Stoke City Completely Debt Free
With all of the publicity surrounding Portsmouth falling into Administration yesterday coupled with reports that debt levels in the Premier League top the rest of Europe put together, some refreshing news has come in light of Stoke City announcing they are 100% external debt free.
Stoke have come on leaps and bounds in recent years and are now an established Premier League team after a brilliant first year in the top flight.
Stoke have also showed the gulf in money opportunities between the countries top two league with their financial results for their first top tier season. The accounts have showed that annual turnover has boomed by almost 500% compared with their final season in the Championship.
Last year’s results showed a turnover of £54m, up from just £11m in the previous year, this has meant an annual profit of £503,000.
The Coates Family, owners of Stoke City seem to be representing a more sensible approach to the running of a club that other people currently in the industry and have invested around £17m interest free into the club with a further £24m planned.
“The club has invested heavily to put together a team capable of being capable in the Premier League, but this has come at a heavy cost in respect of the high initial player cost of investment and the consequential ongoing player wage bill," said club chairman Peter Coates.
Further investment in the club’s infrastructure has also been coupled with the investment in playing staff. This has seen the club’s ground, the Britannia Stadium is now fully owned by the club. This follows the 51% stake in the ground previously owned by Stoke City (Property) Limited being bought by Stoke City Holdings Group Limited.
The stadium has also been refurbished recently and a state of the art new training complex is said to be ‘taking shape’ at a cost of around £7m.
Posted at 09:00AM Feb 27, 2010 by Marc Stenton in The Economy | Comments[0]
Lloyds Banking Group loses £24bn on bad debts in 2009
Lloyds Banking Group has announced it lost £24bn on bad loans in 2009, forcing the bank heavily into the red.
The bank posted an operating loss of £6.3bn - slightly less than analysts had expected and less than the £6.7bn loss the group made in 2008.
On a pre-tax profit basis, the group made a profit of £1bn.
The bank blamed the massive losses on commercial property loans made by Halifax Bank of Scotland (HBOS), which it took over at the start of last year.
It said these "impairments" were 21% lower in the second half of 2009, and would continue to see a similar rate of improvement throughout this year.
Lloyds shares had lost more than 5% by mid-afternoon trading.
'Strong momentum'
Despite the loss, the bank said total income rose by 12%, to £23.9bn, while costs fell by 5%.
It said it had "delivered a resilient trading performance against the backdrop of a marked slowdown in the UK economic environment and continued challenges in the financial markets".
The bank said it had met mortgage lending targets for the year, but would find it "challenging" to meet targets for business lending, because firms were looking to pay off debt rather than take on more.
Looking forward, chief executive Eric Daniels said: "We are building strong earnings momentum and expect our performance to improve significantly in 2010 and beyond."
Mr Daniels has declined to take his bonus entitlement of £2.3m for 2009.
But other staff will be paid bonuses, the bank said.
"The average salary [at Lloyds] is £25,000 a year, and the typical bonus is £1,000, pre-tax," said spokesperson Shane O'Riordain.
"We believe as a matter of principle that when stretching performance targets are met there should be some proportionate financial recognition."
Lloyds took over Halifax Bank of Scotland (HBOS) in January last year.
It underestimated how many bad loans HBOS had on its books, and had to be bailed out by the government as a result.
The bank is now 41%-owned by the state, down from 43% after it raised £22.5bn of capital at the end of last year.
Mortgage losses
Lloyds pinned the blame for its huge loan losses of £24bn firmly on reckless lending by the previous management at HBOS, and on the recession driving other customers out of business.
It also revealed the massive scale of further potential losses lurking on its books because borrowers are struggling to repay their loans.
What it described as "impaired loans and advances" more than doubled in value last year and stood at £58.8bn by the end of December - amounting to 9% of all its lending.
The bank said losses crystallised last year were mainly due to "falls in the value of commercial real estate and the impact of the economic deterioration during the year, including the effects of rising unemployment and reduced corporate cash flows".
In its High Street business, higher unemployment among customers pushed up losses on bad loans to £4.3bn, although losses on mortgages fell back as house prices recovered.
