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The Graham Report on pre-packs: A review by Eric Walls

Eric Walls, Insolvency Practitioner at KSA, has recently written in Insolvency News about his views on the Graham Report and pre-pack administrations. He looks at the need for better transparency in pre-pack deals and questions why CVAs are not mentioned as an alternative solution. 

Click here to read the full article. 

Insolvency Series: 8 critical warning signs that your business is failing

Welcome to the Insolvency Series. Over the next few months, we will post up informative PDF guides about the insolvency process, rescue options and those important warning signs every business must look out for. We will be posting the guides here on our very own blog.  

Our first guide covers how to spot the warning signs that your business is in trouble. If you know what to look out for and take action quickly, there's still time to turn it around.

One in eight SMEs close to going bust

A recent survey by the Insurer, Zurich, revealed one in eight small businesses have considered closing their doors in the last few months. 

Despite news of a growing economy and a fall in company insolvencies, Zurich’s SME Risk Index revealed one in four SMEs have had to make staff redundant or lower the prices of their products. 
Out of the 500 small firms that were surveyed, nearly half felt concerned about keeping up with cashflow, yet just under a quarter were worried about debt.

While there has been a fall in company insolvencies (including those in administration and liquidation), there are a number of small firms that are still uncertain about their future and are much closer to the edge than they would like to be.

Richard Coleman from Zurich, commented, “Our research demonstrates that while concern about risk amongst SMEs is falling, the risks themselves are still very much there. That the number of companies considering closing down because of the economic climate has remained consistent over the past 12 months, suggests that serious financial difficulties are still on the agenda for many.”

Sadly, there will always be businesses in financial distress and this survey only goes to show the underlying issues in a recovering economy. However, there are options available for companies that are struggling with cashflow, like time to pay deals (TTP) or company voluntary arrangements (CVAs). These powerful rescue tools can help to ease creditor pressure as well as restructure the business debt. 

KSA Group Insolvency Notice

TMO Traffic Ltd Creditors Voluntary Liquidation Notice

Meeting of the Creditors of the above named Company will be held at The Holiday Inn, London Road, Ipswich, IP2 0UA on 5 August 2014 at 1.00 pm.

See full notice below:

A guide to commercial funding for start-ups

While there is some government help, small businesses (especially start-ups) can often find it difficult to secure much needed finance. However, there are plenty of alternative options to business loans, like bridging finance. 

Ben Gosling from independent broker, Commercial Trust, has kindly provided an insightful guide to commercial funding for start-up businesses, looking at some of the key differences in the options available. You can read the full article here

UK posts strongest growth of all G7 countries

Figures from the International Monetary Fund (IMF) predict British GDP will have increased by 3.4% between Q4 2013 and Q4 2014. This would reveal that the UK economy is growing faster than any other economy as global growth stands at 3.3%.

Despite slow growth in the Eurozone, Russia and the US, the UK is doing very well with figures showing it is the strongest growing advanced economy by far. Canada, for example, is showing a growth of only 2% year-on-year. 

The Office of National Statistics (ONS) has also reported today that the economy has grown by 0.8% in Q2 this year. The UK is now 0.2% better off than before the financial crisis in 2008.     

Chancellor George Osborne hailed the news, stating: "Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan."

So what is happening?

Private sector employment is up, house prices are strongly up, manufacturing is strong and interest rates are low.  All this is good news.  Strangely though is the fact that net lending to the business sector by banks is down.  Of course, the reason for this is that other lenders such as crowd funding, alternative lenders and asset based lenders are enjoying a resurgence.  Millions are being raised through Funding Circle and Crowd Cube but these are only the tip of the iceberg.  Now even PayPal are going to start lending to businesses.  

The real elephant, which has not yet entered the room but is crashing about in the garden trying to get noticed, is Mark Carney who is warning about interest rate rises and a possible housing bubble.  I think that interest rate rises will not derail the recovery as they are really only a tool to stop overheating and they will only rise when the economy is doing even better.  It will be events in Europe and China that will ultimately affect us the most.  

Scottish businesses in liquidation up by 36%

The latest Accountant in Bankruptcy (AiB) report has revealed the number of Scottish businesses in insolvency has risen by 35.9%, compared to the same time last year (Q1 2013). That’s an increase from 184 firms to 250 businesses that have entered liquidation. Furthermore, the figures show there was even a rise of 2.5% from Q4 2013 to Q1 2014. 

