UK economic growth unexpectedly revised up to 0.4%

The UK economy emerged from recession in the fourth quarter of last year at a faster pace than previously estimated, official figures have shown.

Data from the Office for National Statistics said the economy grew 0.4% between October and December in 2009.  This was faster than the previous estimate of 0.3% growth during the quarter.  The ONS said the upward revision was due to higher output from business services, construction and agriculture.

For the year 2009 as a whole, GDP contracted by 4.9%, the ONS said. The previous estimate had been for a contraction of 5% over the year. GDP in 2008 grew 0.5%.  Howard Archer, analyst at IHS Global Insight, said the GDP figures were "obviously a very welcome development".

"It suggests that the economy ended last year with a little bit more momentum than previously thought," he said. "But it still doesn't fundamentally change our view that recovery is likely to be gradual and bumpy going forward."

The government's temporary cut in VAT and introduction of the car scrappage scheme have in part helped the growth figures. But analysts said the better-than-expected data was also due to companies re-stocking at the end of 2009 after running down their inventories at the height of the recession.

However, government stimulus and the benefits of re-stocking will eventually slow, which is why analysts remain cautious about the economic outlook.

Jonathan Loynes, economist at Capital Economics, said the headline GDP numbers were good news. But he warned: "There are some less encouraging aspects to the figures too. Growth in Q4 was still heavily reliant on public spending and inventories, both areas which are likely to be weaker in coming quarters.  Overall, some welcome news. But the big picture of a fragile and unbalanced recovery is unchanged."

Separate figures showed Britain's current account deficit narrowed by more than expected over the quarter to £1.684bn from £5.912bn, the lowest since the first quarter of 2008.

Posted at 08:28PM Mar 31, 2010 by Kelly Board in The Economy  |  Comments[0]

Jarvis Staff Facing Job Cuts

About 1,100 jobs are to be cut at Jarvis by the administrators who are now running the rail maintenance firm.

Deloitte said that in the absence of further funding, it was not possible to continue operating parts of the group.

The redundancies will affect staff at the head office in York, as well as in Doncaster, Glasgow, Leeds, Newcastle and Peterborough.

Only the facilities management part of the group will continue trading as normal, a statement said.

There has been "a significant amount of interest" in this business, Jarvis Accommodation Services, Deloitte said.

The move means that Jarvis Rail, which is involved in rail engineering and Fastline, which supplies rail repair equipment, will cease operating.

Last week Jarvis, which employed 2,000 people, called in administrators after bank lenders refused further credit.

This followed the breakdown of talks with Network Rail over a proposal that Stan Herschel, regional organiser at the RMT union, said would have enabled the staff to continue rail renewal work.

Mr Herschel earlier told the BBC: "It is not as if extra money were needed. The contracts and the money for the work is already in place.

"We asked that Network Rail simply pay on time and underwrite the future work while Deloitte looks at the Jarvis business. If we don't do the work, someone else has to.

"The work must be done. It's a safety issue. The majority of the money Network Rail is spending on rail maintenance is, after all, taxpayers'." Mr Herschel said.

He said the RMT leadership was seeking an urgent meeting with Lord Adonis, the Transport Minister.

Last year, Jarvis's chairman, former Conservative MP Steven Norris, warned that a reduction in spending by Network Rail was hurting the company.

Network Rail rejected Mr Herschel's criticism. "We did not push Jarvis into administration. We are not responsible for their problems," said a Network Rail spokesman.

He added: "The maintenance work will be done, no question of that. It just might not be done by Jarvis. We have half a dozen similar contractors, and have no problem with them." Other contractors include Babcock and Balfour Beatty.

Network Rail is involved in a bitter industrial dispute with the RMT, with a strike planned for next week.

Jarvis came close to collapse in 2004 after running up huge debts on over-ambitious bids for Private Finance Initiative contracts.

The company had sold off several operations to concentrate on rail maintenance, leaving Network Rail as by far its biggest customer.

 

Posted at 01:57PM Mar 31, 2010 by Marc Stenton in Insolvency  |  Comments[0]

Quinn insurance in administration

A company owned by a County Fermanagh businessman has been placed into administration at the High Court in Dublin.

Quinn Insurance Group, which has offices in Cavan and Enniskillen, is owned by Sean Quinn.  Joint administrators were appointed after the Financial Regulator expressed serious concerns about the finances of the company and how it was being run.  The Quinn Group said all of its other businesses were unaffected by the move.

