters. He sat for 10 years on the Lord Chancellor’s insolvency rules committee, retiring in December 2012 having served the maximum term  

Following the formal part of the event attendees are welcome to enjoy some hospitality during the networking session.

In order to secure your complimentary place at this regional seminar, please contact:
Bond Dickinson on events@bonddickinson.com Tel: 0191 279 9373
Robert Moore of KSA Group on robertm@ksagroup.co.uk Tel: on 07584 583884

Director disqualified for paying herself ahead of other creditors

The director of Titcombe Garage Ltd, a vehicle recovery and repair garage in Swindon, has been disqualified from being a company director for six years.  Linda Ann McCracken paid herself and a friend £247,436 instead of other creditors.  The firm went into liquidation at the end of 2010 owing almost £400k.

These payments were made in the weeks leading up to the liquidation and against advice from lawyers the payments were made.  The friend was a director of a consultancy business.

Ms McCracken was subsequently declared bankrupt in July 2012 on the petition of the liquidator for failing to return the funds she took out of the company, which had been in the form of a director’s loan.

Commenting on Mrs McCracken’s disqualification, Chief Examiner David Brooks said: “This result should serve as a timely reminder to directors that any self-serving actions, resulting in removal of company funds or assets when a company is insolvent, are a breach of their obligations to the company and its creditors, and are likely to lead to serious sanction."

Basically if a specific action doesn't feel right then it probably isn't.  If you are worried about directors disqualification then that is actually a good thing.  It shows that you know that when a business is insolvent then your actions as a director are under scrutiny.  So as long as you take advice and do not favour one set of creditors against another then you should be OK.

Hotel opened by Easyjet founder has gone into administration

Ernst &Young has been appointed administrators of Glasgow eH (Trading) the operator of easyHotel in Glasgow City Centre.  The hotel has now been shut.  The hotel's rooms were priced at just £25 a night and was a "super budget" option.  The hotel was converted from a 1970s office block which cost £6m.  A quick back of the envelope calculation has shown that this was always going to be a struggle.

I am going to make some assumptions here;

125 rooms with 90% occupancy at 365 days a year!  = approx £1m a year in revenue  ( this is very optimistic occupancy rate)  The return on capital assuming running costs at £300k pa is 11%  so it would take 9 years to get your money back!  I have no idea how much it cost to buy the site.

Having said that the new owners of Travelodge are convinced there is a strong market for budget hotels in the UK and are investing some £200m over the next few years.  But even Travelodge is £50 a night.

Fiona Taylor of Ernst &Young said: "We are currently undertaking a full review of its financial position, but an immediate lack of funds has necessitated the closure of the hotel and the resultant job losses.

The administrators said the insolvency move does not affect its parent, Glasgow eH Limited Partnership, which owns the site of the former Drummond House, nor the wider easyHotel chain.

Pre Packs and CVAs in the Press

Read accountingweb.co.uk's review of the  CVA versus Pre Pack debate on the 8th May.  There is already a lively debate on the page itself!

In essence, as we said before, it is very much "horses for courses" and  CVAs and the Pre Packs have their place.  Both are powerful rescue techniques that save jobs and keep businesses trading.  Yes, Pre packs have been abused in the past and are sometimes perhaps pushed where a CVA would have been a fairer deal for all concerned.  Also there is always a perception of pre packs by creditors that a deal has been done behind their backs and people who lose money will often feel they have been treated unfairly.

The most important thing to do is make sure that a professional firm  is appointed to advise on ALL the options.

If you want to talk about rescuing your business through either a pre pack or a CVA then call us on 0800 9700539

What is pre pack liquidation?

Pre pack liquidation is a bit of a misnomer.  

A pre pack is the term normally used where the business and assets are sold to a third party or "newco" and the "oldco" is put into administration in one movement.  When people refer to a pre pack liquidation they are most likely thinking of a phoenix.  There is no simultaneous transaction.  To read the differences see our page on pre pack liquidation.

There is so much misunderstanding of the insolvency world.  So for a clearer understanding read our insolvency advice site at www.companyrescue.co.uk

Turnaround from Local, National, and International perspectives

Date: Wed 12 June, 6pm
Venue: The Waterhouse Chamber, The Town Hall, Blagrave Street, Reading, RG1 1QH
Cost: TMA Members: FREE, Sponsors: £40.00 (after allocated free places),
Non-Members: £40.00

This event, part of the regional activities of the TMA (UK), will focus on the local, national and international turnaround and restructuring marketplace.

Informing us of the local situation will be Pitmans LLP, the largest law firm in the Thames Valley area. With two offices in Reading and one in the City of London, Pitmans have a long and impressive track-record in Turnaround, Restructuring and Insolvency; as such they are in prime position to present their overview of local turnaround conditions, cases and concerns.

KSA Group Ltd are a nationwide firm of turnaround, restructuring and company rescue specialists, with regional offices and representatives as far afield as Edinburgh, Berwick upon Tweed, Gateshead, Birmingham, Bristol and London. Their operation is supported by a vast online presence of websites and internet response mechanisms, receiving literally hundreds of hits per-day from troubled directors and advisors across the country. As such they are able to report on what is happening in the national turnaround marketplace.