In corporate lending, losses rose to £15.7bn, particularly because of the crash in commercial property values and because of other firms going under.
Lloyds also lost large sums on commercial property loans in Ireland and Australia.
On Thursday, Royal Bank of Scotland (RBS), which is 84% government-owned, reported a loss for 2009 of £3.6bn.
Last week, Barclays reported pre-tax profits of £11.6bn, although the figure was boosted by the sale of its BGI fund management arm to US firm BlackRock last year.
Posted at 10:05PM Feb 26, 2010 by Kelly Board in The Economy | Comments[0]
The Inevitable Finally Happens
Portsmouth Football Club officially entered Administration this morning following months of financial turmoil at the south coast club. Mounting debts equally around £60m have finally gotten the better of them.
The decision to enter Administration has been forced upon the club due to the winding up hearing that was due in court on Monday where the club would have almost certainly been placed into Compulsory Liquidation, this would have spelt the end for the company as a whole.
Since the start of the season, the club have had four separate owners, staff wages have been paid late on numerous occasions and off the field problems have been coupled with a poor season on the field. The club are already rock bottom of the league and already 8 points adrift of safety, Administration also carries a 9 point penalty meaning relegation to the Championship is an almost certainty.
The latest owner, Balram Chainrai, had been frantically searching for another buyer before the predetermined deadline they had set for last night. Chainrai had only taken the controlling stake after previous owner Ali Al Faraj had defaulted on a loan secured against his 90% stake in the club.
It is thought there were four interested parties in talks with regards to a takeover. However, due to the dreadful recent financial history, none were keen to force a quick sale and wanted to conduct a proper investigation before agreeing to buy.
UHY Hacker Young have been appointed the job with Andrew Andronikou the Administrator. They will now begin to cut costs at the club and set about making them a more financially viable and attractive investment opportunity.
There have been numerous statements made over the last few hours from people connected in some way with the club.
Chief Executive Peter Storrie has said that he plans to resign his post once a new buyer has been found and has said, “this is a very sad day for everyone connected with the club.”
Storrie also added, "By this course of action owner Balram Chainrai has kept the club alive and given someone an exceptional opportunity to take this great club on with fresh investment to steer Portsmouth in a positive direction.
"It is my intention to work with the administrator to help sell the business and I hope that will be quick as there is already interest in acquiring the club."
Former owner and chaiman Milan Mandaric, now main man a Leicester City, has also spoken of his sadness at the news. He said, “It's really sad. It's not right. I just hope for the sake of the club, and the sporting community, and football in that city, they sort things out.
"And I think they eventually will. That club will never die. That club has a lion's heart. The fans love their club, they will always be there. Unfortunately they don't deserve these kinds of difficulties."
Accountant Nick O’Reilly, the man responsible for compiling Portsmouth’s Statement of Affairs for court has labelled the company ‘completely dysfunctional’ whilst also adding, "The next few months are crucial to the business. People will lose jobs, but hopefully the club will come out the other side."
Former manager Paul Hart, the man sacked in November believes Administration could be somewhat of a blessing in disguise and may even provide the club with a fresh start.
"I think the club can be strong again if they use some foresight and planning and adopt a restructuring programme.
"It looks like administration is necessary and hopefully will give the club a chance to recover.
"The supporters have been long suffering and there are some very good, conscientious people who work there we should be thinking about because their jobs are in a precarious position."
Meanwhile, a spokesman for owner Chainrai, Phil Hart, has been quoted as saying Administration was unavoidable.
"He (Chainrai) was given false promises when he came in. He asked the questions and was given answers and assurances that turned out not to be true," Hall said.
"Having put £17m of his own money in, unfortunately he found the club facing a winding-up order on Monday.
"He had a choice of allowing the club to go into administration, for someone to go in and try to bring it back into a stronger financial position. He feels he's a victim - the club have been overwhelmed by these debts and he is a reluctant owner.
"He wants to do what is right for the club but also to protect what money he's put in."
Administration will serve to give the club some breathing space from mounting pressure from other creditors besides HMRC, who issued the initial winding up petition.