SDLP MLA Tommy Gallagher said the group was a huge employer in the west of Northern Ireland.

"It's the mainstay of the economy here," he said. "A number of people work in Enniskillen, but a large number of them travel across the border to work in Cavan as well.  The key thing for this area is that the insurance business is sustained and the jobs are protected."

Quinn Insurance also operates Quinn Insurance UK.  It employs almost 2,800 people in Ireland and the UK out of more than 8,000 workers in the wider Quinn Group across Europe.  The regulator has ordered this wing of the company to stop writing new business in the UK.

"Existing UK policyholders will not be affected by this decision as existing policies will remain valid. Customers can make claims in the normal way," the regulator said.  "The effect of this action is to prevent Quinn Insurance Limited suffering further financial losses from its currently unprofitable UK business."

Lawyers for the regulator told the court it had been discovered that subsidiaries of the company had made guarantees in relation to the group's assets in 2005 which has reduced the value of the assets by 448 million euros.

Some directors of Quinn Insurance were unaware of the guarantees, lawyers for the regulator said.

The court heard the company had significantly breached its solvency ratios. It had moved from a position where it had an excess of assets over liabilities of more than 200 million euros to a position where it had 200 million euros of liabilities over assets.

In a statement released on Tuesday, the Quinn Group confirmed Quinn Insurance Limited had been placed in "provisional administration".

"This is deeply disappointing in the context of the continued profitability of the group which is currently in excess of €20m per month," the statement said.

"However, the regulator has seen fit to take this action in the context of a perceived depreciation of the underlying assets of Quinn Insurance Limited.

"We feel that this issue could have been resolved to the benefit of all in a relatively short space of time and we will be working with the regulator and the provisional administrators to resolve all outstanding matters.

"The business continues to trade as a going concern with the objective of ensuring a financial restructuring to safeguard the overall business in the longer term."

Posted at 07:53PM Mar 30, 2010 by Kelly Board in Insolvency  |  Comments[0]

A1 GP administrators put Ferraris on the market

David Hampson of Dove Bid Valuation Service has been instructed by Griffins, the administrator, and Bridge Business Recovery, the liquidator, to market the assets of A1 and A1 Grand Prix Operations on behalf of creditors in a private treaty sale - in an effort to keep the popular race series alive.

The assets include 20 of the latest Ferrari engined single seat race cars (2008), 14 of the earlier Lola race car rolling chassis (2005) and all of the support equipment, including the Maserati Quattroporte Sport GT and Ferrari 599GTB track safety cars.

Hampson said: “Offers are currently being invited for the whole asset package, including the intellectual property rights to the A1 GP series logos and brands.”

A1 GP, founded in 2004, is a single manufacturer, open wheel formula racing series ratified by the Fédération Internationale de l'Automobile (FIA), in which identical cars compete against each other. The series is nation-based and included high profile drivers such as Nelson Piquet Jr., Vitantonio Liuzzi and Sébastien Buemi, who had previously raced in Formula One. 

Tim Bramston, a partner with Griffins, the administrator of A1 Grand Prix Operations, said that he was aiming to have a purchaser of the assets in place by the end of this month. 

Bramston said: “We took the step of administration in order to re-unite the Ferrari powered cars with the intellectual property rights to use the brand. The vehicles have now been laid out for inspection in a single location and discussions are already underway with a number of interested parties.” 

Tony Murphy, a partner at Bridge Business Recovery, the liquidators of A1 GP's parent company, A1 Holdings Ltd said that the intention was to market the series as a complete package. 

“We are highly confident that a buyer can be found for the combined pool of assets and with it the prospect of the A1 GP series returning to our TV screens at some point in the near future,” Murphy said.

Posted at 06:49PM Mar 29, 2010 by Kelly Board in Insolvency  |  Comments[0]

House Sales Improve in February

HMRC have said that the number of homes sold in the UK saw a rise in February.

58,000 home sales were completed last month, this was a 14% increase on January’s figures.  The rise compared with February 2009 was also substantial, however the numbers are still a long way down on the 103,000 sales that were completed in December.

December’s boom was due to people rushing through the completion of deals in order to beat the reintroduction of the lower stamp duty threshold, which was implemented at the end of the year.

