Insolvency Practitioner Declares Further Dividends

kalkulation am rechner

The success of an insolvency process is often measured on the ability to realise sufficient assets in order to pay something back to creditors and two cases we are administering are meeting that goal.

In the first case, PBC are delighted to announce the payment of a further significant interim dividend of £200,000 to HM Revenue & Customs from an insolvency estate.  Combined with a payment of £500,000 in January, HMRC have now received over 35% of their debt.  With further assets to realise, it is expected that well over £1million will be returned to creditors.

The second case involves an individual who was declared bankrupt in 2019.  Realisations of two buy to let properties and an endowment policy have enabled payments of approximately 20 pence in the pound to be made to unsecured creditors.

Jamie Cochrane said, “It is always pleasing to be able to make payments to creditors as described here.  The commercial approach taken by PBC on these cases has increased the dividends we are able to pay”.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 (Northampton), 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Don’t Let Late Payments Lead To Insolvency

How much does your business rely upon cashflow?

Does that seem like an odd question to ask?  Well, if so, why is it that a recently published report showed 60% of UK businesses expect late payment of invoices will increase?  Indeed, that same report claims we spend over 71 days per annum (equating to over £27 billion in lost revenue) chasing late payments.

We have all heard the phrase, “Cash is king,” but the vicious circle of late payment across businesses damages the economy and puts businesses at risk of needing to enter into an insolvency event.

Cashflow difficulties are invariably cited as one of the most frequent causes for business failure and at PBC we have seen examples where better credit control may have resulted in them avoiding insolvency altogether.  Indeed, in a recent liquidation a creditor was bemoaning had they been more strenuous with their efforts to get paid they may not have been staring at a write off now!

At PBC we suggest all companies need to take steps to accelerate payment of sales invoices as a sales ledger does not pay the bills, payment does.  That is not always easy to accomplish and a commercial view must be adopted at times.  However, if it has proven too late and you get that dreaded notice your customer is entering into an insolvency event then contact PBC and we can advise you of your rights and even represent you to ensure your interests are protected as best as possible.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 (Northampton), 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Has your business been interrupted?

Personal-Insolvency-services-northampton-milton-keynes

How badly was your business hit by the impact of COVID-19 and the resulting Government (lockdown) measures?

We suppose the correct question ought to be, “What have you done to address the impact on your business?”  Many sought to claim under their business interruption insurance policy, only to have their claim rejected as a pandemic was not specifically covered or their policy was simply inadequate in its wording.

It has been over two years (15 January 2021) since the Supreme Court ruled in favour of the policy holders in a test case.  Since then, according to the Financial Conduct Authority, almost 38,000 policy holders have received an interim payment, at least, totalling some £1.4 billion.

Naturally any claim will turn on the wording within your policy and information suggests there are cases still finding court intervention is required and, no doubt, insurers will continue to seek avenues for denying liability albeit, in a recently reported case, the court ruled again in favour of the policy holder.

At PBC we have successfully claimed a business interruption pay out in an insolvent liquidation.  In another case, having followed our advice to appeal against the initial rejection a company’s fortunes were turned around from insolvency (with the resulting closure) to one of being solvent, while also allowing the shareholders to sell the business as a going concern.

In short, where your insurance policy includes business interruption, revisit the policy and, where in doubt, seek independent advice as you may find you are eligible to recover some of those losses suffered.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 (Northampton 01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Informal full and final settlement – it can be done!

Settlement Agreement

Informal full and final settlement – it can be done!

We were recently referred a matter, which, was slightly unusual in the current climate and below is a summary of the facts:

 

  • Company had ceased trading.
  • Only asset was cash at bank of £67,000.
  • 6 Company creditors totalled £201,000 of which £75,000 was owed to the company directors.
  • No HMRC debt and no Covid support loans.

 

The directors asked could we deal with the voluntary liquidation of the matter and of course, given the net liabilities we said we could. However, given the nature of the matter and looking to think out of the box and, provide best advice, we suggested best try an informal full and final settlement which would provide the following:

 

  • A return of 33 pence in the £ (within 28 days) in the informal offer.

or

  • 21 pence in the £ (payment not likely to be received within 1 year) if 100% of creditors did not agree with liquidation as a result.

