Premier League Defends Controversial Rules

The Premier League has come out in defence of the controversial ‘football creditors rule’ whereby football creditors of insolvent clubs receive a super-preferential status when the club enters formal insolvency proceedings.

The ruling is seen as unfair by many in the insolvency industry and has come under constant criticism, in particularly from HMRC, who is currently preparing to fight the legality of the rule at court for the second time.

As part of the ongoing dispute, HMRC are currently fighting Portsmouth’s CVA proposal as they do their best to prevent any CVAs going through in football whilst the rule is still in place and football creditors are paid in full regardless.

The Premier League are arguing that the ruling protects smaller clubs from also falling into debt as they believe that keeping all the money possible in the game will keep things on an even keel.

HMRC meanwhile, have branded the rule ad ‘fundamentally unfair’ whilst others have labelled it ‘disgraceful.’

As things stand, football clubs are allowing each other ludicrous credit terms when dealing with player transfers between each other, and due to the football creditors rule, the selling club will be paid even if the buying club cannot continue with the payments and falls insolvent.  It’s seen as win, win for football clubs whilst others, including HMRC lose out.

Should the rule be wiped out, it would definitely lead to more caution when agreeing on such credit terms, many believe that by doing this, it may go a long way towards curbing the debt culture circling football at the moment.

HMRC are due in court 3 August 2010 to appeal Pompey’s CVA whilst a court date for when they will bid to end the ruling has yet to be announced.

Posted at 04:07PM Jul 30, 2010 by Marc Stenton in Insolvency  |  Comments[0]

House Prices Increase in June

The Land Registry has revealed that house prices in England and Wales are now on par with the levels seen in the summer of 2006.

The average home in the UK will now set buyers back £166,072 after a small 0.1% increase from May to June.   The year on year rise against June 2009 stands at a much higher 8.4%, marking the eighth consecutive monthly rise.

The Land Registry's survey is widely regarded as the most authoritative, although it only covers England and Wales.  It is now expected that house prices are going to stay fairly static for the remainder of the year.  

The survey also showed that every single region in England and Wales saw an average rise in property prices during the 12 months to the end of June.

The smallest of which was seen in the North East of England, rising 0.7%, meanwhile the best increase was seen in London at 12.2%.

The small rise in the North East was reflected by the month on month results, the average price say a decrease of 1.3% between May and June.  The region seeing the best month on month results was Wales, recording a 2.9% ascent.

Over the past 12 months, semi-detached homes have seen a better rise than any other type of property, recording a 9.6% increase, closely followed by detached house at 9%.  Meanwhile, the value of flats saw an 8% rise.

Posted at 12:47PM Jul 28, 2010 by Marc Stenton in Mortgages & Housing Market  |  Comments[0]

Retail Rising Once More

According to a new CBI survey on the sector, High Street retail sales have shot up in July at their fastest rate for over three years, dating back to April ’07.

According to the survey, the rise has been triggered due to annual summer sales at many stores, whilst the World Cup and warm weather have also served to bolster high street performance.  Clothing, leather, footwear and grocers are the areas experiencing the strongest growth.

The survey, covering 20,000 retail outlets, has also said that it expects sales to continue performing strongly next month as well.  More than half of retailers are seeing better results than at the same point last year, whilst only 18% have seen a drop.

This is a positive balance of 33%, three times as many as early predictions.  Original estimations set it at around 11%.

Lai Wah Co, the CBI's head of economic analysis, said: "Retailers are optimistic that strong sales growth will continue next month, which is promising.

"We still expect the recovery in overall consumer spending to be fairly restrained, however, given concerns about the impact of public spending cuts and weak prospects for real take-home pay in the coming year."

Posted at 04:15PM Jul 27, 2010 by Marc Stenton in UK Economy News  |  Comments[0]

Three Betting Companies Wound Up After Investigation

The Insolvency Service has this week forced three sports betting companies to be wound up in the high court after their investigators revealed that there was no evidence to suggest that the companies had ever paid out any winnings to their customers.

Montgomery Enterprises and Indeleck UK Limited were both owned by Wayne Montgomery, a man who had previous allegations against him back in 2005 for similar scams.  The companies traded as Belmont porting Services and Preferential Sports Investment, they would place bets on sporting events on behalf of customers and take commission out of the winnings.

