Written ByKeith Steven
Managing Director
Keith is the Managing Director of KSA Group Insolvency Practitioners which has been established for 25 years. The company has undertaken more CVA led rescues than any other firm. Read our case studies to see how.
We are a firm of very worried solicitors. Our legal practice is a partnership. We are under growing pressure from all sides. How can you help us solve these problems, restructure and survive?
If you are practising as a partnership you are of course jointly and severally liable for the business and personal debts you have built up. What should you do if the practice is struggling?
First thing to do is to establish if you are insolvent. See the 3 tests below:
Simply – can your practice pay its debts as and when they fall due for payment? Are you as an individual partner in cashflow difficulties with aggressive creditors? This too may cause problems for the partnership.
For example if you are not paying the deductions from employees for NIC and Income Tax across to the HMRC on the 19th of the month following the month they were deducted, then your partnership may be insolvent. Have you met loan repayment dates for practice loans or bank loans?
If your trade creditors sell to you on say 30 days terms and you regularly pay on 90+ days, then you may be insolvent.
Simply, does your partnership owe more than it owns, or are your business assets exceeded by your business liabilities? If yes, then you are insolvent.
It is important to point out that this test should include contingent or prospective liabilities. (If you need advice on these issues email us).
If a creditor has obtained a County Court Judgment, this may demonstrate your partnerships insolvency and the creditor may petition to wind up the partnership.
If a creditor has obtained a statutory demand for greater than £750 and it remains unpaid for more than 21 days, then the creditor may petition to wind up the partnership.
Second thing to do is to use our free daily cashflow spreadsheet (EASY TO USE) and set out the expected cashflow in and out of the business over the next few months.
If you need any advice on filling this out we will provide this free of charge. Please call us on 0800 9700539
This tool will set out what the likely cash position is in the business over the next few months and will help YOU decide which is the most appropriate option. If cash is drying up and there is no way to fix it then winding up the partnership and possible personal bankruptcy could be the option to study see Plan C below.
If cash is tight but still flowing then Plan A or B should be considered. If you know that good cashflow is coming through in the next few months then Plan A can be a powerful way to buy that time.
Plan A trading out and refinancing (avoid insolvency)
Plan B Partnership Voluntary Arrangement (PVA) and or linked individual voluntary arrangement
TGI Fridays Secures A Rescue Deal Resulting In 35 Immediate Site Closures
Update 07th OctoberBreal Capital and Calveton UK have secured a rescue deal for TGI Fridays, meaning the chain will continue to exist on UK high streets.However, the deal includes just 51 of its 86 sites, forcing 35 to shut with immediate effect.1,012 redundancies have been made - please refer to our guide here on your rights in redundancy.The new private equity owners, Breal and Calveton, jointly own the upmarket restaurant chain D&D London. Between them they have also had investments in Byron Burger and wine bar chain Vinoteca - so they are no stranger to the restaurant world! A full list of the TGI Friday sites closingBarnsley Birmingham Bracknell Brighton Marina Bristol Cabot Circus Cardiff Newport Road Chelmsford Cheltenham Croydon Derby Dundee Durham Edinburgh Fort Kinnaird Enfield Gateshead Gloucester Quays Halifax Jersey Leeds Leeds Trinity Leicester Lincoln Manchester Royal Exchange Newcastle Eldon Square Newport Northampton Prestwich Romford Sale Solihull Southampton West Quay South Speke Sutton Coldfield Swansea Watford NorthUpdate 19th SeptemberHostmore, the owners of TGI Fridays has gone into administration and the 86 sites are now officially up for sale."The sale process remains ongoing, with no decisions having been made to close any existing stores, and TGI Fridays continues to operate normally across the country," a Hostmore spokesperson told the BBC.According to reports in the Telegraph administrators at Teneo, the restructuring firm, are on standby if TGI Fridays cannot sell its restaurants. The firm ran into trouble following its attempted foray into the US. The chain has 86 restaurants and employs 3000 people.The owners of the chain, Hostmore, has £35m of debts.The business was spun out of private equity trust Electra in November 2021 in a move that Hostmore chief executive Robert Cook hailed as a “significant milestone”.Its shares started trading at 147p but by March of last year it had lost 90% of its value. By Monday 16th September 2024 the whole company has been valued at £1m. Could it be that TGIs could go into a CVA? The CVA would only really work if the main problem was high rents or just certain outlets needed to be closed down. The money that it owes its lender is no doubt secured so they have the power to call in administrators at any time.Without knowing more about its exact financial position it is hard to say.If the company does go into administration it is likely that a number of the restaurants, which are making money, will be snapped up by other restaurant groups and may continue to trade under the TGI brand. If not then the owners will take advantage of their prime locations.
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