Who pays the Directors?

Among the first of many questions asked by directors of a company in financial difficulty is ‘how am I going to pay my staff?’.  With challenging cash flow and depleting available funds, most directors in such situation opt to forego their own salary to pay for their staff.  A noble action indeed, but it is the right one?

When the company eventually goes into liquidation, the government through the Redundancy Payments Service and under the Employment Rights Act scheme protects employees for unpaid wages.  Employees owed unpaid wages, holiday pay, notice pay and redundancy can claim against this scheme and chances are the employees will be paid their entitlement albeit with a few limitations.

For directors, they have the same opportunity to claim.  However, there are more hurdles to overcome before payments are made to them.  In most circumstances, director/owners of liquidated companies tend to have their claim rejected.

As always, help from experience professionals such as ourselves may be the difference between losing out on such a claim and receiving a cheque from the government.

Retail in Scotland looks set to suffer

Retail in Scotland is being hit by a lack of consumer confidence coupled with a shift to online shopping. High Street stores across Scotland are facing a “bloodbath” of closures as families struggle to cope with soaring living costs and massive job losses.

R3, the Insolvency’s industry trade body, quoted yesterday that more than a quarter of shops and nearly a fifth of hotels in Scotland could go bust within the next 12 months, according to a report. The figures were that 274 retail businesses and 30 hotels in Scotland had a "high risk" of failure. A further 1,238 retailers and 137 hoteliers were "vulnerable to failure" in the next year.

R3 indicated 26.15% of all retail firms and 17.99% of all hotels were at risk.

An insolvency practitioner’s license covers England, Scotland and Northern Ireland so that he or she can act throughout the whole of the United Kingdom.

Bloc Weekend called off as Administrators called in

Bloc Weekend has called in the administrators after having to shutdown one day into the festival, Jamie Playford of Parker Andrews was appointed administrator on 11 July 2012.

On Friday 6 July, Bloc Weekend in London, run by Baselogic Productions, was closed down due to fears of overcrowding, the administrator is still “fact finding” about what led to the closing of the event and couldn’t comment in detail until after the investigation was completed.

A statement on the event’s website read: “It is with great sadness we announce Baselogic Productions, who you all know as Bloc, has been placed into administration following the events of Friday. “The team are working hard with the administrators to investigate the issues that led to the closure of the event and people will be updated as and when we have new information.

This shows that administration can affect any company, even those which are supported by headline groups.

South London Healthcare Trust enters Administration

After weeks of speculation, South London NHS Healthcare Trust has entered administration after running up substantial debts.

South London NHS Healthcare Trust was the result of a merger of The Princess Royal hospital in Orpington, the Queen Mary hospital in Sidcup, and the Queen Elizabeth hospital in Woolwich. At this time, deficit was about £21 million. In 2011, this rose to £40 million.

Despite having one of the lowest mortality and infection rates in the country, and massive improvements in the quality of care, the financial challenge facing the trust is significant. A trust spokesperson said the hospitals will continue to provide first class care and there will be no impact on scheduled appointments.

Number of New Insolvencies drop during summer months

The British summer is known for bringing cloud, wind and rain.  And this year it has been no different so far.  The summer also signals school breaks and holidays for many of us in Britain. 

In Insolvency, there is a trend developing each summer where the number of new insolvencies drops as people tend to take their eyes off their financial position and try to make it through the summer enjoying themselves.  As a result, come Autumn, struggling individuals and businesses tend to find the noose tightening around their necks and scramble for help in any shape or form to overcome the troubles they are facing.

The Summer does not stop creditors pursuing you.  The sooner you act on any form of creditor pressure usually means a positive outcome for ailing businesses and their creditors.  Business consultants such as ourselves have experience in dealing with these situation.  Why wait for Autumn when you can deal with issues now and have a good summer as well?

Provided the sun keeps the rain away of course..

Comedian Frankie Boyle Liquidates his firm via an MVL

Comedian Frankie Boyle has recently been in the spotlight for putting his firm Transkor Productions Limited into voluntary liquidation.

The TV entertainer has been attracting attention as he has recently benefited from making use of the entrepreneurial tax relief scheme through the implementation of a members' voluntary liquidation. 

Mr Boyle's company had a realisable asset value of around £3,083,884 before the liquidation took place. The liabilities were roughly £873,388, most of which was owed to HMRC. The estimated surplus value left-over after the liquidation was paid for and HMRC debts were settled for Corporation Tax & Vat was around £2,201,906.

Instead of extracting the remaining cash as income or dividends, Mr Boyle used the tax relief scheme through the use of a members' voluntary liquidation and only paid around 10% tax in comparison with 50%.