The third company, Heathridge Capital Management appears to have been set up for the same purpose and has shown to be connected to Montgomery Enterprises and Indeleck.

The investigations uncovered that the companies worked using specific, targeted mail shots that invited customers to invest money in them, and use their betting expertise and research in order to make a profit, the mail shots invited potential customers to invest anything from £250 right up to £12000, with a proportion being used for each bet.

The companies claimed that, on average, customers could make approximately 20-25% profit on their investments minus commissions.

One mail shot went even further than that and said, “Belmont Sporting Services will pay £525 per month for each club member for every £250 they invest as their stake money. We expect to win on average £210 every month for every £100 invested by each member,” claiming over 100% profit for investors.

Bets were selected using a software system and collective bets would be placed for all customers who wanted to bet on a particular day.

Wayne Montgomery has previously led Ventura Racing, Regency Ventures Group, Sigma and Integra Club, all of which adopted a similar tactic in attracting investors.  Once investors were on board with these companies, many would later receive a letter saying that their cash was gone following ‘a run of bad luck.’

The Advertising Services Authority (ASA) in 2005 upheld two complaints against Ventura regarding claims that had been made in Sigma mail shots.  Ventura then failed to produce the evidence requested from the ASA of profits made from its betting system.

The investigations has uncovered a number of wrong doings at the three companies, including a deliberate lack of transparency to customers which mislead them as to who was in control of their investments or even which company they were dealing with.

The insolvency service found that over £280,000 had gone through the companies’ accounts between November ’08 and October last year, and £516,000 placed in bets.   

Company accounts failed to distinguish transactions between the companies, identify customers or to establish details of investments, wagers and winnings. 

Investigators could also find no evidence to support the companies’ claim they had made returns to investors and also didn’t find any evidence to suggest any monies whatsoever had been paid out to customers for their winnings.

The company attempted to claim that the winnings were paid in cash to customers but no copies of any letter or statement which would have accompanied such winnings to support this claim was produced during the investigation.

The three companies have now been wound up in the High Court.

Posted at 03:54PM Jul 26, 2010 by Marc Stenton in Insolvency  |  Comments[0]

Thousands in Debt Don't Want Help

Nearly half a million people in the UK that face debt problems aren’t trying to seek help of advice for their predicament according to R3, the insolvency trade body.

Personally insolvency cases in the UK are going up and up and up and are now at record levels, however it seems there are still far more people out there in similar dire straits who aren’t seeking the advice they need to get out of it.

In a survey done to ascertain why, 44% of people in financial difficulty said they didn’t feel their problem was large enough for them to need help, whilst 25% thought it was simply a short term problem and would sort itself out soon enough.

Also, one in five people simply chose to ignore the problem in order to keep it out of their minds as it was easier to carry on that way.

This goes to show, that the current increasing debt problem in the country is even worse than figures are suggesting.

Posted at 09:00AM Jul 25, 2010 by Marc Stenton in Finance7 Company News  |  Comments[0]

Bogus Insurance Claims On The Up

According to a group of insurers, the number of people making fraudulent insurance claims greatly increased in the UK last year and is now at record levels.

The Association of British Insurers (ABI) have said that fraudulent claims cost them a staggering £840m pounds last year after seeing a 14% rise on 2008.  There were around 122,000 cases of bogus insurance claims last year. 

The ABI also added however, that they were unable to tell if there had in fact been a higher number of cases was actually due to there being more fraudulent claims, or if the rise was caused by better detection of such things by the insurers.

According to the figures, the percentage of the overall claims that were deemed to be bogus was 4%, the same level that it was at last year, this suggests that there were more insurance claims made overall in 2009 than in 2008.

The ABI also said that the highest number of dodgy or exaggerated claims was seen in home insurance cases.  However, the costliest field was car insurance, accounting for around £410m worth of the total.

"Our honest customers rightly object to having to pay higher premiums to subsidise the fraudulent minority, which is why insurers continue to up their game in the war on the cheats," said Nick Starling, of the ABI.