 

We are pleased to report that agreement was reached but this was mainly due to their being no HMRC debt and no Covid support loans (HMRC and liabilities in respect of Covid support loans are unable to informally agree this sort of offer) with the creditors involved being able to make a commercial decision.

 

Whilst it would have been easy for us to deal with the liquidation, we always to look to provide the best advice which, we believe, is certainly in evidence here.

 

If you require any advice on an insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

 

What is the value of a name?

How often does the company name become the brand that your customers know?  Indeed, if you were to assess the value of the company assets, what value do you consider placing on that brand in a going concern scenario?

Taking the above into consideration, what then happens if the company (for any reason) has to go into an insolvent liquidation and, because you see a benefit in saving the business, you wish to set up a new company, using that brand (ie company name)?

Sections 216 & 217 Insolvency Act 1986 (“the sections”) provide that when a company enters into an insolvent liquidation then a person who was director (whether de jure, de facto or “Shadow”) of that company may not re-use that “Prohibited name.  Section 216 imposes a strict liability criminal offence while section 217 creates a personal (civil) liability on those who breach these provisions.  Placing the new company under the directorship of your spouse or relative does not circumvent these strict provisions either as a person who knows at the time there is a contravention of the prohibited name provisions can also be held personally liable.

The Association of Business Recovery Professionals recently lobbied the Government Insolvency Service for proposed changes to these provisions, to include companies entering into administration and those companies where a simple application has been made for their striking off. 

The aim of the sections is to prevent “Phoenix” companies from causing a disadvantage to creditors where directors seek to offload the company debt and enjoy a freedom to trade going forward.  When you compare the corporate figure for 2021/22 (524,046 strike offs versus 22,395 insolvent liquidations) then it is understandable why the current provisions require some reform in order to protect creditors.

So, what can you do if faced with this scenario?

Contravention of the above provisions cannot be retrospectively remedied so seek advice at the earliest possible time. 

Secondly, there are exceptions that can be relied upon.  However, given the strict liability status of these sections, any error in following those exceptions can lead to a contravention.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Another satisfied customer

PBC received this testimonial from a very satisfied new client about a  matter we advised on. As Insolvency Practitioners we often deal with both solvent and insolvent liquidations, but we are also very well placed to help people look to avoid our formal services which is what happened below.  All initial meetings are free of charge and completely confidential and we have offices in Northampton and Milton Keynes.

“We were referred to Ian at PBC via our accountants to seek advice on an ongoing shareholder’s dispute. Ian met with us at our earliest convenience at his Northampton office. 

The support and knowledge given  was extremely professional and invaluable. We left the meeting with clarity and a clear plan on how to proceed. 

We wouldn’t hesitate using PBC again if ever needed.’

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information

What are my rights as a creditor in an insolvent estate?

what are my rights as a creditor

 
With insolvency cases continuing to rise, it is important that creditors are aware of their rights should a company enter an insolvency process, the steps that can be taken to minimise the debt to be written off and the knock-on impact on their cashflow.
 
Firstly, it is important that creditors know where they rank in the order of priority. If you supply goods and/or services you will effectively sit at the bottom of the pile if a distribution is made to creditors. In addition, given the bulk of any HMRC claim will be paid ahead of the general body of creditors due to their secondary preferential status, in most insolvencies, any distributable funds are extinguished, leaving little chance of a payment to the ordinary trade creditor.
 
To reduce the chance of suffering a bad debt as a creditor may require an assessment of your internal procedures.  As part of that assessment, PBC offer the following advice and services, both in anticipation of a customer entering into insolvency or when an insolvency event occurs, including:
 
1)    Retention of Title Claims:  Assisting you with making any claim or reviewing your current terms.
2)    Explaining, in simplistic terms, the no doubt bewildering specific terminology (which by law insolvency practitioners must use) in reports received and representing creditors in insolvency proceedings.
3)    Provide training to credit control so they understand the different insolvency procedures but, more importantly, can spot the warning signs. As they say “prevention is better than the cure”.
 
If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information

PBC move into Milton Keynes

The Team at PBC Business Recovery & Insolvency are delighted to announce an expansion of operations by opening an office in Milton Keynes at the Regus Building, Atterbury.

PBC are an established bespoke insolvency practice who bring significant experience to the City, with advice for individuals and companies that are experiencing financial difficulties. Our team have over 100 years of Insolvency knowledge between them and this allows us to provide a comprehensive view into any Insolvency related issue.

