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.