Another former owner, Sacha Gaydamak is thought to be owed around £28m of which a deadline to pay back £9m was missed recently. The Premier League also withheld certain payments to the club from both player transfers and TV revenue in order to cover certain football debts.
Furthermore, ex-player Sol Campbell is suing the club over around £1.5m in non payments of image rights whilst he was at the club.
One slight positive from the fans point of view is entering Administration as opposed to Compulsory Liquidation, is that the company continues to trade, meaning upcoming fixtures, including an FA Cup Quarter final against Birmingham next week, can still go ahead.
Portsmouth’s downfall overall has been swift given the fact that less than 2 years ago, they were lifting the FA Cup at Wembley. Since then, revenue from player sales has hit around £95m, with the majority coming from big name sales such as Lassana Diarra and Jermaine Defoe, who accumulated £35m between them last January. This amount, in theory, should be plenty for them to maintain their operations and make a profit in that period.
This begs the question for many, where did all of that money go?
Posted at 02:39PM Feb 26, 2010 by Marc Stenton in Insolvency | Comments[0]
GM To End Hummer Operation
America car giant General Motors (GM) has announced they are planning to wind down their production of their infamous Hummer vehicle, the cars based on the military Humvee that have sparked outrage amongst environmentalists.
Sales of the Hummer have been steadily declining for a while now and GM have finally taken the decision to cease production after a takeover deal with a China based firm fell through.
Tengzhong had tried to initiate a deal to buy the vehicles, and neither them nor GM have announced as to why the deal has fallen through. Some reports are suggesting however, that the Chinese government have blocked the deal, though there is no actual evidence to support this.
GM had agreed to sell the firm around a year ago, when it entered bankruptcy protection in the US amidst the car market slump and have said they are ‘disappointed’ that the deal could not go through.
"GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner," said John Smith, vice-president of corporate planning and alliances.
They have also said that they plan to continue to honour the warranties on all of the cars still eligible, and would continue to provide spare parts and service support for all current owners around the world.
GM have been making many changes to their previous structure since emerging from US bankruptcy protection last summer and have already ended operations on certain brands they owned as well as selling others.
They announced that Pontiac and Saturn would cease to operate whilst the sale was planned of Saab, the Swedish brand which was eventually sold to Dutch outfit Spyker. It was also planned that they would sell Opel, the front company for GMs European operations, Opel also own UK company Vauxhall.
The original Hummer design, Humvee, was a military vehicle built by AM General and was a huge success in the first Gulf War for the American army.
Hummer was bought by GM in 1999 after the emergence of the sports utility vehicle as one of Americas most popular types of car. However recently, as the image of the type of vehicle has died down, so have Hummer’s sales.
Tengzhong had been planning to make them more economical, and introduce a Diesel Hummer engine had the deal gone through.
Posted at 04:21PM Feb 25, 2010 by Marc Stenton in Insolvency | Comments[0]
Royal Bank of Scotland set to announce £5bn loss
The Royal Bank of Scotland (RBS) will announce losses for 2009 of about £5bn on Thursday, after it struggled with billions of pounds of bad loans.
The bank is also expected to reveal that it will pay a total of £1.3bn in bonuses to its staff.
The UK taxpayer owns 84% of RBS after the government was forced to bail out the bank at the end of 2008.
RBS is the second major UK bank to report 2009 results, after Barclays announced record profits of £11.6bn.
Unlike RBS, and Lloyds Banking Group, Barclays did not take any money directly from the government to help it through the financial crisis.
Lloyds - also part-owned by taxpayers - will release its results on Friday.
Ruined reputation
Announcing losses of about £5bn is usually career-ending for any company's chief executive.
And yet RBS boss Stephen Hester will be trumpeting this figure when the bank publishes its annual results on Thursday morning.
Compared with a loss of £24bn in 2008, anticipated losses of a fifth of that appear to be a major turnaround.
Not that Mr Hester will be rewarded greatly for his efforts - he has already declined to take up his anticipated bonus, worth almost £1.6m.
