Thackeray’s the smart one Michelin starred restaurant in Tunbridge Wells has entered into a company voluntary arrangement or CVA after "adverse trading pressures" has forced it into the arrangement.
The celebrity chef Richard Phillips who co owns the restuarant also runs other venues across the county.
If a company finds that it's debts are insurmountable if payment is demanded in full and the directors acknowledge the fact that the company is insolvent (s123 Insolvency Act 1986) but still viable, a company voluntary arrangement (CVA) can be proposed to the creditors. If the creditors agree the proposal, this can enable up to 70% of the unsecured debts to be written off and the remaining debts restructured and repaid over a period of up to 5 years.
Mr Phillips, who has appeared on ready steady cook, lives near Maidstone and took over the restaurant in Tunbridge Wells more than ten years ago.
Many leisure based businesses are suffering as consumers are cutting back spend. However, it is difficult to predict who in the higher income bracket suffer as some luxury brands are doing very well and others not.
My name is Malcolm Gray and I am passionate about rescuing businesses! I aim to inform local businesses what tools Company Rescue can provide to help struggling but viable companies. We use CVA's, CVA and hive downs, pre-pack administrations and liquidations to restructure companies. I will give uptodate news and views on businesses in the area.
Thursday 24 November 2011
Tuesday 26 April 2011
Winding Up Petitions
Company directors worry about many things when running a business - workload, payment, staff issues, cashflow - the list is endless. But few things can be more worrying and stressful than having a winding up petition served upon the company.
Winding up petitions (WUP) rarely show up "out of the blue". They are almost always the result of director's ignoring the symptoms of insolvency ie. can the company pay its debts as and when they fall due?
Unfortunately, we are currently seeing a trend from creditors using WUP's as a method of forcing companies to pay their debts. While this may be deemed as a misuse of the WUP, it nevertheless cannot and should not be ignored if one is received. Once a petition has been advertised in the London Gazette, the company bank account will be frozen resulting in a cessation of trading!
If a company can prove it's ability and intention to satisfy the debt of the petitioning creditor, a validiation order can be applied for in order to unfreeze the bank account. This is a costly process as it requires the directors to appoint legal counsel to make the application. As the company bank account will be frozen, and access to company funds made impossible, the directors would have to fund this themselves!
If a company is experiencing cashflow problems and creditors are applying pressure for payment, it may be possible to make an arrangement or time to pay deal (TTP) with them in order to avoid this sort of aggressive action being taken. The HMRC for example will usually allow a company to apply for a TTP deal as long as the company is fully compliant and up to date with its filing of returns etc.
Warning! Any TTP deal requires full repayment of the debt and failure to satisfy the terms of the deal usually results in aggressive action from the creditor!
If a company finds that it's debts are insurmountable if payment is demanded in full and the directors acknowledge the fact that the company is insolvent (s123 Insolvency Act 1986) but still viable, a company voluntary arrangement (CVA) can be proposed to the creditors. If the creditors agree the proposal, this can enable up to 70% of the unsecured debts to be written off and the remaining debts restructured and repaid over a period of up to 5 years.
A CVA is a very discreet process and is not advertised, therefore, your clients need not know of the company's situation.
If your company is experiencing any of the issues mentioned above, why not call KSA Group on 0800 9700 539 or visit www.companyrescue.co.uk for free advice on all insolvency issues!
Winding up petitions (WUP) rarely show up "out of the blue". They are almost always the result of director's ignoring the symptoms of insolvency ie. can the company pay its debts as and when they fall due?
Unfortunately, we are currently seeing a trend from creditors using WUP's as a method of forcing companies to pay their debts. While this may be deemed as a misuse of the WUP, it nevertheless cannot and should not be ignored if one is received. Once a petition has been advertised in the London Gazette, the company bank account will be frozen resulting in a cessation of trading!
If a company can prove it's ability and intention to satisfy the debt of the petitioning creditor, a validiation order can be applied for in order to unfreeze the bank account. This is a costly process as it requires the directors to appoint legal counsel to make the application. As the company bank account will be frozen, and access to company funds made impossible, the directors would have to fund this themselves!
If a company is experiencing cashflow problems and creditors are applying pressure for payment, it may be possible to make an arrangement or time to pay deal (TTP) with them in order to avoid this sort of aggressive action being taken. The HMRC for example will usually allow a company to apply for a TTP deal as long as the company is fully compliant and up to date with its filing of returns etc.
