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Company mis-sold an interest rate swap wins £4.6 million settlement with Lloyds

The director of the Coin Group care home company, Errol Bland, has recently won an out of court settlement with Lloyds Bank in the latest case involving the mis-selling swaps scandal.

London law firm, Lexlaw, acted on Bland’s behalf to claim back compensation on a 30-year hedging product bought eight years ago. Compensation had previously been refused on the grounds the borrower was too ‘sophisticated’ and knew the risk involved.

However, Bland is now being paid back £900,000 in interest payments, £200,000 in legal fees and an expected £3.5 million from a break fee after litigation forced the bank to pay up and avoid judicial scrutiny.
Back in 2012, an investigation by the FCA decided Coin Group and thousands of other SMEs should be denied compensation because the size of assets involved proved they were well aware of the risk.  This, for many companies, was simply not the case. Many are now fighting to claim back what they should have been entitled to in the first place.

Bland’s settlement is an encouraging sign to SMEs that there is a chance to reclaim what’s rightfully owed. Read more about Lexlaw’s case here.

KSA Group is a finalist at the Insolvency & Rescue Awards 2015

We are delighted to announce KSA Group has been shortlisted for Corporate Recovery Firm of the Year at the Insolvency & Rescue Awards, in the 'up to 10 licensed appointment taking Insolvency Practitioners' category.

The awards ceremony will take place on the 21st October at the Hilton Park Lane Hotel in London. For more information on the event, visit the I&R Awards website. We wish everyone the best of luck. 

In other news, the Insolvency Service released the latest UK statistics today - read more about it in our news piece

Creditors voluntary liquidations (CVLs) in Scotland increase

The number of Scottish businesses entering a CVL has increased in the first quarter 2015/16 by 25%, according to data from Scotland’s Insolvency Service, Accountant in Bankruptcy (AiB).

Interestingly, the number of compulsory liquidations has actually fallen across the country compared to the last quarter.
As shown in the table below, the total number of registered insolvencies (consisting of CVLs, compulsory liquidations and receivership) has stayed the same since Q4.

Looking at the year on year figures, Scottish insolvencies have fallen by 21.2%. However, the number of companies in a CVL has increased by 12.9% since Q1 2014/15. This indicates more businesses are proactive in going ahead with the insolvency procedure and ending their bad debts instead of leaving the courts to appoint a liquidator and wind up the company.  

The latest UK Insolvency Statistics will be published next week - figures are expected to show an overall decline in company insolvencies. 

Risk of companies going bust in North East drops 15%

According to the latest research from insolvency body, R3, the number of companies at high risk of insolvency has fallen 15% in the North East during the first six months of 2015.

Transport and haulage businesses in this region are performing the best compared to other regions across the UK.

Most sectors, including IT, professional services, construction and manufacturing, have shown a fall in companies at risk of insolvency, however the hospitality sector has remained stagnant while restaurant businesses are up 9%.

Chairman of R3, Allan Kelly, said “The general sentiment across the regional business community in the first half of the year is undoubtedly as positive as we've seen for a very long time, and the findings of our research show how this is being borne out in companies' everyday operations.

The government's insolvency statistics for April to June 2015 will be released later this month and, judging by early data, will show a continued decline in company insolvencies.

Small solicitor firms could be eligible for ‘hardship fund’

Small law firms could soon be eligible for a ‘hardship fund’ to cover insurance run-off costs if they plan to close. 

The Solicitors Regulation Authority (SRA) has revealed that some sole practitioners wishing to close have been forced to stay open because they cannot afford insurance premiums. Insurers must cover solicitors for six years after they close.

The run-off indemnity cover is 50% and is calculated into general insurance costs therefore small businesses could find it very difficult to pay the premiums off.

The Solicitors Regulation Authority published its views in a consultation paper, suggesting several ways to ease the pressure – including setting up a hardship fund that firms can apply for. There were also suggestions to reduce the length of cover down to three years and even getting rid of the minimum limit to try and lower premiums. Last year, the Legal Services Board rejected the move to bring the limit down to £500,000 from £2 million. 