When Mr Hester took the helm of RBS in October 2008, the world's sixth-largest bank at the time was imploding under the weight of its own reckless investments.
His new charge had just been all but nationalised, its reputation in ruins, and Britain was in the midst of the longest and deepest recession on record.
But, blessed with £200bn of quantitative easing from the Bank of England, RBS, alongside most other banks, managed to turn a nightmare 2008 into a busy 2009.
Blame game
While it is pleasing that a bank 84%-controlled by taxpayers will have dramatically cut its losses, it will irritate quite a few that RBS is set to pay out bonuses worth more than £1.3bn to its investment bankers.
That will be unpalatable for the thousands of firms and individuals who were refused credit by RBS last year.
Then again, the staff at the Edinburgh-based bank are getting used to being blamed for almost everything.
Depending on the pressure group, they should not have funded Kraft's purchase of Cadbury. They should not have acted on behalf of Kingsnorth coal plant. And they should not have indirectly invested in Burma.
Next year may turn out to be the one in which RBS does its time and gets paroled. It will start the sell-off process of RBS branches in England, its insurance business (Green Flag and Churchill) in the UK and multiple businesses overseas.
Government intervention
In the meantime, RBS's investment banking division - the part of the bank that nearly destroyed it - has been holding its own in the market under intense political and commercial pressure.
Commercially, RBS is not in a position to do very much without the blessing of UK Financial Investments (UKFI) - the government body that runs taxpayers' stakes in banks such as RBS, Lloyds Banking Group and Bradford & Bingley.
When asked about what it was like dealing with UKFI, one RBS wit said it was like dealing with a particularly attentive fund manager, but with nuclear weapons.
Unless the bank can start making a profit, however, it will have to put up with such interference for another year at the very least.
Posted at 10:12PM Feb 24, 2010 by Kelly Board in The Economy | Comments[0]
Debt Relief Order Rules to Change
The legislations surrounding Debt Relief Orders are set to change for individuals with a small pension funds, according to Labour.
Debt Relief Orders (DROs) are a lesser alternative to Bankruptcy or an Individual Voluntary Arrangement in wiping out personal debt.
DROs are used to wipe off individual debt of less than £15000 if there is basically no way in which the person can realistically pay the debt in a timely manner. However, there are very specific criteria in which the person must adhere to.
One of these criteria surrounds a person assets, if an individual has more than £300 worth of assets, then they do not qualify for a DRO. This has been affecting people with a small pension fund as that fund has been pushing people above the threshold despite adhering to every other condition.
This is where the change has been proposed by Business Minister Ian Lucas, he wants to implement a common sense change that will allow the more vulnerable people with a very small pension pot the chance to gain a DRO without necessarily satisfying all of the needs.
Since they were introduced back in April last year, over 12000 people used a DRO in the first 9 months of its existence. The main issue in implement this change is how large a person’s pension fund can be before they are no longer considered. The government are currently consulting over this issue.
The Citizens Advice conducted a survey of people to have had DROs rejected to highlight the potential flaw in the rules. Of the rejected individual surveyed, a huge 96.3% of people were rejected purely because of their pension fund. Of those people, a substantial 78% had a pension fund that was smaller than £5000.
Posted at 03:30PM Feb 24, 2010 by Marc Stenton in Insolvency | Comments[0]
Portsmouth move closer to entering administration
Portsmouth will go into administration by Friday unless a buyer is found for the Premier League's bottom club.
If Pompey enter administration they will be docked nine points, but the winding up order against them due to be heard on 1 March will be suspended.
A spokesman for Pompey owner Balram Chainrai said: "There is now only a short window of opportunity for buyers to come in with a credible offer.
"Having the club wound up is not an option as far as we are concerned."
Portsmouth have debts of £70m, and the winding up order was over £7.5m owed to HM Revenue and Customs.
Chainrai's spokesman Phill Hall said: "The serving of this notice [that Portsmouth intend to appoint an administrator] means the winding up order is automatically suspended.
"It means the club is safe, it can fulfil its fixtures and as far as is possible it is business as usual."
