The Haven Heading for Administration
Whitehaven Rugby League Club are looking to place the company into Administration over the coming days in a bid to halt an impending winding up order regarding a £64,000 debt to HMRC.
It is understood that HMRC have not yet issued a winding up petition against the company, but have threatened to do so if they are not paid in full very soon.
However, at the club’s annual general meeting last night, it was announced that the club was facing up to debts totalling around a quarter of million pounds and simply does not have the funds to pay HMRC.
The board is expected to file its notice of intent to enter Administration today in a bid to allow time for a buyer for the club to emerge.
“It will stop the clock on HMRC for 10 days,” said Haven chairman Dick Raaz.
“During those 10 days we would have to find a potential administrator, which we have already done and find potential buyers with a credible likelihood of bringing the club out of administration.”
The AGM heard that the Haven board inherited debts of £305,576 when it took over in early 2009, increasing gross income by £115,000 over the year and cutting the debt slightly to under £282,000. Last year’s operating loss was £21,635, down from £92,799 in 2008.
Home attendances have plummeted this year, hitting income and Haven were relegated from the Championship, which also knocked advertising revenues.
Posted at 04:22PM Aug 31, 2010 by Marc Stenton in Insolvency | Comments[0]
Directors Blaming Accountants for their Failings
Following an increase in the number of limited companies becoming insolvent, accountants have been warned to be more aware of the financial health of their clients to avoid being blamed for the insolvencies. This follows a recent spate of limited companies facing insolvency and blaming their accountants for poor advice.
According to Wilkins Kennedy, most of the directors of the limited companies had taken illegal loans or dividends from the company, although almost all the directors blamed the advice of their accountants for doing so.
Keith Stevens, of Wilkins Kennedy said, “In almost every recent case, the director said ‘my accountant told me to do it’ or ‘I did it because my accountant told me to.’”
Stevens also confirmed that there was a real possibility of accountants having to face legal action, which has resulted in them wanting to meet and discuss the situation. Accountants should be aware of their clients’ activities and accounts to ensure they do not end up with legal claims as a result of giving bad advice.
Wilkins Kennedy has also stressed the importance of limited company directors and owners taking responsibility for their actions, and not heaping the blame on their accountants. Company owners and directors have a duty to show they acted in a responsible manner.
Insolvency practitioners have been approached by HM Revenue & Customs to investigate the problem of illegal dividends and loans because HMRC is concerned that companies are using this method to avoid payment of tax debts. An illegal dividend or loan is when the dividend is taken out of a company without sufficient profit to cover the amount. It is illegal to remove assets for yourself and leave creditors unpaid.
Posted at 03:43PM Aug 26, 2010 by Marc Stenton in Insolvency | Comments[0]
Clothing Company Struggling
American Apparel, the clothing chain known for its racy advertising and eclectic leggings, is on the brink of bankruptcy it has been revealed.
The fashion retailer has warned it might not be able to continue trading because of debts and trading losses.
Unless sales in American Apparel's 279 worldwide stores suddenly improve (and at present they are down 16 per cent on last year), the firm will breach the terms of an $80m loan provided by the British company Lion Capital in March 2009 to rescue it from another financial crisis.
That would force it into receivership, threatening the jobs of 10,000 employees in 20 countries.
The group’s share price dived when it emerged that Deloitte & Touche quit as American Apparel’s auditors earlier this summer, after allegedly finding “material weaknesses” in the firm's financial controls.
As a result the company is facing an investigation by the US attorney's office regarding why the Deloitte & Touche resigned. A newly appointed auditor Marcum is completing a review of the accounts.
American Apparel, which has more than 280 stores worldwide, and 14 in the UK, have now warned of losses of up to $7m (£4.5m) for the three months to June.
And the retailer, which makes all its clothing in downtown Los Angeles, now has debts totalling $120m, admitted that it is currently losing money at a rate of nearly $30m a year.
The fashion retailer previously hit headlines when 2,000 shoppers descended on a London store sale prompting a rummaging riot which injured 10 police officers.
The group has attracted controversy since its creation. Dov Charney, the company's chief executive, also its largest shareholder, has been repeatedly sued for sexual harassment and the company has faced several problems in recent months from underperforming results due to mass lay-offs of illegal workers.
Last year, film director Woody Allen successfully sued American Apparel for $3.3m after it used his image in an advert without permission.