As an indication of the types of claims that were wrongly made last year, they offered an example of somebody who had claimed for a head injury apparently caused by a fall when in fact, they had been hit with a baseball bat during a fight.

Meanwhile, separate figures released by the Motor Insurers’ Bureau have shown that the highest numbers of uninsured drivers are to be found in London, with Merseyside and Greater Manchester also having a large number.

Posted at 10:00AM Jul 24, 2010 by Marc Stenton in UK Economy News  |  Comments[0]

HMRC Serve Petition Against Owls

HMRC have sparked a new row in their ongoing battle with football as they now try to make an example of arguably the largest club yet.

Four times English top flight champions, Sheffield Wednesday have had a winding up petition served against them regarding an outstanding tax bill of around half a million pounds, thought to be the PAYE bill for May.

The winding up petition reflects similar cases involving Portsmouth, Cardiff City and Chester City as HMRC continues to try and make an example of football clubs in general to support their appeal against the football creditors rule.

In this instance, the winding up petition has come much sooner than usual and may well have caused a problem as Wednesday fight to tackle summer cash flow problems.   Certain cases have seen debt build and build for months before the petition is finally submitted, it is thought Wednesday’s bill is from much more recently.

The recently relegated club released a statement saying, "We have been involved in dialogue with HMRC for a number of weeks. As such we have been somewhat surprised and disappointed by their decision to seek a winding-up order at this time,

"We understand that HMRC is taking a tougher line in general with football clubs, but feel their actions are disproportionate and will raise unnecessary speculation as to the financial position of the club.

"We can inform supporters that the club, working in partnership with the Co-operative Bank and their advisors, will seek to settle this matter as soon as is practical."

The Owls have struggled throughout the past decade since being relegated from the Premier League and currently owe the Co-operative bank around £26m along with outstanding debts to former chairman Dave Allen. 

The club have been trying to secure some form of investment over the course of the summer, however a deal with American company Club 9 Sports failed to materials amid worries over whether they had the funds in place that they stated.

Certain Owls fans are now hoping the impending winding up hearing will force potential investors to act more quickly as they bid to secure the long term future of the club.

The case will be heard at court on 11 August 2010.

Posted at 03:17PM Jul 23, 2010 by Marc Stenton in Insolvency  |  Comments[0]

UK Retail Sales Beat Expectations

UK retail sales figures have exceeded market expectations for June, rising by 0.7% compared with May.

Sales were up 1% on the months excluding the volatile petrol sales figures and also saw a fairly substantial 3.1% rise on the year according to the Office of National Statistics (ONS).

 According to the figures, the rise has been propelled by the healthy improvement seen in household goods and general stores numbers, rising a seasonally adjusted 1.6% and 1.5% respectively.  The growth rate for May was also revised in the latest figures, up to 0.8%.

The ONS have released the new data along with the UK car production figures for June, which also saw healthy improvement.  The sterling and FTSE 100 index have reacted positively to this, increasing 0.5% and 0.8% respectively.

Despite the healthy data, analysts are still urging caution over the rest of the year, believing the outlook for consumer spending is still very uncertain.  This comes after other figures showed that public borrowing has increased higher than expected, causing uncertainty over many households spending power.

Sales volumes at petrol stations dropped 2.2% versus May, bringing the total fall since June last year to 15.9%.  This means the total value of sales has fallen 3.6% since June 2009, despite rising pump prices.

Posted at 04:02PM Jul 22, 2010 by Marc Stenton in UK Economy News  |  Comments[0]

House Sales Rise in June

There were 86,000 home sales in the UK last month according to HM Revenue and Customs, this marks a huge 21% rise when compared to may and a 15% year on year ascent.

The rise has also meant that the opening half of the year has seen a 21% rise against the same period in 2009.  However despite this, The Royal Institution of Chartered Surveyors (Rics) has said that the figures mean that house sales are still subdued.

"Sales are still running well below the levels preceding the onset of the credit crunch, partly because of a shortage of mortgage finance as well as, until recently, the lack of stock on the market," a spokesman said.

Lenders have become sceptical that their mortgage lending will raise much further this year.

Earlier in the week, the Bank of England has warned that sales may be stopped growing faster by the tight supply of mortgages, this may become worse over the coming months.