Hall admitted that a nine-point penalty would make Portsmouth's relegation to the Championship at the end of the season "almost certain".
But he claimed: "Administration would mean the club re-emerging as a healthy financial entity.
"It would then become an attractive proposition for a potential buyer who could invest new funds in rebuilding the club's future."
He added: "We would like to ask the fans, staff and management of Portsmouth for their support and patience should this step be taken as we believe it is the only route left open."
One of the parties interested in buying the troubled club has revealed he will not be able to take over the club ahead of Monday's winding up petition.
New Zealand-based businessman Victor Cattermole is considering buying Pompey through his investment group but told The Guardian newspaper: "In an ideal world, we would like to purchase the club before Monday, but we will not be rushed."
Cattermole's group is one of three potential buyers for the south coast strugglers.
Chainrai recently became Portsmouth's fourth owner of the season, taking 90% of the club shares after the previous owner Ali Al Faraj defaulted on loan payments due to him.
Eight points from top-flight safety, Pompey's financial woes have meant their players have been paid late on four occasions this season.
Entering administration would leave them 17 points from safety, with only 12 matches remaining to preserve their Premier League status.
The club are also involved in a separate dispute with former owner Sacha Gaydamak over whether they have missed a deadline in paying a £9m chunk of the £28m they owe him.
The Premier League recently withheld £2m of transfer payments and a £7m slice of TV revenue to divert to Chelsea and Watford for the signings of Glen Johnson and Tommy Smith respectively.
The Fratton Park club are also being sued by former Pompey defender Sol Campbell for £1.7m for unpaid image rights.
Earlier on Monday, another former owner Sulaiman Al Fahim quit as non-executive chairman and offered his 10% stake to the Pompey Supporters' Trust.
Ken Malley, a member of the Football Supporters' Federation who is on the PST working committee, said: "As a fan, I'd rather we didn't go into administration.
"There's an awful lot of small businesses that lose out terribly if we do, so I'm not happy about that side of things.
"I'm just anxious that sooner or later we get some owners that are transparent and attempt to work with the community and the fans.
"If we get owners that do then we will be more than happy to work with them.
"There'll always be a Portsmouth FC, whatever happens. A lot of work has gone on behind the scenes to make sure that a phoenix would rise from the ashes in time for next season."
Posted at 09:05PM Feb 23, 2010 by Kelly Board in Insolvency | Comments[0]
Mortgage Approvals Slump in January
According to the British Bankers’ Association (BBA), the number of mortgages that major banks are agreeing with home buyers suffered a sharp fall in January. The fall is thought to be due to the re-introduction of a lower stamp duty threshold beginning at the start of the year. This led to more buyers borrowing in December.
35,000 new mortgages were approved by the BAA’s members last month, 11,000 less than December. This drop saw the total mortgage lending also plummet to £8bn, this was an eight and a half year low.
Another reason thought to have discouraged would-be buyers is the cold snap that hit the country in January.
The BBA's statistics director, David Dooks said, "It was no surprise to see the January mortgage figures falling back from December, when transactions were being pushed through to beat the end of stamp duty relief.
"There was a natural reaction in the January figures and the bad weather further suppressed market activity," he added.
The BBA’s figures have reaffirmed previous ones published by the Council of Mortgage Lenders (CML) last week. They also said that the government’s temporary stamp duty holiday has caused a rush to buy in December which caused the knock on effect of January’s low rates.
Melanie Bien, of Savills Private Finance, said: "There has been a big hangover from the stamp duty holiday."
And she added: "The very poor weather conditions meant everything ground to a halt."
However, Bien also thinks there will be a recovery in numbers over the next couple of month as the market hits their busiest period.
On a positive note for the housing market, as house prices begin to rise once more, the Newcastle building society has launched a new range of mortgages. These are designed to target first time buyers.
The Newcastle are offering mortgages requiring just a 10% deposit, at an interest rate of 5.95% for a two year fixed rate deal, or 4.% on a two year tracker.
Newcastle have also stated though, that the deals aren’t available to everyone, as funds available for the deals is limited.