Posted at 04:00PM Aug 25, 2010 by Marc Stenton in Insolvency | Comments[0]
Fall in Corporate Insolvencies
There continues to be less corporate insolvencies than previously expected, with 33 per cent fewer recorded during July than the year before, according to Experian.
There continues to be less corporate insolvencies than expected, with 33 per cent fewer recorded during July than the year before, according to Experian.
According to the firm 1,542 UK businesses failed last month, compared to 2,312 insolvencies recorded in July 2009. This equates to an insolvency rate of 0.08 per cent of the business population in July 2009, compared to 0.12 per cent the year before.
Max Firth, managing principal of pH, an Experian company, said, “July’s data indicates that the SME population is faring much better in terms of insolvencies than it did this time last year, however, increasing failures at the top end of the market demonstrates clearly that there is a still a great deal of uncertainty.
"Given this ever changing picture, it is vital that organisations ensure they understand and proactively manage the risk that those they do business with exposes them to.”
All regions saw year-on-year falls in insolvency rates, with Scotland overtaking the South East as the region with the lowest rate of insolvencies.
The North East, which has been particularly exposed to the downturn due to its manufacturing community, and Wales saw the biggest improvements with insolvency rates halving over the last year. Just 0.09 per cent of businesses in the North East failed in July 2010, compared to 0.17 per cent in July 2009, while Wales saw rates decline from 0.14 per cent to 0.07 per cent.
The improvements in the North East meant that it is no longer the worst performing region. Greater London continues to be the region where businesses had the lowest financial strength score at 79.75.
The financial strength of firms in the leisure and hotel industry rose from 77.95 in July 2009 to 78.97, the biggest improvement of any sector. However, this sector has recently been stricken by the rash of tour operators toppling in August. Holiday firms Goldtrail, Sun4U and Kiss Travel have all recently collapsed which will affect Experian's rating for August.
The largest companies, those with 501 or more employees, was the only size business to see an annual increase, with the insolvency rate leaping to 0.17 per cent from 0.11 per cent in 2009.
At 80.93, the financial strength score of UK businesses in July was marginally higher than the 80.61 recorded in July 2009, and up slightly on June 2010 (80.83). However, it remains down on the 12 month high of 81.37 recorded in December 2009.
Posted at 03:46PM Aug 20, 2010 by Marc Stenton in Insolvency | Comments[0]
Another Travel Company Fails
Following last summer’s demise of XL Airways and latterly Goldtrail, another UK tour operator has gone into insolvency proceedings.
Birmingham based firm Sun4U have announced they have ceased trading on their website, leaving around 1200 holidaymakers once again stranded abroad, sparking fears more travel companies could be about to face the same fate.
A message posted on the company's website said, "Sun4u Limited has ceased trading. For further information please contact the Association of British Travel Agents’ claim handlers CEGA on 01243 621 500."
Sun4U are one of many who fell victim to the totally unforeseen ash cloud disaster earlier this year. Travel giant TUI, owner of Thompson and Thomas Cook, issued a profit warning to the industry yesterday, after they announced the ash cloud had cost them around £105m.
The travel industry was already facing a difficult year before the cloud after the Met office’s announcement earlier this year that the UK was in for a ‘Barbeque Summer,’ prompting people to opt to stay home and save money.
Vernon Dennis, partner at law firm Howard Kennedy has said, "With the economic outlook for consumers remaining so uncertain it could be anticipated that due to falling demand and the emergence of the 'staycation' there would be some business failures in the travel sector come the autumn.
Sun4u is thought to have employed about 40 staff at its call centre, with a turnover of about £20m and approximately 50,000 customers a year.
Travel organisation ABTA has advised that anyone who has booked a package holiday must contact the Civil Aviation Authority (CAA) or contact the supplier named on the invoice.
The CAA said measures would be put in place to ensure those abroad with Atol packages can come home but it warned those who used Sun4U as a travel agent simply to book flights might have trouble returning.
Posted at 04:48PM Aug 16, 2010 by Marc Stenton in Insolvency | Comments[0]
Unemployment Down in UK
Unemployment figures in the UK dipped in the second quarter of this year to 2.46 million, a fall of 49,000 according to new figures published by the Office of National Statistics (ONS).
