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Dunfermline Athletic could exit administration with a CVA

Creditors are to vote on a Company Voluntary Arrangement  at midday at East End Park today, with the owner Gavin Masterton potentially holding a casting vote.  This is because 75% of the creditors by value who attend the meeting or vote by proxy can carry the CVA.

Pars United, the coalition of fans groups that is in line to buy DAFC plc and East End Park Ltd, which owns the stadium, have been working hard to ensure a yes vote. While some creditors may abstain, it is widely thought that to achieve a successful CVA either a full turnout of creditors is required, with the vast majority voting in favour, or Masterton must vote in favour or abstain. The latter is the most likely outcome.

If the CVA is not approved then the club will not be able to meet any of its fixtures and will most likely completely disappear.

Bryan Jackson, of the administrators BDO, told the BBC Sport website. "New sanctions kick in if we haven't got a CVA approved by the end of the month [a 10-point penalty and a £150,000 bond payable to the Scottish Football Association] if we're going into the new season.

"The first problem is that I don't have a way of funding going into the new season. I don't have a plan B. I wouldn't close the club down overnight if it doesn't go through, but I can't really see any great options."

Hearts facing liquidation unless offers improved

Gintaras Adomonis who is the administrator of the Lithuanian bank Ukio Bankas the former owner of Hearts FC has told  BDO, to continue negotiation with fans' group the Foundation of Hearts and Five Stars Football Ltd as none of the offers for the club were acceptable

Ukio Bankas will initiate the process of liquidating Hearts as it has a floating charge over the Tynecastle Stadium as security for lending the company money.  Ukio Bankas holds 29.9% of the shares in Hearts. Kaunas-based investment firm UBIG that has a 50% stake is owed a further £10million by the club. It owns a 50 per cent stake. Both companies were once controlled by former Hearts owner Vladimir Romanov but are now insolvent.

The statement released by Mr Adomonis added: "Hearts administrator BDO received three offers from investors, none of which were acceptable. "Last week the potential investors presented improved offers, however, the main creditor's expectations were still not met. Ukio Bankas approved the administrator's proposal to continue negotiations with the two potential investors. The third investor's - HMFC Limited - offer was rejected."

As such there is a real risk that Hearts could go into liquidation

Greenwoods Communications in administration

Greenwoods Communications has gone into administration following the running up of debts to HMRC.  On Thursday 300 staff were told they would lose their jobs and only 26 remain in order to wind down the company.

The firm, based in Coleshill, was a supplier of infrastructure to the mobile and IT communications businesses.

Warwickshire MP Dan Byles said.

"I had been working with the company at the tail end of last year and early this year in getting HMRC to defer payments and the like,"  "It seemed to be getting OK again and I thought they had turned a corner.
'Very sad' .  Staff will be paid until the end of the month and will receive redundancy payments, he added.

I think it might of been a better idea to get a turnaround firm to try and negotiate with HMRC than the local MP??

In fact Ernst and Young had put the previous company into a pre pack administration in February 2013 and the buyers had bought the £2.98m debt from Lloyds Commercial Finance.  The pre pack had saved 270 jobs at the time but it has transpired that they have lost a major contract with Cable and Wireless that put a strain on cashflow.

At its peak the firm had a turnover of £40m





What is the winding up order process?

If you or your client has received a threat of, or an actual winding up petition it would be a good idea to know what is likely to happen.  The most important thing of course is to act!

A winding up petition is a serious step to take by a creditor and usually follows if all other methods of collecting the money has failed.

Read our new page on the winding up order process on companyrescue.co.uk to find out what happens and what steps can be taken to avoid the winding up of the company

Pension funds no longer treated as preferential creditors in insolvency

A recent court decision has ruled that pension funds are no longer to be treated as preferential creditors in insolvency situations.  In the past the Pensions Regulator used a mechanism known as the "Financial Support Direction" (FSD)

The verdict was the result of a case brought by the administrators of the UK divisions of investment bank Lehman Brothers and Canadian telecoms group Nortel.  This is a very important case as in many cases companies in insolvency have pension fund deficits.  This does not mean that pension holders themselves are in a worse financial situation as the Pension Protection Fund (PPF) will still have to meet any shortfall.  This will mean, of course, more pressure on the PPF.

Nortel, the Canadian firm which collapsed in 2009, had a £2.1bn shortfall in its European scheme. The pension entitlements of more than 40,000 workers were implicated. The funding gap at the UK division of failed investment bank Lehman was far smaller at £148m.