Warning! Any TTP deal requires full repayment of the debt and failure to satisfy the terms of the deal usually results in aggressive action from the creditor!
If a company finds that it's debts are insurmountable if payment is demanded in full and the directors acknowledge the fact that the company is insolvent (s123 Insolvency Act 1986) but still viable, a company voluntary arrangement (CVA) can be proposed to the creditors. If the creditors agree the proposal, this can enable up to 70% of the unsecured debts to be written off and the remaining debts restructured and repaid over a period of up to 5 years.
A CVA is a very discreet process and is not advertised, therefore, your clients need not know of the company's situation.
If your company is experiencing any of the issues mentioned above, why not call KSA Group on 0800 9700 539 or visit www.companyrescue.co.uk for free advice on all insolvency issues!
Tuesday 12 April 2011
Take Advice Early
If I could give small business directors one piece of advice, it would be to take advice early!
If we were to wake up every morning feeling unwell, most of us would visit our GP to diagnose the problem and find a cure wouldn't we? Yet so many business owners do the exact opposite!
Creditor pressure is building up, clients aren't paying on time or at all, the bank overdraft is up to the limit each month, the taxman is writing letters asking why the PAYE is 2 months in arrears and the VAT is now due and then the 7 day warning letter lands on the mat. Sound familiar? This is usually the moment when a director decides to seek advice and KSA Group have provided many solutions for companies in this exact situation, but why wait this long when the indicators were there months before?
Terminal insolvency procedures such as compulsory liquidation and creditors voluntary liquidation are often the result of ignoring the symptoms mentioned above. We at KSA Group provide all of our clients with tools to monitor cashflow. If a company voluntary arrangement is to be proposed for a business, knowing the cash position of the company is vital and also required by the proposal if a company is going to be rescued.
If a business is struggling but still viable and advice is taken early, a CVA can be used to write off up to 70% of the unsecured creditor debt and restructure the rest over a period of up to 5 years and is a very powerful and discreet rescue procedure.
We at KSA Group provide FREE INITIAL ADVICE to businesses experiencing financial difficulties so why not call 0800 9700 539 OR VISIT WWW.COMPANYRESCUE.CO.UK And find a solution to your company's problems
If we were to wake up every morning feeling unwell, most of us would visit our GP to diagnose the problem and find a cure wouldn't we? Yet so many business owners do the exact opposite!
Creditor pressure is building up, clients aren't paying on time or at all, the bank overdraft is up to the limit each month, the taxman is writing letters asking why the PAYE is 2 months in arrears and the VAT is now due and then the 7 day warning letter lands on the mat. Sound familiar? This is usually the moment when a director decides to seek advice and KSA Group have provided many solutions for companies in this exact situation, but why wait this long when the indicators were there months before?
Terminal insolvency procedures such as compulsory liquidation and creditors voluntary liquidation are often the result of ignoring the symptoms mentioned above. We at KSA Group provide all of our clients with tools to monitor cashflow. If a company voluntary arrangement is to be proposed for a business, knowing the cash position of the company is vital and also required by the proposal if a company is going to be rescued.
If a business is struggling but still viable and advice is taken early, a CVA can be used to write off up to 70% of the unsecured creditor debt and restructure the rest over a period of up to 5 years and is a very powerful and discreet rescue procedure.
We at KSA Group provide FREE INITIAL ADVICE to businesses experiencing financial difficulties so why not call 0800 9700 539 OR VISIT WWW.COMPANYRESCUE.CO.UK And find a solution to your company's problems
Tuesday 8 March 2011
Directors Responsibilities
"Are you aware of your fiduciary duties as a director?"
This is a question I ask every time I visit a distressed company director, and the answer I receive all too often is "no!".
Directors are aware however (in most cases), of their duties when business is bouyant and profits are being made, as the directors duty is simply, to act in the best interests of the company and it's shareholders/members.
When a company enters and remains in an insolvent position for an extended period, the company and the directors must, by law, acknowledge this and seek to reconcile the situation and/or seek advice from an insolvency professional.
The standard "healthcheck" in this situation is the three insolvency tests - the cashflow test, the balance sheet test and the legal action test.