We advise directors and owner-managed businesses on all aspects of rescue, recovery and, where necessary, closure.  This includes shareholders of solvent companies where they are planning a tax-efficient exit strategy.

We know that dealing with these issues can be difficult and very stressful. Our approach is friendly, professional and effective and is based on a proven history of dealing successfully with businesses and individuals both locally and nationally.This has resulted in us becoming a trusted and respected firm in the business community.

The initial consultation is free of charge without any obligation. Here we can discuss all aspects of the business in a confidential manner in order to provide an outcome that is right for the business, the directors and shareholders.

Associate, Ian Cooke said,

“We are always looking at what is the right advice for the client.  Sometimes those who we meet simply need an assurance or a steer on what is best for them.  However, if they need our services, then we always guide a client through the appropriate process, in order that they understand what is required and why.”

A full suite of the services PBC offer can be found on our website, www.pbcbusinessrecovery.co.uk

Director at PBC Gary Pettit, added,

“This is a natural move for us.  Milton Keynes is the fastest growing city in the UK and its location compliments our headquarters in Northampton, while allowing us to assist the expanding presence of professional advisors in the area.”

If you require any advice or assistance on any insolvency-related issue or corporate mediation, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01908 488653 or email to enquiries@pbcbusinessrecovery.co.uk. 

Can a director sell an insolvent company?

insolvency practitioners in meeting

One of the current frequently asked questions PBC are receiving at the moment is whether a director can sell their company when it is insolvent. There are several factors which affect the answer, including those discussed below.

Normally such a sale will involve the transfer of the business and assets of the company to a new entity but occasionally the directors will be able to secure a sale of the shares where the purchaser inherits all the debts of the company. Whilst these sales are unlikely if the company is insolvent, a director should establish whether such a possibility exists in the first instance.

While a share sale is invariably more ideal for creditors, in the majority of cases a sale will only involve the business and assets. Here, directors need to ensure the assets are sold at a fair value and therefore we would always advise that an independent, professional agent is engaged to undertake such a valuation and are likely to provide some guidance on how to sell the business and assets with minimum criticism of the directors. Failure to get this correct may result in claims being brought against the directors at a later date, so it is important.

A further complication are the provisions about the re-use of a prohibited name which apply when a company enters into insolvent liquidation. These state that an individual who has acted as director in the twelve months prior to liquidation cannot be involved in the “promotion, formation or management” of a company or business with a similar name to that of the company which entered into liquidation. The rules also extend to cover trading names and branding. Any individual in breach of these rules is committing a criminal offence and faces the prospect of personal liability for the debts of the successor business.

The sale of business and assets of an insolvent company can be the proverbial minefield, combining values, director duties and creditor interests. At PBC we can assist with this process to ensure you do not tread on any of those mines.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation at our offices in Northampton (01604 212150) and Milton Keynes (01908 488653) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

Don’t miss the early warning signs- take advice!

Life is full of those “Where were you?” moments from the death of Princess Diana to the fall of the Berlin Wall.  Insolvency is similar with the announcement of big companies entering into insolvency and one of the most recent was Carillion in January 2018 (This writer was at a breakfast in the Premier Inn, Leeds City Centre when the news broke).

The Carillion story took its latest twist over the weekend with the news the company’s former auditors, KPMG, had reached an undisclosed settlement against the £1.3bn lawsuit launched by the Official Receiver.  The claim focused on audits between 2014 and 2016 and alleged KPMG did not spot various “red flags” as it audited Carillion’s accounts. The firm was paid £29m to audit Carillion over 19 years and signed off the final audit nine months before the liquidation.

When the claim was issued, KPMG said that Carillion’s board and management were solely responsible for the failure as they set the strategy and ran operations and that the lawsuit was “without merit”.  KPMG’s have now issued a statement saying: “I am pleased that we have been able to resolve this claim. Carillion was an extreme and serious corporate failure, and it is important that we all learn the lessons from its collapse”.  When you consider KPMG were also fined £14.4 million by the regulatory body on this matter, these are wise words that ought to be considered by all advisors.

However, the lessons apply not just to professional advisors but to directors as well.  Missing the early warning signs or “red flags” can result in an increased risk of financial problems.  At PBC we strongly encourage directors of companies in or facing financial distress to take advice at an early stage.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.