The figures include businesses that have entered compulsory liquidation, creditors’ voluntary liquidation (CVL) and Receiverships.

Interestingly, it is the number of compulsory liquidations that has increased, implying the HMRC department in Scotland are becoming tougher on insolvent companies. Around 60% of compulsory liquidations are lead by HMRC. 

The number of CVLs has in fact fallen by 22% year-on-year which suggests companies are going down alternative routes, like administration, or they've run out of money and have let the businesses be compulsory wound up.

It could well be that businesses are not well informed of the possible rescue options and instead are recommended liquidations and winding up of the company. If this is advice they are unsure of or don't like, they could leave it too late, resulting in a compulsory liquidation.  

Financial Year



Percentage change
2014-15 Q1 on:







2013-14 Q4

2014-15 Q1









Compulsory Liquidations








Creditors' Voluntary Liquidations








Total Corporate Insolvencies








Members' Voluntary Liquidations








Source: Accountant in Bankruptcy (AiB) - Scotland's Insolvency Service

Did RBS force small companies to close for profit?

The issue as to whether Royal Bank of Scotland (RBS) forced small companies into insolvency as a way of boosting its profits has been in the news again today.  Global Restructuring Group (GRG) was the division of the bank which was responsible for trying to help struggling companies repay loans but at the same time price in the risk that they might fail.  The Tomlinson Report looked at these allegations.  Read our recent blog post on this.

Basically, if a company was referred to GRG then they immediately saw an increase in their borrowing costs which, in many cases (allegedly) was the reason, they went on to fail.  So, a self fulfilling prophecy!

The question that has been bothering the banks business customers, and the politicians, is whether GRG were actually incentivised to close businesses down and extract large fees to boost profits.  Obviously, it is in the bank's interest to try and keep the businesses running paying larger fees but at some point many will fail.  Another alleged tactic was where businesses had valuable property, such as in the case of hotels, GRG would force the business to close and then be able to take the property, on which it had security, and sell it at a profit. During the credit crunch many properties were taken back and then subsequently sold by RBS.

At a Parliamentary Committee hearing the bosses of GRG were quizzed on whether the division was a "profit centre" for the bank.  The term is important because if it is then it raises the prospect of a conflict of interest in the bank as GRG was set up to help struggling businesses and not make a profit out of them.  In a statement to the Committee, Chris Sullivan, the Deputy Chief Executive, said that he had not seen a Clifford Chance report into internal procedures relating to GRG commissioned by the bank.  He has now admitted that he did see the report and even made comments of a typographical nature... So he must of read it quite thoroughly.  He also agreed that GRG was indeed "monitored for financial performance"

This U-Turn for the Deputy Chief Executive is damaging for RBS and everyone in the business will be interested to see what the next Select Committee report says in the Autumn.

It is KSA’s view that turning around viable but distressed companies should be the focus of these bank departments, by giving financial support and to help these businesses stay alive, wherever possible.  But if they cannot be kept afloat as is often the case, then any sale of assets forced by administration should not be to the bank’s own companies.

Majority of SMEs are confident in raising cash

According to the latest survey from Platform Black and IFF Research, 71% of small to medium businesses are positive they can access the funding they need over the next year. 

500 managers and directors were surveyed across the UK, with those in the manufacturing and construction sectors showing most confidence. 

For a while, the perception has been that acquiring finance is difficult for SMEs. However, these latest figures reveal a welcoming shift in attitude as more small businesses feel confident in getting the funds they need. 

Alternative finance, like crowdfunding, peer-to-peer lending and invoice finance, is becoming more popular among SMEs, simply because there is more flexibility and choice. Small businesses are starting to feel confident in approaching non-traditional lenders. 

The survey also showed only very small ‘micro’ businesses feel less confident (at 69%) in applying for finance. With one to nine employees, a micro business may have difficulty due to a lack of trading records. 

Overall, this new-found confidence is great news for small businesses and the wider economy. The government is also working on plans to help SMEs that have been rejected for finance by connecting them with alternative lenders. Another step in the right direction!

Max Clifford Associates goes into liquidation

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