Most companies I visit fail at least two of the tests. While the balance sheet test and the legal action test vary in their failure, failing the cashflow test (can the company pay its debts as they fall due) is almost always the reason the director seeks advice.
Section 123 (1)(2) of the insolvency act 1986 explains these three definitions in detail but, what many directors don't know, is that struggling on in an attempt to trade out of the financial crisis often increases the debt to the HMRC and trade creditors.
The directors fiduciary duties change in insolvency from acting in the best interests of the company and its shareholders/members to acting in the best interests of the creditors.
Wrongful trading (section 214 IA86) can occur at this time and can leave the directors liable for prosectution and the veil of incoporation being lifted. If the liquidator deems that the directors knew or ought to have known that the company could not avoid entering insolvent liquidation and increased the debts to it's creditors during this time whilst knowingly being unable to pay it back, the directors may be liable to make a financial contribution to the company's assets and sometimes much worse!
It is critical that directors are aware of these responsibilties and take advice early on in order to avoid this situation.
Liquidation is not the only option available. If advice is sought at the onset of insolvency, and the business is still viable, a company voluntary arrangement (CVA) can be proposed to the unsecured creditors, restructuring the historical debt and paying it back over up to a 5 year period thus giving the business a chance of survival .
If your business is experiencing financial difficulties or you are worried about any of the issues mentioned above, why not visit us at http://www.companyrescue.co.uk/ or call 0800 9700539 to arrange a free appointment with one of our regional advisors!
This is a question I ask every time I visit a distressed company director, and the answer I receive all too often is "no!".
Directors are aware however (in most cases), of their duties when business is bouyant and profits are being made, as the directors duty is simply, to act in the best interests of the company and it's shareholders/members.
When a company enters and remains in an insolvent position for an extended period, the company and the directors must, by law, acknowledge this and seek to reconcile the situation and/or seek advice from an insolvency professional.
The standard "healthcheck" in this situation is the three insolvency tests - the cashflow test, the balance sheet test and the legal action test.
Most companies I visit fail at least two of the tests. While the balance sheet test and the legal action test vary in their failure, failing the cashflow test (can the company pay its debts as they fall due) is almost always the reason the director seeks advice.
Section 123 (1)(2) of the insolvency act 1986 explains these three definitions in detail but, what many directors don't know, is that struggling on in an attempt to trade out of the financial crisis often increases the debt to the HMRC and trade creditors.
The directors fiduciary duties change in insolvency from acting in the best interests of the company and its shareholders/members to acting in the best interests of the creditors.
Wrongful trading (section 214 IA86) can occur at this time and can leave the directors liable for prosectution and the veil of incoporation being lifted. If the liquidator deems that the directors knew or ought to have known that the company could not avoid entering insolvent liquidation and increased the debts to it's creditors during this time whilst knowingly being unable to pay it back, the directors may be liable to make a financial contribution to the company's assets and sometimes much worse!
It is critical that directors are aware of these responsibilties and take advice early on in order to avoid this situation.
Liquidation is not the only option available. If advice is sought at the onset of insolvency, and the business is still viable, a company voluntary arrangement (CVA) can be proposed to the unsecured creditors, restructuring the historical debt and paying it back over up to a 5 year period thus giving the business a chance of survival .
If your business is experiencing financial difficulties or you are worried about any of the issues mentioned above, why not visit us at http://www.companyrescue.co.uk/ or call 0800 9700539 to arrange a free appointment with one of our regional advisors!
Tuesday 1 March 2011
Over Drawn Directors Loan Account (ODLA)
Many directors that I visit are often unaware that they have an over drawn directors loan account (ODLA) or the implications of this when the company is in an insolvent position.
Many directors see the only way of dealing with the company's position and accrued creditor debts (most of which is usually to the HMRC) is to enter creditors voluntary liquidation (CVL) and unfortunately, this is often the advice they receive.
If a company enters CVL while the directors have outstanding ODLA's, this debt will need to be repaid to the company, allowing it to be distributed to the creditors as a dividend by the liquidator.
While unsecured company debts are written off in CVL, the ODLA is not. This money must be repaid as it is in breach of the Companies Act 2006. In many cases, it is the borrowing of such funds from the company that has contributed to it becoming insolvent.