Ray Boulger, of the mortgage lenders John Charcol, said: "Both deals are certainly pretty competitive."
Posted at 02:02PM Feb 23, 2010 by Marc Stenton in Mortgages & Housing Market | Comments[0]
Corporate Insolvency Drops Again
Corporate insolvencies have dropped yet again in the UK in January with the North West seeing the most favourable improvement.
The UK as a whole has seen a 24% drop compared to January 2009, whereas the North West has dropped by a massive 37.5%. These new figures come from the information service company Experian show. The drop has seen business insolvencies at their lowest rate since June 2007.
The decrease comes despite insolvencies in Scotland showing a 20.3% increase, this was the only UK region included in the research that has shown any form of increase.
Financial strength also improved in the UK from 79.46 to 81.16, this is an indicator which shows the likelihood of a business failing over the next 12 months. It is measured on a scale of 1 to 100, with 1 being the most likely to fail.
The managing director of Experian company pH has said, “It’s encouraging to discover that not since the current financial crunch started have so few firms become insolvent in a single month.
“While it is too early to predict whether we are fully out of the woods, this does hint at an improvement in the health of UK businesses, something which is reinforced by the financial strength view provided by January’s data.”
The figures have also shown that the highest insolvency rate was amongst companies that employed between 11 and 100 people whereas the lowest rate was in very small firms with 1 or 2 employees.
Also, Breweries and plastics and rubber companies saw the highest insolvency rates for business types.
Posted at 02:23PM Feb 22, 2010 by Marc Stenton in Insolvency | Comments[0]
Petrol Prices Fail to Fall
The AA has stated that petrol prices have stagnated over the past month despite a fall in wholesale cost.
Prices have failed to fall despite being expected to following the wholesale price falling by 2 pence per litre. The average price in the UK has remained at 112 pence per litre.
Thoughts are that supermarkets are responsible for the freeze in prices. In recent years, they have always led price cuts and others have followed suit, however they have been slow to cut their prices this time around.
The AA has also said that long term, UK motorists staring down the barrel of a constant upward trend in their fuel costs.
Meanwhile, the average Diesel price has also remained the same throughout the country at 114 pence per litre.
Brief Respite
The price report conducted by the AA has shown that certain supermarkets have lowered their prices back below the so-called driver tolerance threshold of 110 pence. Although, they have also shown that some motorway service stations, where the price is traditionally slightly higher, motorists are paying up to 10 pence more than the going rate.
Yorkshire and Humberside have shown to be the cheapest places for motorists to fill their tank, whereas Northern Ireland has shown to be the most costly.
"We know from our research that £1.10 a litre is when driver tolerance of higher fuel prices begins to evaporate, and £1.12 may have been sufficient for many car owners to reconsider who they buy their fuel from," said AA president Edmund King.
"The AA fears that the recent fall in the wholesale price is only a brief respite."
The higher petrol prices are thought to be one of the main reasons for the UK inflation rate seeing a sharp rise to 3.5% in January, this is the fastest annual pace it has grown for well over a year.
The recent VAT rise back to 17.5% is also thought to have been a major cause.
Posted at 09:00AM Feb 21, 2010 by Marc Stenton in The Economy | Comments[0]
Retail Sales Nose Dive in January
The cold snap in January looks to have had a huge impact on retail sales in January. Figures have seen their sharpest fall in a year and a half, plummeting by 1.8% between December and January.
A drop in figures had been predicted as wintery conditions hit the nation, however the data from the Office of National Statistics (ONS), shows that the drop has been 3 times quicker than expected. It is thought that the figures may be slightly offset by the inclusion of petrol sales for the first time, as people chose not to use their cars on the treacherous roads.
These figures are adding to already potent concerns regarding the state of the UK economic recovery. Sales by value have risen however, they are 0.9% up on January 2009.
Fuel sales plunged by around 11.1% for the month. With this impact striped out of the figures, retail sales would have fallen by a slightly smaller 1.6%. However, this figure would still have shown a drop more than twice as quickly as experts had envisaged.
Food sales fee by 2.4%, however clothing sales did grow slightly as the cold weather led to higher sales in warm winter clothes.
