PBC announce large dividend from complex liquidation

Gary Pettit, the liquidator of Alexander – Bale Facilities Management Ltd, is pleased to announce the payment of an unexpected dividend following extensive investigations into the company’s affairs.

The company was placed into compulsory liquidation on 21 November 2011 and R Neil Marshman was appointed liquidator on 6 July 2012. Following his retirement from the practice he was replaced as office holder by Gary Pettit on 22 May 2014.

After substantive investigations into the company’s affairs, the former liquidator successfully obtained judgment against the directors to be jointly and severally liable for £1,208,585 as a result of the various payments made out by the company in the period leading up to its winding up.

Following the appointment of Mr Pettit, a freezing order was obtained and following further detailed enquiries a number of bank accounts and properties were identified resulting in significant realisations.

I am now pleased to report payment of a dividend of 34.17 pence in the pound to unsecured creditors. Creditors’ claims totalling £993,827.96 were admitted and the dividends paid totalled some £339,614.

Gary said, “It is always pleasing to see investigations bear fruit and lead to significant returns to creditors. On the face of it there were no assets available and creditors had resigned to writing off their debt.  This liquidation demonstrates the value of insolvency practitioners when the evidence is available.”

Could Brexit affect your pension scheme?

The staff at PBC were recently visited by Darren Toms of Clumber Consultancy to provide a briefing on the latest position on how auto-enrolment and other matters had affected how the pension and insolvency “worlds” interact.

During the briefing, Mr Toms raised the issue of the effects of Brexit on valuations of pension scheme liabilities which is summarised below.

As far as Defined Benefit (“DB”) pension schemes go, the key area affected by Brexit was the way in which pension liabilities are measured by reference to gilt yields. Gilt yields fell and have continued to fall since the EU referendum vote which saw the combined liabilities of UK pension schemes rise to an all-time high of £2.3 trillion on 1 July 2016. As a consequence, DB pension scheme deficits in the UK rose from £830 billion before the referendum, to a staggering £935 billion (a 12.7% increase) on 1 July 2016 alone (Source: Hymans Robertson, an independent pensions consultancy firm).

The problem is heightened for any pension schemes currently reaching their triennial anniversary to produce a valuation. If for example the scheme year-end date is 31 August 2016 then the Scheme Actuary has 12 months to produce a valuation at that date, which will then lead to difficult negotiations between Trustees and Employers throughout 2017.  Given that the pension scheme deficit has to be illustrated in the profit or loss account this could lead to a number of company failures or difficult discussions around mergers and acquisitions.

Trustees and Employers will need to brace themselves for such negotiations and ensure that there are no conflicts of interest present around the Trustee table when doing so. There are two key questions that Trustees and Employers need to ask themselves:

  • Is the investment strategy for the pension scheme still appropriate considering the liabilities and longevity of the scheme?
  • Is the sponsoring employer still able to support the scheme and the level of deficit recovery plan contributions that is likely to be laid out in front of them?

One thing that is for certain is that both the Pension Protection Fund and the Pensions Regulator won’t accept Trustees and Employers seeing the Pension Protection Fund as an easy get out for Employers. In addition, the Pensions Regulator will look to use their anti-avoidance powers more and more where sponsoring employers look to shirk their responsibility to their pension scheme. Interesting times ahead!

Should you feel this issue affects your business, phone PBC on 01604 212150 for a free consultation.

Further information on Clumber Consultancy can be found at http://www.clumberconsultancy.co.uk/

‘Living beyond means’ – a leading cause of bankruptcy

‘Living beyond means’ – a leading cause of bankruptcyRecent statistics released by the government showed the leading causes of bankruptcy in 2015 were living beyond means, relationships breakdowns and reduced levels of income. The data also highlighted differences in the reasons why men and women go bankrupt.

Gavin Bates, Insolvency Practitioner at PBC, said: “These figures are similar in some respects to the statistics we discussed in our blog last year, however, a particular point of interest is that ‘living beyond means’ is the most common reason why both men and women go bankrupt. This certainly correlates with our experience at PBC where we are seeing an increasing number of people who are in financial difficulty because they are spending more money than they can afford.”

The research also ties into the increases in household debt that have been making the headlines recently.  Official figures from the Bank of England showed that personal debt, including credit cards, overdrafts and loans, has risen to its highest level since December 2008, leading debt charities to call for greater assistance for those that are struggling.

Gavin Bates continued: “People seeking credit may be doing so simply so they can afford essential items and cover day-to-day living costs, while others do so to ‘keep up with the Joneses.’ Taking on additional debt may be in some circumstances unavoidable, and works if you can manage to make the minimum payments. It would be better to review all your finances, reduce or cut outgoings and not borrow in the first place. All too often we see people who have suffered a reduction in, or loss of, income, or a period of ill health which make the position unmanageable very quickly.”