The surge in sales at the end of last year appears to have caused a lull in sales during January and February, this was exacerbated further by the cold weather in January that effected travel all over the company limiting peoples chances of moving.

According to both the Halifax and Nationwide mortgage lenders, prices fell in February after rising gently for most of the preceding year.

Earlier this week, figures from the British Bankers' Association (BBA) suggested that the property market would stay subdued for some time.

It reported that its members, who account for about 70% of all mortgage lending, approved just 35,275 new mortgages with house buyers last month.

These are widely regarded as a good indicator of short-term trends in lending and were barely above the 35,154 approved in January.

Chancellor Alistair Darling took action in his Budget this week to keep activity in the housing market ticking over.

For the next two financial years, first-time buyers will not have to pay the 1% stamp duty that would normally be levied on purchases worth between £125,000 and £250,000.

 

Posted at 09:22AM Mar 28, 2010 by Marc Stenton in Mortgages & Housing Market  |  Comments[0]

Retail Sales Pick Back Up

Retail sales picked up in the UK in February after a woeful start to 2010 according to the Office of National Statistics (ONS).

A 2.1% rise will come as refreshing news to the retail market after a slump of 3% in January, caused mainly by the cold snap that hit the country throughout January.  The figures dropped 3% in that period.

The rise has been expected however, as there have been no similar unforeseen events in February that could have disrupted the numbers.

"Sales in January had been hurt very badly by the weather and the reintroduction of VAT," said Sarah Hewin, senior economist at Standard Chartered.

"We have to be cautious about saying that consumption is on an upward trend, however. Overall spending is still relatively weak."

A more negative note comes from the figures comparative with 12 months previous, sales rose by 3.5%, however a much more substantial rise had been expected by the majority of analysts.

In terms of value, sales for February were up 1.9% compared with January, or 5% up on a year ago.

 

 

Posted at 11:09AM Mar 27, 2010 by Marc Stenton in The Economy  |  Comments[0]

House Price Inflation Up Last Month

The Land Registry has confirmed that house price inflation picked up throughout February in England and Wales despite a slight fall on prices over the course of the month.

Prices fell marginally by 0.3% last month; however they remained 7% higher than at this stage last year due to the vast dip in the market at this point in 2009.  This showed further growth on top of January’s figures when the prices were 5.2% higher than the same period last year.

"[This] points towards a strengthening in the housing market," the Land Registry said, adding it was the fourth monthly rise in a row.

£164,455 is now the average price of a home in England and Wales

"The report does, however, note significant regional variations with London at the top of the tree, showing an annual increase of 11.9%, followed by the South East at 9.4%," said Simon Rubinsohn, chief economist at the Royal institution of Chartered Surveyors (Rics).

"By contrast, prices in the North East still appear on average to be lower than where they were in February 2009.

"Looking forward, the modest pick-up in buyer enquiries detected in the latest RICS housing market survey is likely to be reinforced by the decision in the Budget to remove stamp duty on property purchases by first-time buyers," he added.

In this week's Budget, Chancellor Alistair Darling announced that stamp duty of 1% on properties worth between £125,000 and £250,000 would be removed for the next two years for first-time buyers.

 

Posted at 03:04PM Mar 26, 2010 by Marc Stenton in Mortgages & Housing Market  |  Comments[0]

Jarvis to call in administrators

Rail maintenance company Jarvis has announced that it will go into administration after lenders refused to offer the company further credit.

The company has seen big reductions in its business since the beginning of the recession in 2008.

Jarvis said its creditors were now not prepared to offer it the money it needed to continue as a going concern.

The company said it had no option but to enter administration, and had asked for its shares to be suspended.

"[The company] has been impacted by economic conditions generally and, in particular, the very considerable reductions in rail and plant work volumes," Jarvis said in a statement.  "Trading conditions have been, and continue to be, difficult...following negotiations with the company's secured lenders, it has today become clear that sufficient support will not be extended to the company to enable it to continue trading as a going concern.  As a consequence, the directors now have no option but to take steps... to place the company, and certain of its subsidiaries, into administration."

Spending cuts

The decision means that the jobs of more than 2,000 Jarvis employees are at risk.

Bob Crow, general secretary of the RMT union, which represents rail workers, described the news as "another hammer blow for the rail industry" and blamed "Network Rail's cuts programme and the scrapping of essential renewals work" for Jarvis's collapse.