Potential ‘Double Dip’
Another variable potentially affecting the figure is the VAT increase. January saw it rise back to 17.5% after the drop to 15%. This is thought to have cause many sales to be done in December rather than January in order to avoid this rise.
These figures have been revealed after the UK inflation rate shot to 3.5%, adding to the government have had to borrow a further £4.3bn to cover an unexpected boom in the number of people claiming job seekers allowance.
"January's retail sales figures round off a pretty awful week for news on the UK economy," said Jonathan Loynes, chief European economist at Capital Economics.
"Of course, we knew the January sales figures would be bad after the VAT rise and bad weather. But the drop is even worse than the retail surveys had suggested."
He also said he expects sales to bounce back, however spending growth may slow as people’s wages grow at a smaller rate than price rises.
"At the very least, these numbers provide a very weak platform for sales in the first quarter of this year and therefore raise the chances that the economy may succumb to a double-dip (recession)," Mr Loynes said.
A ‘double dip’ is a term used for an economy in recession return to growth, before contracting again shortly afterwards.
Posted at 09:00AM Feb 20, 2010 by Marc Stenton in The Economy | Comments[0]
Portsmouth Need To Sell To Continue
Portsmouth FC are asking for special dispensation from the Premier League in order to try and fend off their impending winding up order from HM Revenue and Customs. If they cannot mount some sort of funding over the next couple of weeks, they will almost certainly be placed into compulsory liquidation.
The Premier League, along with football governing body FIFA, have legislations in place regarding when clubs can and cannot register and de-register playing staff. Premier League clubs can buy and sell players from 1 June until 31 August, and then once more throughout January.
Portsmouth have written to the Premier League, requesting that they can sell their star players outside of these windows under exceptional circumstances in order to raise some much needed cash. The Premier League has in turn forwarded the request onto FIFA and their answer will be heard shortly.
The clubs chief executive, Peter Storie believes that the immediate sale of player such as Algerian international Nadir Belhadj and the highly rated Kevin Prince-Boateng may be vital to securing their future. Belhadj has reportedly been attracting the interest of European giant Barcelona.
Storie has said, “Of course we don’t want to sell any more players, but we have no choice.
Avram Grant still believes he can keep us up, so he doesn’t want to sell any more players.
But if it’s a question of survival or selling, there clearly is no choice. We have some immediate cash flow issues to resolve.”
Mixed Feelings
Numerous figures throughout the Premier League have had their say on the current Portsmouth situation.
West Ham United co-owner David Gold has said that h would happily loan Portsmouth the necessary funds if they did come and ask him, so long as the deal was sanctioned by the Premier League and Pompey kept up the repayment. Failure to do this however, is one of the main reasons they are in the predicament they are.
Brian Laws, the manager of fellow relegation strugglers Burnley has also had his say. He says that all the clubs in the league have to work to the laws and legislations of the sport and, whilst he sympathises with the clubs current plight, no club should be granted special privileges that others aren’t.
Arsenal manager Arsene Wenger has commented on the likely consequences for the Premier League if Portsmouth are to go out of business. He believes they will lose integrity over the situation, and will no longer be able to claim it has the greatest league in the world if they are to allow a club to be unable to compete.
Meanwhile, Stoke manager Tony Pulis has slammed the Premier Leagues ‘fit and proper persons act.’ This was brought in due to the rise in investors taking over various clubs, they wanted to make sure that all takeovers were done with the best of intentions. Unfortunately however, Pulis believes the Premier League have overlooked the numerous owners Portsmouth have already had this season, who many hold responsible for their crippling debt.
The next few weeks promise to be pivotal in the clubs future.
Posted at 02:08PM Feb 19, 2010 by Marc Stenton in Insolvency | Comments[0]
Red Driving School's parent firm in administration
LVG, the parent company of driving instructor business Red Driving School, the UK's third largest, has gone into administration.
However administrators MCR said they had already received a number of offers and a buyer could soon be unveiled.
LVG employs 400 people in total across three offices, but all the Red Driving School drivers are franchisees.