If the insolvent company is viable and there are ODLA's outstanding, a company voluntary arrangement (CVA) would be the correct advice, as it will not only achieve a better result for the creditors (which is the primary aim) but it will also allow the ODLA to be repaid to the company over the period of the CVA which is usually 5 years and there is also no investigation into the director's conduct (D report).
In a CVA, the creditors will recover their debts ( although in most cases compromised) over a 5 year period which is almost always a better result than in CVL.
If you're company is experiencing any of the issues mentioned above, why not visit http://www.comanyrescue.co.uk/ for further information.
Many directors see the only way of dealing with the company's position and accrued creditor debts (most of which is usually to the HMRC) is to enter creditors voluntary liquidation (CVL) and unfortunately, this is often the advice they receive.
If a company enters CVL while the directors have outstanding ODLA's, this debt will need to be repaid to the company, allowing it to be distributed to the creditors as a dividend by the liquidator.
While unsecured company debts are written off in CVL, the ODLA is not. This money must be repaid as it is in breach of the Companies Act 2006. In many cases, it is the borrowing of such funds from the company that has contributed to it becoming insolvent.
If the insolvent company is viable and there are ODLA's outstanding, a company voluntary arrangement (CVA) would be the correct advice, as it will not only achieve a better result for the creditors (which is the primary aim) but it will also allow the ODLA to be repaid to the company over the period of the CVA which is usually 5 years and there is also no investigation into the director's conduct (D report).
In a CVA, the creditors will recover their debts ( although in most cases compromised) over a 5 year period which is almost always a better result than in CVL.
If you're company is experiencing any of the issues mentioned above, why not visit http://www.comanyrescue.co.uk/ for further information.
Friday 11 February 2011
Hailsham town centre still struggling
Hailsham High Street in Sussex has seen a number of shop closures over the past year.
Tough trading conditions and high business rates are being cited as the reasons behind the closures.
C H Seymour Ltd – a long established domestic appliance retailer is one of the latest casualties.
C H Seymour Ltd have been in business on the high street for more than 20 years but were forced to call in liquidators on Friday 28th January 2011.
A spokesman for the appointed liquidators was quoted as saying “the directors have tried all possible avenues to find a buyer for C H Seymour Ltd. Unfortunately, they found that there was no other option but to place the company onto liquidation”
The retail sector has been severely hit during this recession, especially in rural areas.
While the circumstances surrounding the decision to place C H Seymour Ltd into creditors voluntary liquidation are not entirely clear, this is unfortunately all too common in this current climate.
High rent and rates are two of the main causes for businesses to suffer cashflow problems.
If a business is still viable and the director’s are aware of the company’s cash position, CVL is not the only option!
A company voluntary arrangement (CVA) can be proposed by the directors. A CVA is an extremely powerful tool available to a company. It can help terminate a lease, end staff contract’s and allow the directors to propose a restructure of the unsecured debts and a repayment plan over up to a 5 year period.
Once the directors have made the decision to propose a CVA, a small companies moratorium can be applied for through the courts which will prevent creditors from taking further action against the company while the CVA is being written.
This restructure, if agreed with 75% in value of the creditors, can allow the unsecured debts to be “crammed down” allowing a portion of the debt to be written off. This will enable the company to go forward without the burden of historical creditor pressure, re-negotiated terms with the landlord and business rates, and therefore refocusing the directors on driving the business past breakeven.
If you would like to know more about CVL and CVA or your business is suffering from cashflow problems, why not visit www.companyrescue.co.uk .
Friday 28 January 2011
Commercial printers to be sold as going concern following administration
Commercial printers, Granite Colour Ltd has entered administration following the recent failure of its subsidiary company The Good News Press.
The Good News Press was put into creditors voluntary liquidation on 24th August 2010. It’s failure resulted in Granite Colour being left with c£120,000 debt which had a detrimental effect on the company’s cashflow.
The purchase of The Good News Press in February 2010 by Granite Colour Ltd put severe cashflow pressures on the company - which boasted an annual turnover of circa £2.5 million – and the failure is being named as one of the primary reasons for Granite Colour falling into administration.
It is not clear who appointed the administrators for the Essex based company, but a spokesman for them said, “The company’s association with the failed business resulted in certain suppliers insisting on pro forma terms, which put further pressure on cash flow. Finally, the company experienced a drop-off in its sales towards the end of 2010”.
The administrators are already pursuing a going concern sale with a potential buyer and at this time and they have confirmed that none of the 22 staff have lost their jobs at this stage.