Another option is to widen the list of exceptions where insurers don’t pay out. This would result in fewer claims, bringing down general costs. On the other hand, firms with valid claims in need of funding would find it more difficult to achieve this.

32% fall in retailer administrations

The latest research from Deloitte shows the number of retailers entering administration in England has fallen by 32% in the first half of 2015, compared to the first six months last year. Only 45 retailers called in administrators this year compared to 66 in the first half of 2014.

For the same period in 2013, there were 95 retailers in administration – over double the figures from this year.

Depending on the type of business, a more online presence may be needed to meet consumer demand or equally there may need to be more traditional stores to assist with online operations. Retailers are having to adapt to ever-changing consumer spending habits in order to survive and compete in the market.

Head of retail at Deloitte, Ian Geddes, said “Consumers do not shop channels – they shop retailers and brands. Therefore it is essential that retailers continue to focus on how they integrate online and in-store retail to best serve their customers.”

The news continually reports on the economy improving, giving businesses and retailers a boost in confidence. With a large choice of alternative funders ready to help fund extra working capital or bridge a gap, retailers also have many more options on the table. 

There are other insolvency methods too like the company voluntary arrangement (CVA) and informal time to pay deal with creditors which can avoid administration or liquidation. 

Summer Budget 2015 - the main announcements

Today (8th July), Chancellor George Osborne addressed House of Commons and the public with the first Conservative budget in 20 years. Many were expecting to hear about major cuts in welfare and a further crackdown on tax avoidance among other plans. Most notably, it was announced the national living wage would increase to £9 per hour by 2020. 

While the economy is continually improving (up 3% in 2014), Osborne stressed the government is committed to tackling the deficit and therefore has to make major cuts to keep on top of the debt. 

£12 billion will be cut from the welfare budget over three years instead of two, while there will be a £5 billion saving after combating tax avoidance. Further cuts will be made in various government departments (to be announced in the autumn).  

Below were the main announcements:

The national living wage increase to £9 per hour by 2020. From April next year, the NLW will be £7.20 per hour. 
Student grants to be replaced with loans
Inheritance tax threshold increased to £1million for married couples by 2017
Fuel duty to remain frozen until the end of 2015
Benefit cap will be reduced to £20,000 per year, £23,000 for households in London. 
Tax credits and local housing allowance to stay frozen for four years
“Non-dom” tax status to be abolished from 2017. Anyone who has lived in the UK for the last 15 years out of 20 will have to pay full tax on “worldwide income and gains”. 
Reduction in mortgage tax relief for BTL landlords (to give more space to first time buyers in the market).
BBC to fund TV licenses for those over 75.

There were only a few announcements aimed at businesses and SMEs including consultations with councils on longer Sunday trading hours and a reduction of corporation tax to 18% by 2020.

R&D Tax credit allowance will also increase £200,000 a year for businesses.

Hopefully we’ll see more on business rate reform over the next coming months and in the Autumn Budget. 

Las Iguanas sold to Bella Italia and Cafe Rouge owner

Rebranded as Casual Dining Group after entering a company voluntary arrangement (CVA), the company behind the popular restaurants has now bought the profitable Las Iguanas restaurant chain from private equity firm, Bowmark Capital.

Formerly known as The Tragus Group, the company went into a CVA last year owing millions of pounds to creditors while running a loss-making restaurant chain, Strada. During the CVA, Strada restaurants were sold off, rent leases were negotiated and an overall £263 million of debt was cut.

After a difficult restructure, the company managed to exit the CVA and focus on rebuilding the business.

The auction process, handled by BDO, saw various private equity firms and restaurant groups put in bids for the Latin American restaurant, including the owner of ASK and Zizzi. 

Las Iguanas will continue to be run by CEO, Mos Shamel. 

Commercial property – choosing the right location

In our last contribution to the Company Rescue blog, we looked at initial considerations for buying the right commercial property. Here, we will examine the next crucial factor: location.

Choosing the right location for your commercial premises is really a case of striking the balance between cost and convenience. Unfortunately, the more accessible your business is for customers, staff and suppliers, the more expensive it is likely to be.