Bryan, Mansell &Tilley LLP are specialists in International Turnaround situations and who better to report on the global situation than Alan Tilley, an internationally renowned figure with the TMA and the industry as a whole. Alan will speak on the current trends, challenges and cases across the globe. The presentation will also contain a brief review of the TMA Europe Conference, which will have taken place in London on 6th & 7th June, and cover the newly launched EACTP (European Association of Certified Turnaround Professionals) accreditation programme.
There will be an opportunity for questions and answers following the presentations.

After the conclusion of the formal part of the event, attendees are invited to enjoy some quality networking time and hospitality will be provided by the event sponsors – KSA Group Ltd.

The event speakers

Suzanne is one of the leading insolvency and turnaround specialists in the South East dealing with all aspects of corporate and individual insolvency, restructuring and refinancing including, but not limited to, contentious and non-contentious issues arising in administrations, receiverships, liquidations (solvent and insolvent), bankruptcies, voluntary arrangements, and security issues, and in restructuring and refinancing projects. Suzanne is a licensed Insolvency Practitioner.
Chambers Guide to Legal Profession for 2010 states that Suzanne has a: "high-level skill set and commitment to meeting her clients' needs". Specialist interests are Debt Recovery, Dispute Resolution, Insolvency & Restructuring, Automotive Sector, Invoice Discounting, Construction & Engineering. Suzanne is a graduate of Middlesex University. She trained and qualified as a commercial litigation and insolvency solicitor at Pitmans, joining in 1994

Keith Steven of KSA Group Ltd has been rescuing and turning-around companies since 1994; he has worked for insolvency firms, turnaround funds and venture capital investors. Keith formed his own turnaround practice, KSA Group Ltd in 2001, and he is acknowledged as an expert in the delivery of CVAs for SME companies faced with financial difficulties.
Drawing on case studies from across the UK, Keith will paint a picture of the national scene and illustrate the situation with examples of companies currently being ‘rescued’ or in the ‘work-out/post-restructuring stage. The combination of regions, sectors and corporate ‘tangles’, plus the diversity of rescue options used by KSA Group, should ensure an educational and entertaining presentation.

KSA Group is one of the leading turnaround and insolvency specialists in the UK, with offices and representatives in London and across the country. Their priority is company rescue, not corporate closure. The company developed the UK's first on-line turnaround and support site,www.companyrescue.co.uk, with over 1,500 pages of free information, PDF guides, FAQ's, flowcharts and case studies - information freely available, and of great value, to accountants, lawyers, bankers, advisors and of course directors of /investors in struggling businesses.
KSA Group is delighted to sponsor this evening’s Thames Valley event and is proud to be a Corporate Sponsor of TMA.

Alan Tilley is founding principal of Bryan, Mansell and Tilley LLP.  He has over 20 year’s expertise in operational and financial turnaround and restructuring, managing the complex issues in preserving enterprise value while operating in the zone of insolvency. He is a frequent speaker on cross border European restructuring and has written several articles on the subject.
He is the 2008 recipient of the TMA International Chairman’s award for outstanding service to the international turnaround and restructuring profession and Insolvency & Rescue UK Turnaround Manager of the Year 2010. He is co author of the Institute of Chartered Accountants best practice guideline on Turnaround’s. His hands-on and Board level experience in finance and operational management makes him equally at home in large and small companies, in distress and performance improvement situations, in M&A due diligence and in stabilising new acquisitions.

If you would like to come along to the event as a Guest of KSA Group, get in touch with Robert Moore Please email robertm@ksagroup.co.uk or call 0207 877 0050

Daniel Contractors in administration rumours

Update:  Daniel Contractors have had a winding up petition advertised yesterday. This will mean the bank account will be frozen.

A report in the Sunday Times said that Daniel Contractors, and engineering business based in Warrington, with a workforce of 1,300 was likely to go into administration.  The firm would neither confirm nor deny the rumours.   Deloittes were names as the likely administrator.  A spokesperson for construction credit rating agency Top Service said the firm had been on its radar for a while “due to increasing number of adverse reports from our customers and the mounting County Court Judgements (CCJs)”.  However the total value of the CCJs amounts to £111k but the most recent was lodged on the 8th May.

This could just be a temporary cashflow problem which they can trade out of, but if it is not, the most likely next step is a notice of intention to appoint administrators.  This will protect the company against any further legal actions against the company but they will have a maximum of 20 days, assuming one extension is allowed, before administrators will need to be appointed.

Daniel Contractors are involved in  laying large pipelines and the hire of plant and equipment - The main sector they work in is Oil and Gas.

Like many large engineering firms it suffered in the recession and lost some £100m in sales, margins have been squeezed but added to this its Chief Executive also died not long ago.

Recent accounts show that the firm made £117.4 million in revenues, with pre-tax profits of £1.3 million for 2011.
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