Business Rescue & Insolvency Newsletter

Corporate

The latest quarterly figures should give rise for optimism but business leaders are being warned that there is no room for complacency. The figures posted last week in connection with HMRC’s Time to Pay (TTP) arrangements have shown just how reliant cash strapped companies have been on the TTP arrangements with £6.8bn deferred tax payments having been agreed since November 2008. It is worth recording however that £5.41bn has already been paid back but we understand that the number of repeated deferrals increased considerably from around 33,000 in September 2009 to 79,000 by early 2010. Unfortunately up to date figures are not readily available as to how many businesses entered into formal insolvency having been in a TTP agreement however, towards the end of last year, two thirds of Insolvency Practitioners had seen companies moving from a TTP agreement into formal insolvency.
 

The above graph highlights the continued decline in liquidations since the peak of early 2009. The small increase last quarter in creditor voluntary liquidation has been reversed and overall liquidations are 13.9% down on twelve months ago but only a more modest 2.2% on the previous quarter.

In the twelve months ending Q3 2010, approximately 1 in 133 active companies (or 0.8% of all active registered companies) went into liquidation, which is a slight decrease from the previous quarter, when this figure stood at 1 in 127.

Although this quarter’s figures for personal insolvencies are the lowest this year, we are predicting that the annual total will top 140,000 for 2010. To put this into perspective the annual total for the first year of this millennium i.e. 2000 was 29,528.

The nature of personal insolvency is highlighted by the fact that only some 13% of bankruptcy orders involve trading debts with some 87% being consumer and other personal debt reflecting the excesses that were happening since about 2003.

The Sports and Social Club sector has been one of the hardest hit and has seen a decline in recent years for a variety of reasons. With disposable income being continually squeezed, the situation is not likely to change in the near future, and many clubs face a difficult time ahead.

Cranfield’s vast experience in dealing with not for profit organisations has led to the company launching a major campaign to work with sports and social clubs.

For example, we have recently been acting for Foleshill Liberal Club, in Lockhurst Lane, Coventry, amongst others, and played a key role in assisting members to wind up the affairs of the club and trying to sell the premises on its behalf after it went into voluntary liquidation.

Sometimes it is a long drawn out pain for some of these organisations to ‘call time’ on their business, but we have an abundance of knowledge and expertise in dealing with this sector and are able to deliver the best achievable outcome for the clubs and prospective buyers under such conditions.

If any of your clients are in this sector and need our help, then please let us know. We would be happy to carry out a free Business Health Check in the first instance, or if there are more serious problems, then we can offer expert advice on the best way forward for them.

Please contact: Tony Mitchell or Patrick Murtagh on 024 7655 3700 or email: tony.mitchell@cranfieldbusinessrecovery.co.uk or patrick.murtagh@cranfieldbusinessrecovery.co.uk

Cranfield is regularly asked for expert comment on business and finance. In the lead up to Chancellor George Osborne’s Comprehensive Spending Review (CSR), our MD, Tony Mitchell was asked for his views on the CSR by the Coventry Telegraph, which reaches over 30,000 readers. This was followed last Friday by an appearance on BBC Coventry & Warwickshire radio to talk about the latest Insolvency Figures.

Our research suggests that around 50,000 firms nationwide, many of whom are already experiencing financial difficulties, would be at risk as a result of the CSR. In addition, we know that there are a lot of companies out there at the moment that are being supported by HMRC and there is a lack of desire amongst the banks to force companies to cease trading. Also, creditors realise there is not much money about and are unwilling to force companies into insolvency. This is presenting a picture that is not an accurate reflection of the true situation, and clearly there are many businesses that simply would not be trading under normal circumstances. If there’s a further squeeze on cash flow, it could be the final straw for many companies.

Despite these pressures, however, Cranfield firmly believes that we should try and move away from the negatives and help companies put together strategies and turnaround packages to avoid insolvency in the first place. The key message of our recent media comments, therefore, is that we don’t necessarily see it being all doom and gloom for businesses.

By identifying potential problems at an early stage with expert advice, and putting effective strategic planning in place, many struggling businesses could benefit from the expertise of practices like Cranfield, in conjunction with their accountants and bank managers, and prevent the worst case scenario of insolvency.

2010 Carting Challenge. 

This year’s Carting event took the form of a one off race held at Priory Park, Tamworth in September. Much to the race director’s better judgement, 13 teams of 4 drivers arrived for the two hour endurance race which meant there was only one spare kart if any mishaps befell any of the teams.

By the end of the two hours darkness had enveloped the circuit and with only limited floodlighting available the final quarter of the race became that much more interesting. After two hours of competitive racing only 6 seconds separated the first and second teams and for the second time in the competition’s history, Shortland Horne, Commercial and Residential Estate Agents, pipped LDP Luckmans, Chartered Accountants, to lift the Cranfield Carting Challenge Cup. In third place only a lap behind were the combined teams of Chartered Accountants Dafferns LLP and Fox Evans.

A huge thank you to all the firms and companies that took part.

Table Football. 

In association with Allied Irish Bank (GB), the second round of our Professionals Table Football Championship took place on 21 October at AIB (GB)’s Eaton Road, Coventry stadium.

Two pitches were used during the qualifying rounds culminating in the final on the Wembley stadium pitch. After a couple of hours furious wrist action the newly formed partnership of Tony Mitchell and Brett Barton, playing for one of the home teams, proved too strong for other teams and were presented with the Championship Trophy by match referee Alan Howe of AIB (GB). Tony & Brett have now slipped back into retirement and will be acting as referees in future Championships.

A big thank you to all those who participated in this year’s Championship and if there are any other professionals who would like to relive their college/university days next year please get in touch.

The Best of British. 

Cranfield is hosting a Best of British cheese and wine party on Tuesday 30th November 2010. We will be serving the finest stilton from Cropwell Bishop Creamery and a gusty English Red wine from Chapeldown in Kent.

As well as supporting British small businesses and sampling their delicious products, guests will also have the opportunity to network in informal and relaxed surroundings at our offices in the centre of Coventry.

"In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing." Theodore Roosevelt