 The renewed rise in house prices, which started in the spring of 2009, now seems to have reached a plateau, according to the most recent surveys from the Nationwide building society and the Halifax bank.

Rics is now predicting a fall in house prices over the latter part of the year, depending if the increasing number of homes for sale outnumbers the number of potential buyers.

Posted at 04:14PM Jul 21, 2010 by Marc Stenton in Mortgages & Housing Market  |  Comments[0]

UK Borrowing Higher Than Expected

New figures published have shown that public sector borrowing in the UK last month has come out well above what economists had been expecting.

The Office of National Statistics (ONS) have shown that the total borrowing for June came to £14.5bn, whilst being a slight improvement on the same period a year earlier, it is still far more than had been expected.  Forecasts were set at around £13.1bn.

Also in the figures, the ONS have shown that the total government debt is now equivalent to 63.9% of the UK's annual economic output, this means it is at its highest level since it began being tracked in March 1993.

The pound has not struggled too much however, only falling 0.4% against the dollar, down to $1.522.

Chancellor Geroge Osborne has said, “The public finances numbers today remind us why we need to get on top of the budget deficit."

The deficit hit 11% of GDP last year.  The new Conservative-Liberal Democrat coalitions has vowed to eliminate this altogether in 5 years, and are initially planning to reduce it to 10.1% this year alone.

The figures mean that net borrowing for the year to date, thanks partially to rising tax revenues, still remains below the levels reached at the same point in 2009.

Looked at on a "cash" basis, which only counts payments at the actual time they are made, the shortfall in June was £20.bn. This was the highest monthly cash shortfall since records began in 1984, and well above analysts' expectations of only £15bn.

The borrowing number is calculated using the government's preferred "accrual" basis, which smoothes out the impact of big lumpy payments over the course of the year.

Posted at 03:13PM Jul 20, 2010 by Marc Stenton in UK Economy News  |  Comments[0]

Director Disqualifications Up

The number of company directors getting disqualified following insolvency proceedings shot up by 17% last year as the recession forced directors into rash decisions to safeguard their personal financial positions.

All company directors have a director’s disqualification report filed against them when a company goes into some form of insolvency, normally the report comes back clean, however it seems the recession is forcing more and more directors into unlawful business decisions.

This comes according to law firm Wedlake bell, they said that in the year leading up to the end of March 2010, 2169 company directors have been disqualified, following on from 1852 in the 12 months previous.

Edward Starling, partner and head of the rescue and restructuring team at Wedlake Bell, said, “A recession traditionally leads some directors to break the law in a last ditch attempt to save their business or their own personal financial situation.  When a company goes bust and an insolvency practitioner gets appointed these irregularities are uncovered.”

Wedlake Bell also said that there were also more and more cases of multiple directors at the same company are facing banning orders because the Insolvency Service is finding more instances of collusion between directors.  While 1,047 companies were targeted in the last year the number of directors facing a ban was more than double this at 2,169.

According to the research, the biggest growth in the reasoning behind director disqualification was for non-commercial transactions whilst insolvent.  This shot up by 56% to 388.

Another large rise was in cases involving criminal activity such as fraud, seeing a 52% rise to 265.  Also, a massive 813 banning orders were handed out relating to unpaid company taxes.

Posted at 04:33PM Jul 19, 2010 by Marc Stenton in Insolvency  |  Comments[0]

HMRC Appeal Pompey CVA

HMRC have continued in their ongoing battle against the controversial football creditors rule, they have now launched an appeal against Portsmouth FC’s CVA proposal, it is thought that they probably rejected the proposal initially, however it still got the 75% approval necessary.

Part of their claim is stating that there were ‘material irregularities’ in the vote count when the CVA was voted on.  Previously, Administrator Andrew Andronikou had denied the reported figure of £37m owed to the taxman, saying it was less than this.  However, HMRC believe that the debt was such that they should have had a more than 25% sway in the vote, thus being able to block it completely.

If the application to the High Court is granted and the CVA blocked, it may have a detrimental effect on the club due to current football rulings.  If Portsmouth cannot exit Administration via a CVA, they will receive a further points penalty at the start of the new season, as well as having to remain in Administration.