Giles Frampton of R3, the insolvency trade body, said: "The Nortel decision is to be welcomed in that it appears to restore a fair balance between the rights of pension funds and other creditors in administrations."

To read more on pensions in insolvency read our pages.

UK economy expands 0.6%

So all is rosy for UK Plc...  The economy has picked up by 0.6%, which is hardly a stellar performance, but it now means that we have recovered almost 50% of the lost output from the financial crisis of 2007/8

The recovery was across a broad range of sectors with agriculture and production sectors both turning in positive growth, alongside services and construction.

The services sector grew 0.6% which represents a staggering 80% of output so the figures have been helped by this growth.  Manufacturing and construction improved with expansion of 1.5% and 0.9% respectively but both are significantly below their peak in pre recessionary output of 10.2% and 16.5%.

Manufacturing has performed poorly in the recent past due to the crisis hit Eurozone but the recent surge in production in the automative industry is a bright spot.  Any sudden re-emergence of the Eurozone debt crisis will probably blow progress off course so we are not out of the woods yet.

Construction and house building will hopefully be boosted by the increased guarantees from the Government on mortgage lending.




Need help with business debts?

If your business is struggling with debts, despite the upturn in the economy, now would be a good time to tackle them.  Creditors will perhaps be more optimistic about a companies future trading prospects and they may accept a compromise on the debt.

Read our new page on help with business debts

Nichole Farhi bought out of administration

Maxine Hargreaves-Adams, the businesswomen who bought collapsed Fenn Wright Manson from Zolfo Cooper in March 2012 has emerged as the buyer of Nichole Farhi which went into administration on July 3rd.

Nichole Farhi and the founder of French Connection set up the business in 1982 and it operates from 6 stores and has numerous concessions in department stores such as Harvey Nichols, House of Frazer, and Selfridges.

The business suffered like many retailers and  made a loss of £5.6m  on £21.7m turnover in the last available accounts.  The firm employed 75 staff across its retail network, and had another 44 staff employed at its headquarters in London.

Peter Saville, partner at Zolfo Cooper, said the acquisition would mean "preserving a well-known retail brand".

Buying a business out of administration is a risky business. See our page on how to buy an insolvent business but it would appear that Maxine, daughter of the Matalan founder, knows a thing or two about retailing.  Presumably the purchase of Fenn Wright Manson has gone well enough for her to come back for more.

Many retailers are surviving by being bought out of administration or even in a pre pack deal.






KSA Group Insolvency Notices

Tol Contracts Limited - Liquidation Notice


Meeting of the Creditors of the above named company will be held at The Holiday Inn Hotel, M6 Jct 7, Chapel Lane, Great Barr, Birmingham, B43 7BG on 25 July 2013 at 2.45 pm

See full notice below

http://www.companyrescue.co.uk/insolvency-notices/tol-contracts-limited-liquidation-notice



Allan Business Services Limited - Liquidation Notice

Meeting of the Creditors of the above named company will be held at the offices of KSA Group Ltd, Tower 42, Level 7, 25 Old Broad Street, London, EC2N 1HN on 26 July 2013 at 10.30 am

See the full notice below

http://www.companyrescue.co.uk/insolvency-notices/allan-business-services-limited-creditors-voluntary-liquidation-notice

Winding up petitions by HMRC fall but distraint is up.

HMRC issued 42% fewer winding up petitions in the UK in the financial year 2012/13 to wind up companies than they did in the previous year.  Winding up petitions are now at the lowest figure in five years. In Scotland the number of winding up petitions issued fell by 68%.

Pinsent Masons said that HMRC issued 3,733 petitions for winding up companies in 2012/13, compared to 6,440 in 2011/12.

However the use of distraint by HMRC has increased.  We are increasingly coming across small businesses that have had a visit from the HMRC field officer.  The latest figures available for distraint show a significant increase.  According to Syscap, the finance providers,   HMRC have used 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.

Serena McAllister, senior associate in restructuring at Pinsent Masons, said “The drop in petitions to wind up companies and place them into liquidation, combined with evidence that suggests HMRC is increasing using its powers to seize business assets, show that HMRC is now using distraint as its preferred method of enforcement.

“This tactic appears to be paying off as HMRC’s recovery rate has increased significantly, which is good news for the taxpayer although not so good news for businesses."


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.

It is not too late to rescue the business though as you could agree a time to pay deal or even a CVA.  Call us for details on 0800 9700539


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