When a company enters administration, the directors have no control and may be relieved of their duties and have no further involvement in the business. Often the primary strategy is to trade the business for a short period and sell the business as a going concern in order to achieve a better result for the creditors than liquidation. Other concerns with this procedure are the contracts of the employees of the company in administration. Will the new buyer adopt the employees contracts and transfer them to the newco?
Another common objective is for the company in administration to exit into a company voluntary arrangement (CVA). This enables the company to restructure the unsecured debts over up to a 5 year period, improving cashflow and enabling the business to go forward and also allows the directors to regain control of the company. This will almost always achieve a better result for the unsecured creditors than selling the business as a going concern.
What directors must always remember is that when a company becomes insolvent, the director’s duty is to the creditors not the company. Failure to recognise this duty may remove the veil of incorporation and lead to a breach of section 214 of the insolvency act 1986 and action being taken against the directors for wrongful trading.
Administration in the southeast
I recently worked on an administration in the south for the KSA Group.
KSA director of insolvency Eric Walls was appointed joint administrator by the holder of a qualifying floating charge, after a winding up petition was served on the company in December 2010.
The strategy for the administration was to trade the business for a short period of time and market the business for sale as a going concern. The joint administrators continued to collect the debtor book and looked to complete any ongoing contracts, in order to maximize any possible return to creditors
The director was asked to advise on work in progress and assist with collecting the debtor book. In some cases, the directors are relieved of their duties by the administrator and have no further involvement in the company.
During 13 days of marketing, a number of offers for the purchase of the business were considered. One of the main purposes of an administration is to try and secure a better result for the creditors than would be achieved in liquidation.
A purchase was finally agreed with a buyer, who also employed the company’s workforce, thereby saving a number of jobs.
Administration can be a costly process and is really only feasible if sufficient funds can be generated and a better result for the creditors is likely to be achieved.
If the business is still viable but a winding up petition has been served against a company, administration can be a very powerful tool as a moratorium takes effect putting a stop to all action against the company.
In some circumstances, a company in administration can propose a company voluntary arrangement (“CVA”) to its creditors in order to restructure the company’s unsecured debts over say 5 years, thereby hopefully leading to better prospects for creditors and the company going forward.
The administration period would come to an end with the company exiting into a CVA
A properly constructed and successful CVA will almost always generate a better result for the creditors than liquidation. It can also enable the business to go forward and ideally exit the CVA with the creditors receiving a reasonable dividend over the proposed period.
Monday 24 January 2011
Thames Gateway Chamber of Commerce faces compulsory liquidation
One of Kent’s Chambers of Commerce has ceased trading today in light of a winding up petition to be presented in court.
Thames Gateway (Kent) Chamber of Commerce now faces compulsory liquidation.
The board, which were only elected in January 2010 had decided to seek advice from insolvency practitioners earlier this week after December and January export services revenue was much lower than forecast.
The board also claim that revenue from memberships and cash at bank was lower than expected.
A statement from one of the directors said: "We have been saddened by a number of matters that have come to light which, had they been known to us when we were nominated and elected as directors, would have dissuaded us from accepting."
Although all the circumstances surrounding Thames Gateway (Kent) Chamber of Commerce are not clear, this is an all too common scenario in business.
It is the duty of all directors to be aware of the financial position of the company especially when the company enters an insolvent situation.
If directors are not aware, or they ignore statutory demands, solicitor’s letter s and other threats of legal action, they run the risk of a creditor presenting a winding up petition seeking a compulsory winding up order by the court of the insolvent company.
If the company cannot satisfy statutory demands or other threats of legal action or can’t pay its debts as and when they fall due, the company is insolvent under section 123 of the insolvency act 1986, then directors should seek advice from a licensed insolvency practitioner.
If the company continues to trade, the directors run the risk of wrongful trading which is a breach of section 214 of the insolvency act 1986 and can lead to legal action against the directors.
If directors take action early, they can propose a CVA and apply to the court for a moratorium (only available for small companies) or appoint an Administrator in order to stay proceedings against the company and get a better result for the creditors. This would be deemed as taking appropriate action as well as initiating a Creditors Voluntary Liquidation.
If you are worried that your company may be insolvent but still viable, a CVA can be used to restructure the historical company debts and rescue the business from liquidation (CVL).
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