Jarvis's businesses involve rail maintenance contracts and rail freight services. Last year, the company's executive chairman, the former Conservative minister Steven Norris, complained that a reduction in spending by its main client Network Rail was hitting the company hard.

"It has been a painful process to absorb the impact of Network Rail's sudden reduction in workload," Mr Norris said.

Network Rail denied it was responsible.

"It's never easy to see one of our suppliers cease trading, especially when there is plenty of work available and investment in the railway is at historically high levels," said Simon Kirby, director of investment projects at Network Rail.

He added that he would be working closely with the administrators to ensure that work due to be undertaken by Jarvis would still go ahead. 

Posted at 08:09PM Mar 25, 2010 by Kelly Board in Insolvency  |  Comments[0]

The 2010 Budget

Chancellor Alistair Darling warned voters in his Budget not to put the recovery in jeopardy in the general election by voting against Labour.

The Budget has shown that a series of tax increase for the better are to be introduced as well as a cut on stamp duty for first time house buyers.

Darling cut this year’s forecast deficit by £11bn from the initial £178bn before insisting that labour had been ‘right about the recovery.’

The Tories however have hit back, describing the state of the economy Labour has put us in as ‘a complete mess’ and that Labour have also ‘done nothing to clear it up.’

 Furthermore, Darling has been accused of stealing Tory policies by Conservative leader David Cameron with regards to the changes in stamp duty and the imposed extra tax on strong cider.

Cameron also added, in a dig at Gordon Brown that, “The biggest risk to the recovery is five more years of this prime minister.”

Meanwhile, Nick Clegg, Liberal Democrat leader has slammed both Darling and Cameron saying the pair are ‘in denial’ about the scale in which spending cuts need to be enforced whilst completely dismissing the Budget as nothing more than ‘a political dodge.’

"This isn't the preface to a new government but a footnote to 13 years of failure," he added.

A leading economics expert has said of Darlings message that, "it's bad, but not as bad as we thought - and not nearly as bad as it would have been under the Conservatives".

Darling has set out the battle lines for the upcoming election by stating, “The choice before the country now is whether to support those whose policies will suffocate our recovery and put our future at risk.

"Or support a government which has been right about the recession, right about the recovery, and is right about supporting the people and business of this country to build a prosperous future."

The cut in stamp duty for first time buyers on house up to £250,000 in value has been made possible by the increase to 5% imposed on houses with a value of £1m or more, stamp duty on first time buyers will be suspended for two years.

A series of other measures introduced targeting high earners were also unveiled , this is likely to go down well with Labour MPs that are fighting an election next month.

Darling said that the inheritance tax threshold is to be frozen for a further four years, this is in order to aid covering the cost of care for older people.

He also announced that there will be a cut in tax relief on pensions for those that have an income above £130,000 whilst an end will be brought to some personal tax allowances on people with an income of more than £150,000.

The government will also be sticking to a 2.2% real terms rise on spending during 2010, however Darling has warned that cuts after the start of next year will be the ‘toughest for decades.’

The Conservatives have been demanding an earlier cut, however darling has hit back at this saying it would be both dangerous and wrong whilst risking derailing the recovery.

"The task now is to bring down borrowing in a way which does not damage the recovery or the frontline services on which people depend," he said.

"The challenge now is how we invest as a country to support the industries of the future and allow the talent of the British people to flourish."

A crackdown on tax evasion also received heavy approval from Labour MPs, this is to be achieved through new agreements that have been put in place with the governments of Dominica, Grenada, and Belize – home of Tory ‘non dom’ donor Lord Ashcroft.

The Treasury is insisting all of the new spending measures are fully funded from existing budgets and not paid for by the £11bn less than expected borrowing.

The stamp duty cut is set to cost the Treasury £290m in 2011-12 after initially costing £230m in 2010-11, this will be funded by the increased stamp duty band on £1m properties that will be implemented next April.

Darling also said that he is planning to stagger the implementation of the increase on fuel tax increase, the intended 3p rise will now not be completed until January, with slight increases now expected in April and October before completing in January.

The costliest measure included in the Budget in due to the planned continuance on the winter fuel allowance for pensioners, with a £600m pledge going to that cause.

One of the changes will come into effect this weekend, with a rise in tax on beer, wine and spirits coming in at midnight on Sunday. Amongst these is a 10% tax increase on cider and alcopops, further increases will also be brought in on high strength cider.  Alcohol duties will also increase by 2% above inflation for two further years from 2013.