Individuals who find themselves with spiralling debts should seek advice as soon as possible so they can take action to get their finances back into shape.

Press Release – Bradford Bulls

Joint Administrators of Bradford Bulls – no purchase concluded and business ceasing to trade

 

Gary Pettit of PBC Business Recovery, Northampton was appointed one of the Joint Administrators to Bradford Bulls (Northern) Limited (“BBNL”) – in Administration, on 14th November 2016.  BBNL operates the Bradford Bulls Rugby League Club (“Club”), playing in the Kingstone Press Championship.

The Joint Administrators are represented by Prodicus Legal Solicitors of Leeds and Sanderson Weatheralls.

The Joint Administrators regret that following negotiations and due diligence over the weekend, the last remaining bidder has indicated that it will be unable to conclude a purchase of the Bradford Bulls.

Gary Pettit said,

“Several parties engaged in a process to acquire the Bradford Bulls, but that has ultimately proven to be an unsuccessful exercise.   Due to non-disclosure agreements, what can be divulged is strictly limited.

As I have said throughout, the situation is much more complex and complicated than any of the parties, including the RFL and the Administrators, envisaged when this process commenced.   There was fundamental uncertainty over a series of topics, including the quality of the management information available.

Bradford Bulls entered Administration for the third time in five years. This highlights that there is something fundamentally wrong with the business. The problems facing the Bradford Bulls are not unique.   Rationally, the days where a sports club operates at a loss and is underwritten by a Patron should be gone.

The biggest challenge for any purchaser of the Bulls is generating additional revenue to meet the operating costs of the club. That is why Odsal Stadium is important, for any purchaser to justify investment in redeveloping and upgrading the facilities as a stadium. To be clear, the issue has not been the potential for any other development.

The plight of the Bradford Bulls has been widely publicised. The Administrators have done everything possible to conclude a sale.

Ultimately however, the Administrators can only represent the Bradford Bulls as it is. The situation is also exceedingly difficult for the RFL as the governing body.

I am very disappointed to say that the last potential purchaser confirmed last night that it will not be acquiring the Bradford Bulls. This is largely because time does not allow the complex issues to be resolved. The Administrators are under statutory constraints as to how they must proceed.

Given the inability to secure a sale of the business, the Administrators have been left with no alternative but to make all staff redundant and cease trading. The Administrators will make the appropriate application to the Court shortly.

The Administrators wish to acknowledge again (and are grateful for) the professionalism displayed by players and staff throughout.

The Administrators are sadly conscious that the losses here extend beyond the current staff and players who will lose their jobs. Those losses extend to the families of the staff, into the community in Bradford and West Yorkshire, plus the people and businesses facing little prospect of recovering debts owed. The losses also extend to sport in general and specifically to Rugby League”.

A look at personal guarantees

A look at personal guaranteesA recent survey by Wirefund revealed that over half (55%) of SME business owners do not know what a personal guarantee is. This certainly matches our experience at PBC as we see many cases where company directors cannot remember whether they signed personal guarantees or not.

 

What is a personal guarantee?

In the last decade, there has been a trend among creditors, including banks, finance providers, landlords and, increasingly, trade suppliers, to ask for personal guarantees. As the name suggests, this is a contractual promise to pay the liabilities of another. If you’re seeking a small business loan, for example, you might be asked to provide a personal guarantee of the loan. Such guarantees are unsecured, which means they are not tied to any specific asset such as property. For the lender, such guarantees make a loan agreement more secure, as responsibility for paying it back falls not just to the borrowing company but to the individual directors involved as well.

 

Why do they matter?

The unsecured nature of the guarantee means that you will be personally responsible for repayment of the loan in the event it cannot be paid back by the business itself. All your personal assets, therefore, are at risk, from the family home to cars. If you do not have sufficient assets to cover the debt, then you may be made bankrupt and with it encounter all the ongoing difficulties associated with a poor credit rating. It is also worth pointing out that if several directors give a personal guarantee to the same creditor, then the creditor does not have to take action against all of them and can instead choose to pursue just one.

 

It is clear that personal guarantees carry significant implications, and certainly, the courts have tended to take the view that the guarantor undertook the commitment with full knowledge of the facts. It is easy to sign up in haste in order to secure funding. However, it is important to seek advice in advance to ensure the full ramifications are understood should the guarantee be called upon. You may also want to consider personal guarantee insurance to provide some protection in the event of difficulties.

 

Options

Should you find yourself in a position whereby your company is failing and you are left with personal liabilities, then there are a range of options to consider from personal insolvency procedures through to negotiation of a settlement. We offer a free, confidential, no-obligation initial consultation to discuss the issues you are facing.