This is a perfect example of how directors' can utilise a members' voluntary liquidation to extract cash and assets in a tax efficient way.

Tour operator struggling

Thomas Cook are still having difficulty with their finances after announcing half year losses on the rise, following a challenging six months.

According to Thomas Cook - more than half the deficit was due to costs of £384.6m - classed as specially disclosed items - which are not the result of normal operating performance.

The travel firm has still recorded a loss of £328m compared with £269m for the previous year.

Earlier this month the travel company had struck a new £1.4 billion refinancing package with its lenders until 2015.

With Thomas Cook struggling - it's no wonder how some of the smaller travel firms are also having a tough time and are facing company insolvency in this challenging economic period ahead.

Is the UK becoming a Brothel for Irish Bankruptcy Tourism?

While bankrupts in the UK face only one year in financial purdah, in Ireland it is 12 years – despite promises of reform from the Dublin government.

This has led to a number of Irish Business' entering the UK and changing their Centre of Main Interest (“COMI”).

Two recent cases cast different dispersions about the ability to change a person COMI

The first case was an Irish couple who built up a €1bn (£800m) portfolio of luxury property, stretching from London to Washington DC and Stockholm, will attempt to file for bankruptcy in London on Thursday.

Brian O'Donnell, a high-profile Dublin corporate lawyer, and his psychiatrist wife, Mary Patricia O'Donnell, are accused of being among the Irish "bankruptcy tourists" fleeing to the UK to use Britain's more lenient bankruptcy laws. Mr McFeely’s Coalport company built the Priory Hall apartments in Dublin, and the O’Donnells are being pursued by Bank of Ireland for €75 million in unpaid loans related mainly to property investments. Both claim their main centre of business activity is Britain where the bankruptcy laws are different to those in Ireland. The High Court has currently adjourned the hearing and it is not certain where COMI lies.

Another case involved Mr Quinn, a well known Irish businessman who originally was declared bankrupt in the UK on presentation of his own petition. He contested that he had switched his COMI to the UK. The Irish Banks were not happy that he had declared bankruptcy in the UK and sought to seek an annulment. This was based on the fact that he had not disclosed various tax and other disclosures when going bankrupt. The Bankruptcy was annulled in the UK and a few days later he was declared bankrupt in Dublin. 

Peterborough NHS Speculation - Hit Back

Peterborough and Stamford Hospitals (PASH) NHS Foundation Trust has hit back at comparisons made of its financial position with that of South London Healthcare NHS Trust. PASH NHS Trust was forced to issue a statement amid speculation over its financial position following news the London NHS trust may enter administration as a result of a £69 million hole in its finances for the financial year 2011/12. However, Nigel Hards, chairman of PASH NHS Trust said the organisation has created a five-year recovery plan to deal with a £54.3 million loss brought about by PFI repayments for its £289 million Peterborough City Hospital. PASH have explained that as a foundation trust they are regulated in a different way. Although there are significant financial issues there is also a five-year recovery plan in place which is in the process of being approved by the Department of Health. It is then a situation that will be reviewed to help assess the recovery.

The hospital have made it clear that staff and patients should be assured that although there are issues, the board is working closely with the regulators in order to stabilize the situation.

Nigel Hards, chairman of PASH NHS Trust says “Although this cannot happen immediately, we believe we have a robust plan that spans the next five years.”

Retail Sector Insolvencies on the Rise

The number of retail sector failures has risen by more than a third recently.

Around 670 retailers went bust during the first quarter of 201 which is a 38% rise against the 486 that became insolvent during the last quarter of 2011.

This is a 3% increase on the number if businesses that failed during the same period last year, confirming that this year is in fact worse for insolvency figures.

The retail sector has been struggling to get back on its feet since the first recession that began in 2008. Since this period the UK has slipped back into a double-dip-recession and has forced many business to consider voluntary insolvency solutions such as liquidation or company voluntary arrangements.

Many are blaming the double-dip-recession for pulling the retail sector back down into insolvency.

Jameson Smith & Co help UK directors to get out of tricky insolvency situations. We speak with directors every day so get in touch if you need help with your company.

You can get in touch on 08000 746 757 or use our live chat facility at the top of the page.

Insolvency & Rescue Awards 2012

This years Insolvency & Rescue Awards are coming to us this October!

Last year many insolvency practitioners turned up hoping to be selected and walk away with an award in-hand. Some great insolvency practitioners won some great awards.

The Insolvency & Rescue Awards celebrates the achievements of firms and individuals in a challenging sector.

To read more about the Insolvency & Rescue Awards 2012 visit the website at www.insolvencyandrescueawards.co.uk