Tobacco duty also increased yesterday by 1% above the inflation rate before a following increase by 2% in real terms each year until 2014.

Further changes with aim of boosting business are also going to be brought in, business rates will be cut for one year from October onwards according to Mr Darling.  Due to this, more than half a million firms will benefit from a tax reduction, meanwhile state own banks will be forced to lend more to businesses.

Darling will also bring in a one-off £270m payment that will fund an additional 20,000 university places.  He also extended a 6 month job or training guarantee for under 24 year olds through to March 2012.

He also stated that stronger than expected tax receipts meant that government borrowing would be £167bn this year - £11bn down on the £178bn he predicted in the pre-Budget report in December.

He said that the deficit would continue to fall faster than previously forecast - dropping to £74bn in 2014-15, down £8bn on his earlier prediction.

The chancellor said he was standing by his forecast that the economy would grow by 1 to 1.5% this year although he slightly downgraded his prediction for next year to 3 to 3.5% compared to the 3.5% in the pre-Budget report. His forecast for the following years is unchanged.

He also revealed that the £2bn proceeds of a bank bonus tax was more than three times what the Treasury forecast in his pre-Budget report.

And he unveiled a guarantee to give everyone a basic bank account, giving up to a million more people access to bank accounts over the next five years.

Some of the more controversial measures in the Budget may not make it into law before polling day, which could be just six weeks away.

But the planned cut in stamp duty would probably stay in place whoever wins the election, as it is similar to existing Tory policy.

He also outlined plans to boost future economic growth, with billions invested in digital jobs, broadband for all, high-speed rail and biotech industries, using money from existing budgets.

If the Conservatives win the election they will produce an "emergency Budget" within 50 days of taking office which could reverse many of Mr Darling's measures.

The chancellor did not unveil any new tax increases, with the new 50% top rate of income tax expected to come into force from April and thresholds frozen.

Giving its reaction to the Budget, the SNP said Mr Darling should have scrapped the fuel duty increase altogether, adding: "The Labour government have shown they would rather save face with the City than support Scotland's communities."

Plaid Cymru's leader at Westminster, Elfyn Llwyd, said: "This unfair fuel tax is another example of an uncaring, out of touch government."

Business groups broadly welcomed the measures aimed at boosting enterprise.

CBI director general Richard Lambert said: "This was a clever, political budget. However, anxiety remains on how the deficit is going to be paid down, and the growth forecasts for 2011 and beyond are still on the optimistic side."

Derek Simpson, joint leader of the Unite trade union, said: "The last Budget before the election shows leadership and responsibility during difficult times."

Lord Pearson, leader of the UK Independence Party, said: "The three old discredited parties who are debating our economy have once again avoided the elephant in the room, in any discussion about our economy which is of course the cost of our European Union membership."

Green Party leader Caroline Lucas welcomed Mr Darling's plan for a "green investment bank" but said overall the Budget was "a wasted opportunity to seriously put fairness at the heart of the agenda".

Posted at 02:06PM Mar 25, 2010 by Marc Stenton in The Economy  |  Comments[0]

Mortgage lending still subdued, say banks

Mortgage lending to house buyers is still subdued, according to the British Bankers' Association (BBA).

Its latest figures show that the number of mortgages approved in February by the big banks was 35,275.

This was only slightly higher than in January when 35,154 loans to home buyers were approved.

The BBA said the market was still depressed by a rush by buyers to beat the end of the stamp duty holiday at the end of last year.

"House purchase approvals were some 16% higher than in February last year but still well below the figure in December as the aftermath of the year-end change to stamp duty was still working through," said David Dooks of the BBA.

"The average value of house purchase approvals (£140,800) was 11.5% higher than a year ago.

"Volumes of remortgaging and equity withdrawal approvals continued to be lower than a year earlier," he added.

In February 2009, mortgage approvals stood at 30,457 as lending started to recover steadily through the year.

That upward trend has been brought to a halt, at least temporarily, as a result of the stamp duty threshold being brought back down from £175,000 to £125,000.

Some of the plans to restrict mortgage lending, put forward last year by the Financial Services Authority (FSA), have split the mortgage lending industry.

The FSA has been consulting on its plan to ensure that all lenders check that their borrowers can afford to take on and repay their mortgage loans.