 Furthermore, the Football League may place a transfer embargo over them, meaning they would not be able to register any new players, or even renew the contracts of existing ones.

HMRC have released a statement saying, “We are acting in the interests of all those creditors who are not in the football industry. We don’t think it’s right that they are offered 20p in the pound against full repayment of others. Also we cannot agree with the striking out of £13m of debt which seriously undermined our ability to challenge the CVA."

Posted at 01:48PM Jul 16, 2010 by Marc Stenton in Insolvency  |  Comments[0]

Government to Tackle Debt Problem

The Government has been forced to announce a review of consumer credit in a bid to tackle the rising debt and insolvency problem in the UK.

Posted at 03:40PM Jul 15, 2010 by Marc Stenton in Insolvency  |  Comments[0]

UK Unemployment Down

UK unemployment has dropped in the 3 months to the end of May.  New figures released from the Office of National Statistics (ONS) have shown numbers fell by around 34000 people to 2.47m.

The figures have also shown a decrease in the number of people in the UK that are claiming Jobseeker’s Allowance, dropping to 1.46m, 20800 less than the last official results.  This means that the jobless rate is now at its lowest in 6 months at 7.8% and is also slightly better than forecasted.

During the same period, the number of people in work saw its steepest gain in 4 years, shooting up by 160000, this is however due to a record increase in part time workers.  These were up 148000, meaning a rise in full time positions of just 12000.

This sharp rise in the number of part time workers now sees the percentage of workers in part time positions at its highest rate since recodes began 18 years ago at 27%.

The stats have also shown that the best results were shown in England.  Despite the UK lowering unemployment as a whole, Scotland, Wales and Northern Ireland all saw a rise in unemployment of 0.3%, 0.1% and 0.6% respectively.

The UK figures will raise hopes that the economic recovery is gaining momentum. Although some experts think unemployment could start rising again by the end of next year.

In a speech made yesterday, Andrew Sentence, a member of the Bank of England's Monetary Policy Committee said that the labour market had now stabilised.

"Evidence from the Bank of England's agents and recent employment surveys is that the labour market in the UK has stabilised and that labour demand in the private sector may have already started to pick up."

David Tinsley, an economist at National Australia Bank in London and a former Bank of England official, agreed that rising unemployment had come to an end - for now.

"It may pick up again next year. It's hard to see how a steady pace of improvement will be maintained as public-sector job losses start to bite."

Vicky Redwood, of Capital Economics, was also cautious about future downward trends. "We still doubt that private sector hiring will pick up strongly enough to offset the severe public sector job cuts," she said.

Posted at 03:12PM Jul 14, 2010 by Marc Stenton in UK Economy News  |  Comments[0]

Inflation Down In June

UK inflation has seen its second successive monthly fall to 3.2% in June from 3.4% in May.  However, according to the Office of National Statistics, the year on year rise in the Consumer Price Index (CPI) is still well above the 2% target set down by the Bank of England.

The pound grew 0.6% to above $1.50 on the news that the CPI figure was slightly above expectations.  It was thought that June’s figure would come out at 3.1%.

The Retail Prices Index (RPI) also saw a drop in June, coming out at 5%, following on from 5.1% in May.

The RPI measure includes housing costs and used to be used for the Bank's inflation target, and is widely used in pay talks.

Falling clothing and fuel prices helped weigh the headline inflation rate down.

Core inflation on the other hand, which ignores volatile energy and food prices, increase to 3.1% from 2.9%, equalling its highest level since records began in 1997.

The accelerating core inflation suggests that the longer term trend direction of inflation may in fact still be upwards.

A major factor behind this was the rising cost of services, which rose from 3.4% to 3.9% in May.

The recent spike in inflation had been driven by the VAT rise back to 17.5%, the weak pound and the recovery in commodity prices, among other factors.

Moreover, a further rise in VAT to 20% will temporarily bolster prices again in January.

The Bank of England believes that, as the effects of the government budget cuts kick in and the pound stabilises, inflation will return to its 2% target over coming months.

Posted at 04:44PM Jul 13, 2010 by Marc Stenton in UK Economy News  |  Comments[0]