Factors to consider


Reliable public transport links make life easier for both customers and staff and are very important for almost all businesses. Similarly, it is important that your suppliers are able to access your premises easily. Consider how often you will be receiving and sending goods, particularly if you are thinking of setting up in a congestion zone (see below).

Amenities and surroundings

Your staff will be far happier if they work in an area with good local amenities such as bars, shops, restaurants and recreational facilities. This may be similarly beneficial if you are likely to receive many clients at your place of work.
You may also find that your surrounding area affects the perception of your business, both by staff and potential customers.

Business rates and service charges

Business rates are linked to your property value, and a higher rates bill is often unavoidable if you need to buy in a more expensive area. But you should also look into how much your local authority will charge for ongoing services such as commercial waste collection, as these costs can have a significant impact on your profits.

Congestion charges

The impact that congestion charges can have on business performance is often hotly debated. Eighteen months after the introduction of the London congestion charge in 2003, a survey conducted by the London Chamber of Commerce and Industry (LCCI) showed that 84% of businesses had reported reduced takings year on year, and 63% of businesses had reported a loss of customers ¹. 

Transport for London (TFL), on the other hand, claims that trends in VAT registration, business rate valuation appeals and commercial real estate prices do not suggest that the charge has had a deleterious effect on local trade. They in fact claim that the congestion charge has been beneficial for businesses in terms of working environment and ease of travel ².

Local competitors

For some types of business, being located near to too many competitors can severely impact trade. On the other hand, certain businesses tend to attract customers who will shop around before deciding on a purchase, and can actually benefit from being near a handful of similar businesses because of this (estate and letting agents are good examples).

Passing trade

Some businesses rely heavily on ‘passing trade’; that is, trade conducted as a result of a casual encounter, where the client did not initially intend to purchase the goods or services.

Many shops are dependent upon passing trade, and will need to be located on high streets and in other areas where their window displays can draw in potential customers. This is not always true, though; some niche shops, such as independent or second-hand book stores, can enjoy repeat business from collectors, enthusiasts and students, and may be able to trade in less busy areas.

Planning law

You might need to alter your chosen property in order to render it suitable for your business needs. Depending on the usage class of the premises, you might require permission from the local council to do so – so always be sure to check for planning restrictions before you make a purchase.

Find out more about planning law at the GOV.UK planning portal.


Again, choosing a commercial property is all about balance, as there are pros and cons to every option. The benefits of being in a city centre location can be offset by noise pollution, congestion and cost, whilst a tranquil rural environment might be more difficult for customers, employees and suppliers to get to.

It is often wise to consider what is absolutely crucial for your business success before figuring out where you can stand to make compromises; this way, choosing the perfect location for your premises can become significantly easier.

Written by Ben Gosling for Commercial Trust Ltd.

1. “Response to the consultation on the proposed cost increase to the congestion charging scheme” London Chamber of Commerce and Industry. Feb 2005.
2. “Central London congestion charging: impacts monitoring”. Transport for London. Jun 2006.

Rising rents now putting pressure on companies

It has been revealed the well-known London restaurant, The Criterion, has entered administration, 140 years since it opened.

The reason behind this decision was the landlord’s demand of a 60% rise in rent, from £525,000 to £850,000 a year. The company had been unable to meet this and so sought advice from Kubik. 

The company stated, “It was decided that Administration was the most viable option as it allows the business to continue to trade as normal whilst the administrators market the business for sale.”

The Bewl Water Sailing Club, published earlier today, also had to close due to expensive rent.  At KSA Group, we have received a few calls about increasing rent/rates costs causing financial problems. Changes last year to the seizure of goods process made the whole procedure more transparent, giving extra time for struggling business to pay back debt. 

Once a Notice of Enforcement is issued, the debtor has seven days to pay back monies owed before bailiffs can take control of goods. 

In the case of rent arrears, the commercial rent arrears recovery procedure (CRAR) kicks into action if rent payments are missed and the landlord wishes to take action. 

Of course, it's rare that a rent increase is the root cause for a company's problems. Rent rises, especially with regard to high street locations, should reflect the value of the area where they are situated, which is a function of the likely income. However, the restaurant business is particularly fickle and just being in a good location is not enough by a long way. We do not know the full details of the lease so it is hard to be sure what happened.

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