"Our proposal to make income verification a requirement for all mortgages generated a polarised reaction," the FSA said in its feedback document.

"Objections were raised mainly by large lenders, who argued that the proposals would impact negatively on the self-employed, which will trigger an increased usage of fraudulent income documentation".

Posted at 08:03PM Mar 24, 2010 by Kelly Board in The Economy  |  Comments[0]

Rent Deadline Threatens Retailers

The high street is bracing itself for a wave of retail collapses this week as a huge rent deadline looms.

Wednesday will be one of four so-called “quarter days” where rents have to be paid three months in advance, a system seen by many retailers as archaic.

Richard Fleming UK head of restructuring at the KPMG, said: “The March rent quarter date may be the nail in the coffin for retailers who have not traded well over the past few months.

“Creditors effectively have to decide now whether to support businesses now through to the end of the year."

High profile retail magnates including Topshop boss Sir Phillip Green have been lobbying the government for a change to the system, but until it is overhauled this rent deadline could spell the end for many business who are already teetering on the brink due to recessionary pressures.

Many retailers are currently in the process of negotiating with landlords a switch to monthly rent payments to bolster cash flow. Other solutions include disposing of empty or underperforming stores, through company voluntary arrangements (CVAs).

Rarely seen until the recession, CVAs have become more common as businesses face the threat of failure. They allow companies under threat of administration to renegotiate debts with unsecured creditors but some landlords regard them as a tool to escape individual lease liabilities.

 

Posted at 04:28PM Mar 24, 2010 by Marc Stenton in Insolvency  |  Comments[0]

UK inflation falls sharply in February

The Consumer Prices Index eased to 3pc from a 14-month high of 3.5pc in January, according to the Office for National Statistics (ONS).  Prices for items such as petrol and household goods saw smaller increases than 12 months earlier, while British Gas also cut gas prices.  The ONS added that toys and games also dampened inflation this year as prices were unchanged compared with a big increase in costs a year ago.

But factors such as the VAT cut – and subsequent return to 17.5pc in January – have introduced volatility into the monthly figures, as well as the desperate measures undertaken by firms to survive the worst of the recession last year.

Far less discounting by retailers this year than 12 months ago, when most shops were slashing prices to tempt in consumers, put upward pressure on the cost of living in January, alongside the rise in VAT.

Howard Archer, economist at IHS Global Insight, said: "The lower inflation is, the better for government spending plans."

However, he cautioned that it was also "probably a sign that underlying demand remains pretty weak".

Meanwhile, prices across the board rose at a far lower rate between January and February than during the same period last year, when CPI inflation surged at a record monthly rate of 0.9pc.

Petrol prices rose by a record 3.2p per litre a year ago to stand at 89.5p, although this time round average prices rose by a far smaller 0.9p. Food and drink costs also rose by less than a year ago.

The only major upward impact on inflation this month came from women's clothing, where prices rose by more than a year ago.

Today's fall in CPI is slightly bigger than the drop to 3.1pc expected by the City.

The Bank of England expects inflation to continue to fall to below its 2pc target in the months ahead, as the economic slack opened up by the recession drags down prices.

Posted at 10:56PM Mar 23, 2010 by Kelly Board in The Economy  |  Comments[0]

Portsmouth Administrator Previously Criticised

The administrator of debt-ridden Portsmouth football club has previously been criticised by a judge for “manifestly inappropriate conduct” and failing to “meet the standard to be expected of a reasonably competent insolvency practitioner” during a recent liquidation, it has been revealed.

Last week HMRC rubber-stamped the validity of Portsmouth’s administration and Andrew Andronikou’s appointment by Balram Chanrai after initially questioning his independence.

HMRC, which is owed £11.6m in PAYE and VAT, examined Andronikou’s recent past when preparing its legal challenge.

 The most damaging criticisim of Andronikou is within a High Court battle in December 2008. The case, Tradition (UK) Ltd v Ahmed & Ors (2008), details an appeal judge overturning an attempt by Shami Ahmed, the founder of clothing chain Joe Bloggs, to avoid bankruptcy through an individual voluntary arrangement (IVA), handled by Andronikou.

The judgment said: “Mr Andronikou’s conduct in these proceedings, particulary in relation to evidence filed by him on behalf [of Ahmed and his family] was manifestly inappropriate”. The judge also found that Andronikou “did fail to meet the standard to be expected of a reasonably competent insolvency practioner.”