It also owns two other businesses under the Red brand - Red Instructor Training and Red Fleet Training.
Red Instructor Training trains would-be driving instructors, and Red Fleet Training is employed by companies to test and improve the driving skills of their employees.
'Profitable operation'
LVG's 400-strong workforce includes 200 people at its head office, and 150 spread across two "operational support facilities" in Liverpool and in Billingham near Middlesbrough.
"We are confident a buyer will be secured as the most recent financial reports indicate the business has been quite a healthy and profitable operation." said joint administrator Andrew Stoneman of MCR.
"It only entered administration due to a lack of funding and investment."
Posted at 10:31PM Feb 18, 2010 by Kelly Board in Insolvency | Comments[0]
Burberry Set to Cut Jobs
Fashion designer Burberry has announced that they plan to restructure their Spanish operations after blaming it for the large loss they made in the previous financial year. The new structure will see around 300 redundancies.
Currently, the UK based firm design and sell exclusive collections in Spain that they do not sell in any other country, they are planning on changing this an only selling their global collection after Autumn/Winter 2010.
Burberry has tried to maintain a different image in Spain compare to other countries, they have always operated as middle-to-upmarket whereas in the UK and other countries they have always been a luxury brand.
As a result of the changes, their Barcelona facility is due to be closed later this year. They have announced that once the changes are implemented, their pre-tax profits will remain ‘in line with expectations.’
Cost Cutting
As mentioned, Burberry blamed their recent poor performance on their Spanish brand after reporting a £16.1million loss for the year to 31 March 2009. Around that time, the company were trying to implement a £50million cost efficiency programme.
Further job cut are also expected both in Spain and here in the UK due to the close of their ‘Thomas Burberry’ line. It was announced last month that this may see as many as 290 cuts in the UK along with a further 250 in Spain. This comes despite already reducing their Spanish work force by around a third in the last year.
Posted at 10:22AM Feb 18, 2010 by Marc Stenton in Insolvency | Comments[0]
Reader's Digest UK in administration
Publishing company Reader's Digest, famed for its magazine of the same name, has gone into administration in the UK, putting 117 jobs at risk.
The decision comes after talks between the company's US parent group and the UK Pensions Regulator broke down.
The dispute centred on how to pay down a £125m deficit in its UK pension fund.
Administrators said the UK magazine, which has more than 540,000 subscribers and was founded in 1938, would continue to trade while a buyer was sought.
Reader's Digest had agreed a deal with the Pension Protection Fund to pay off a small part of the deficit, but the regulator vetoed the agreement.
As a deal could not be done, the UK publisher said it would not be able to meet its pension obligations and so could not sustain operations.
Prize draws
The first edition of Reader's Digest was published in the US in 1922.
Having begun as a collection of condensed articles, it started to include original content and is now mostly made up of specially commissioned pieces.
More recently it became known for its prize draws. The administrators said last week's draw took place as scheduled, with the prize fund kept in a trust, but arrangements for future draws were to be reviewed.
The magazine also became associated with free gifts - from pens and alarm clock radios to encyclopaedias - as it looked to lure new readers.
However, Reader's Digest has failed to shake off its image as a publication favoured by older people and in dentists' and doctors' waiting rooms.
Despite attempts to modernise, including launching an online edition, its readership in the UK has fallen dramatically from about two million in the 1990s.
The company says Reader's Digest is the largest-selling subscription magazine in the world. The group also sells books, other magazines, recorded music and home videos.
Cash flow
The pensions crisis is just the latest problem to hit the publisher.
The US parent group, Reader's Digest Association (RDA), filed for Chapter 11 bankruptcy protection last year after struggling with interest payments on a $2.2bn (£1.4bn) debt. It now expects to come out of Chapter 11 shortly.
The UK arm had experienced a cash flow problem for some time, a company spokesman said, and this had been exacerbated by higher-than-normal contributions to the severely underfunded pension fund.
Its more than 100 UK employees are employed in Swindon and Canary Wharf.
Posted at 09:00PM Feb 17, 2010 by Kelly Board in Insolvency | Comments[0]