PBC announce large dividend paid from company voluntary arrangement

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PBC are pleased to report on the recent payment of a dividend from a company voluntary arrangement (“CVA”).

 

After consulting with a financial consultant and seeking advice from PBC, the company proposed a CVA to its creditors which was approved with modifications in December 2013. The arrangement consisted of a splitting of the company into two distinct trading entities which included the saving of the majority of the employees’ jobs.  The arrangement included the sale of assets and contributions from future profits.

 

Recently, the directors of the company approached the joint supervisors regarding the possibility of varying the arrangement by settling the outstanding amounts due in respect of the monthly contributions and the sales consideration by way of a lump sum payment. The variation was approved by creditors who have now received a distribution earlier than originally expected.  The joint supervisors have distributed over £92,000 to creditors.

 

Joint supervisor Gary Pettit said, “It is always pleasing to be involved in the rescue of both a company and the saving of jobs, both of which have happened in this case. The directors sought advice at an early stage which resulted in the possibility of a rescue option being available to them.  This has allowed the company to turn around its financial situation.”

Local Entrepreneur Wins Young Business Person Award

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Fae Perkins, owner of Northamptonshire hair extensions business, Bond Hair, was crowned ‘Young Business Person of the Year’ at this year’s SME Northamptonshire Awards.

Fae, aged 29, set up her business specialising in professional hair extensions over 8 years ago and was also shortlisted in the Business Innovation and Entrepreneur of the Year categories at the awards ceremony which took place last Thursday evening.

The judges commented “Fae seems to have limitless energy linked to an impressive personal drive.”

Fae runs what she classes a ‘lifestyle business’ on top of holding down a full time position as Marketing Manager for prestigious self-build company, Potton. Fae has maintained and grown her loyal client base regardless of also being dedicated to her full time day job.

The Young Business Person award recognised business talent for those under 30 years of age and was sponsored by Northampton-based firm, PBC.

“I’m really happy that my hard work is recognised, I’m fortunate enough to love both my jobs so it isn’t a chore to work hard” continued Fae. “I never think 17 hour days are anything special, until someone points out that’s 2 days’ work for most people!”

The Young Business Person award was presented by Gary Pettit, Managing Director of Northampton-based business PBC, who said “PBC feel it is important to be part of the business community and were pleased to support this award. The economy needs young people in business and Fae is an excellent example”.

For further information on Bond Hair™ visit http://www.bondhair.com

How to avoid a Christmas cash flow crisis

How to avoid a Christmas cash flow crisisWhile some businesses, particularly in the retail sector, find that Christmas is their busiest time of year, for others it can be a difficult period. Factors such as lower levels of production due to increased holiday, decreased sales and, in some instances, total shut down for a week or two, can all have an impact. However, employees still need to be paid, and any loan repayments must be met and all these elements combined can have a negative influence on cash flow.
What steps can SMEs take to prepare for this? In this blog, we offer some advice.

Plan for extraordinary expenses

Christmas parties, staff gifts, bonuses and the like all add up. Employees will also often be paid much earlier in the month than usual. Make sure you plan and budget for this expenditure well in advance, so it doesn’t catch you out.

Delay unnecessary expenditure

Think carefully before making purchases and avoid buying big-ticket items if they can wait until the New Year.

Get paid

To maintain positive cash flow it is essential to invoice promptly and actively chase any late payments. In the run up to Christmas, this is more important than ever. If overdue accounts are not chased in late November or early December, then the chances are they won’t be paid until January at the earliest. Keep in mind that the person responsible for accounts may be taking extra annual leave and therefore may not be around to make payments. Likewise, if invoicing is delayed until after Christmas there will be a noticeable impact on cashflow at the end of February. Any delay in invoicing means a delay in getting paid.

Incentivise prompt payment

If there is room in the profit margins, consider offering a ‘Christmas discount’ for payment upfront or early settlement of the invoice and be clear on what the penalties are for late payment.
Maintain your cash reserves
Look at using the full payment terms you have agreed with your suppliers. At this time of year, there is little point in paying early, unless a discount is on offer.

Have a Plan B

If you can, build a cash buffer to help you through the period. If this is not feasible, then look at arranging alternative funding options such as a temporary business overdraft or loan.

 

To ensure your business does not start 2017 with financial difficulties it is important to plan ahead and have a proactive approach. Taking the time to assess your situation and predict any issues will pay dividends.

Charity Craft Fair raises £420.

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PBC would like to thank all those who attended the craft fair earlier this week for their generous donations which have raised £420 for Ronald McDonald Charity Houses.   For more information about PBC’s chosen charity, read here.

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In addition, PBC would like to thank the stallholders who attended, those who baked cakes and the team at the Northampton office for their hard work in making the event a success.

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More events to raise money for Ronald McDonald will be announced shortly, so watch this space.