The drop marks the largest fall in unemployment since 2007, whilst the number of people in employment saw its largest rise for 21 years dating back to 1989, increasing by 184,000 people.
The figures have also shown a drop in the claimant count, the number of people out of work and receiving job seekers allowance now stands at 1.46 million, down by 3,800.
The heavy rise in the number of people in employment comes largely thanks to a large influx in the number of people taking on part-time positions. These saw an increase of 115,000, taking the number of people in part-time roles to its highest figure since comparable records began back in 1992, at 7.84 million.
Meanwhile, the number of people in full time employment also rose to 21.18 million, up by 68,000.
The UK unemployment rate now stands at 7.8%. This is a fall of 0.2% on the previous quarter. On a regional scale, the rate for England fell 7.7% from 7.9%, whilst Northern Ireland’s rate also dropped by 0.2% to 7.7% and Wales’ rate saw a fall of 0.3% down to 9%.
Meanwhile, Scotland was the only UK country to see a rise in unemployment for the quarter, up to 8.4% from 8.2%.
The ONS also said that average pay was up by 1.3% on a year earlier, a slower annual rate of growth than in the previous three months.
Posted at 04:21PM Aug 11, 2010 by Marc Stenton in The Economy | Comments[0]
Personal Insolvency Drops in Second Quarter
Personal insolvencies in England and Wales have finally shown some positive results, seeing their first drop for three years. However, some are sceptical as to whether the number of people in financial difficulty is actually dropping or more people are simply ignoring their problems.
According to new figures, there were 34,743 cases of formal insolvency in England and Wales from April to June, 3% less than in the first quarter of this year. Corporate insolvency was also down to 1,311, decreasing 2% from the last quarter and a massive 14% compared the same period last year.
They now appear to be in a gentle decline as the economy recovers from recession.
"This is a welcome trend in the number of business failures, but the UK economy is not out of the woods yet," said Malcolm Shierson at accountants Grant Thornton.
"We expect to see an increase in business failures in outsourcing, as well as the hotel and leisure services sectors," he added.
The personal insolvency comes as a welcome relief after constantly rising for the past 3 years. The final quarter of 2007 saw 23,830 insolvencies compared with a huge 35,682 from January to March this year.
"It's encouraging to see that bankruptcies are down, but don't be misled by this," said Brian Johnson at accountants HW Fisher.
"The fact that both debt relief orders (DROs) and individual voluntary arrangements (IVAs) are still creeping up shows that we are not in the clear yet.
"Many consumers are still highly stretched financially and public sector spending cuts are only going to make things worse over the course of the next two years," he added.
Paul Crayston of the Money Advice Trust pointed out that personal insolvency was still running at a level far higher than a decade a ago.
"The number of insolvencies in the first half of the year 2000 was 15,369, whereas the first half of this year saw 70,425 insolvencies - an increase of more than 458% over the last 10 years."
Posted at 04:32PM Aug 06, 2010 by Marc Stenton in Insolvency | Comments[0]
Pompey Win Court Case
The High Court judge has today ruled in favour of Portsmouth FC’s Administrators in the battle to stop Pompey’s CVA proposal going ahead.
The hearing was a key part in HMRC’s ongoing vendetta against football in general. The appeal related to certain PAYE payments that HMRC believed were still due but were not calculated in the debts of the company, these debts would have given HMRC the needed 25% vote in the CVA to reject it initially.
The payments relate to certain image rights payments to players that no PAYE or National Insurance has been paid on. It was thought that if the judge did rule in their favour today, it would open the floodgates so to speak for HMRC to go after approximately 10 clubs, many in the Premier League, who had been paying image rights to their players in the same way.
Portsmouth will now leave Administration via the CVA and will also avoid any further punishment from the Football League. Leaving Administration by any method other than CVA would have meant further points penalties in the new season.
It is thought that the image rights of the players has been being paid via an offshore company, thus eliminating any PAYE liability, HMRCs argument was that as the players were employed by the company, then the PAYE liability was still there.
Leeds United are amongst the other clubs reportedly doing the same thing, it is widely thought that HMRC would have targeted Leeds first as they have already lost out on large sums in previous cases with Leeds.
Posted at 04:44PM Aug 05, 2010 by Marc Stenton in Insolvency | Comments[0]
Real Estate Worst Hit in Recession
A new study done by R3 has been released identifying the sectors that were worst hit by the recession, revealing real estate, renting and business activities companies are the ones that have struggled the most.