 Andronikou has also come under fire before in the courts in relation to allegedly negligent advice. The case Griffin v UHY Hacker Young & Partners (A Firm) [2010] involves an allegation that Andronikou failed to advise his client that the winding up of his drinks company would prohibit him from becoming a director or being involved in the management of a future business. The judge ruled in the case: “It would have been the easiest thing in the world for Mr Andronikou to advise Mr Griffin to legitimise what he was doing. It is specifically alleged that he was negligent in failing to do so. Mr Griffin says he would have acted upon such advice.” 

Andronikou is also embroiled in an HMRC investigation into the volutary liquidation of Aqua, a London-based commercial laundry company that serviced various top hotels. HMRC disputed a £500,000 debt which the sole director claimed his insolvent company owed him. Last May Andronikou agreed to be replaced as the liquidator ahead of a High Court hearing. 

Stephen Hunt, the new liquidator from Griffins chosen by HMRC, has confirmed that he is “investigating the director and Andronikou’s conduct in the run-up to the insolvency.”

HMRC is separately prosecuting former Portsmouth chief executive Peter Storrie, and Harry Redknapp, former chief executive, for alleged tax offences.

 

Posted at 02:17PM Mar 23, 2010 by Marc Stenton in Insolvency  |  Comments[0]

Rent deadline threatens retailers

Wednesday will be one of four so-called “quarter days” where rents have to be paid three months in advance, a system seen by many retailers as archaic.

Richard Fleming UK head of restructuring at the KPMG, said: “The March rent quarter date may be the nail in the coffin for retailers who have not traded well over the past few months.

“Creditors effectively have to decide now whether to support businesses now through to the end of the year."

High profile retail magnates including Topshop boss Sir Phillip Green have been lobbying the government for a change to the system, but until it is overhauled this rent deadline could spell the end for many business who are already teetering on the brink due to recessionary pressures.

Many retailers are currently in the process of negotiating with landlords a switch to monthly rent payments to bolster cash flow. Other solutions include disposing of empty or underperforming stores, through company voluntary arrangements (CVAs).

Rarely seen until the recession, CVAs have become more common as businesses face the threat of failure. They allow companies under threat of administration to renegotiate debts with unsecured creditors but some landlords regard them as a tool to escape individual lease liabilities.

Posted at 07:54PM Mar 22, 2010 by Kelly Board in The Economy  |  Comments[0]

UK Recovery to be 'Sluggish'

Economists are predicting that the recovery in the UK economy this year will be ‘sluggish.’

The recovery is expected to be subdued until at least the middle of next, whilst it will grow around 1% this year, according to industry body CBI.

Furthermore, economists at the Ernst and Young ITEM Club have criticised the government’s forecasts for the economy, branding them too optimistic.  The government is forecasting a growth of 1.25% this year, progressing onto 3.5% in 2011.

These forecasts may be revised however by Chancellor, Alistair Darling, in this week’s budget.

"[The chancellor's] projections for future years are too bullish - based on a strong pick-up in consumer spending that is unlikely to materialise," said Peter Spencer, chief economic adviser to the ITEM Club.

Meanwhile, CBI have said that they expect the economy to grow by 2.5% next year.

"The economic outlook is improving, but the lack of a clear drivers for growth will make for a bumpy ride in the months ahead," commented Richard Lambert, director general of the CBI.

"[We expect] the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year."

Both of these groups have now called for more detail to be given in coming years regarding the government’s plans to cut the deficit in the budget.

In order to fill the deficit, the borrowing required is expected to be less than the originally predicted £178bn, the figure that Darling set down in last year’s pre-Budget report.

According to the ITEM club, Darling has the capacity to make a total of £25bn in cuts over the next five years in order to tackle the budget deficit without impacting upon the UK’s economic prospects.

The CBI called for a "credible plan" to balance the budget by 2016 in order to reassure international investors.

On Sunday the chancellor repeated his warning that there would be "no giveaways" in Wednesday's budget.

"The mood of the times is not for giveaways," he told the BBC.

"People are not daft, they know perfectly well that we need to get borrowing down and secure [economic] recovery."

Posted at 04:10PM Mar 22, 2010 by Marc Stenton in The Economy  |  Comments[0]