R3 have tracked the activity in many sectors during the economic downturn and have noted that there were over 12,000 corporate insolvencies seen in these sectors.
This was shown to be far more than were experienced in the construction sector, a sector previously reported to be one of the worst hit. There were 7,184 construction insolvencies over the smae period.
R3 president Steven Law explained that the real estate sector took a much bigger hit than any other.
"Clearly there was an oversupply when the recession took hold and, as people and businesses became less inclined to move, development projects could not be sold on," he said.
However, the pure size of the real estate market may have gone a long way to explaining the higher number of financial difficulties in this sector, with well over a million companies prior to the recession.
Mr Law added that a higher total of enterprises means that there would logically be a greater number of bankruptcies.
When insolvencies were viewed in proportion to the total number of existing companies, hotels and restaurants actually took the biggest hit, with 1.7 per cent going to the wall.
Real estate saw a rate of 1.1%, coming in fifth place on the list.
Posted at 04:28PM Aug 04, 2010 by Marc Stenton in Insolvency | Comments[0]
Southend Fight Off HMRC Petition
Southend United yesterday avoided being forced into Administration through the courts yesterday as HMRC lost one of their battles in the ongoing vendetta they have against football in general.
The High Court dismissed HMRC’s petition after the club proved they had the necessary funds in places to pay all debts currently due as well as being able to pay debts on time moving forward.
The petition was submitted regarding a £238,710 outstanding tax bill. However, after the club recently struck up a deal with Sainsbury’s, chairman Ron Martin has said this deal has allowed them to ward off the pressure of HMRC.
HMRC has warned though, that they will pursue action again should the club fail to make their next payment on time.
A spokesman for HMRC said ensuring tax is paid should be at the ‘centre of football's business strategy’ as it should with all businesses.
“HMRC doesn’t initiate insolvency action against football clubs - or any other business - lightly but we will not hesitate to do so when that is the right way to protect the country’s tax revenues and other creditors from those who trade whilst insolvent and run up debts that they simply cannot pay,” the spokesman said.
Chairman Martin said all costs at the club for the next 12 months had been ‘underwritten.’
Part of the deal with Sainsbury’s includes a new store being built on the site of Roots Hall, and the club moving to another stadium.
Posted at 03:07PM Aug 03, 2010 by Marc Stenton in Insolvency | Comments[0]
Holiday Makers Keen to Increase Their Debt
More than 2 million people in the UK this summer have loaded themselves in debt for the sake of a holiday as personal insolvency continues to hit record highs.
New research has shown that these people are borrowing an average of over £1000 to be paid back over a seven month period. Scottish holiday makers have been shown to be the worst culprits, 12% said that they either had or were planning to borrow money in order to go on holiday this year. Closely following them was Londoners with 10%.
The research, done by insolvency trade body R3 showed that the least likely to borrow money for holidays were people in the North West, Yorkshire, Humberside and the West Midlands, just 3% of people in these areas intended to borrow the necessary funds.
Frances Coulson, R3 vice-president, said: “That people are prepared to take on a substantial amount of debt for such a long period of time in order to afford a holiday is worrying, especially as these are still economically uncertain times.
“Personal insolvency hit record levels in the first quarter of this year and looks set to rise - so we’re urging people not to spend more than they earn.”
Currently, more than 70 people per hour in the UK are falling into some form of personal insolvency proceedings with figures indicating that personal insolvency is now at its worst level since records began 50 years ago, figures saw a 17.9% hike for the first quarter this year compared with last.
New insolvency figures will be published over the next few days.
R3 have revealed that 2,329,500 people had borrowed or were intending to borrow money for their holiday at an average of £1,130 each.
Another revelation shown is the generational split in attitude towards borrowing. 16 to 24 year olds were shown to be the most likely to, whilst over 65s were the least likely. These figures may be slightly distorted however, as the average over 65 will have more spare cash than someone in the 16 to 24 bracket.
Ms Coulson added: “The figures points to a clear generational split in attitudes to borrowing and debt. We must continue to promote the idea that saving, rather than borrowing, to pay for luxuries is the best way to avoid a life dogged by financial problems.”
Posted at 03:52PM Aug 02, 2010 by Marc Stenton in Insolvency | Comments[0]
