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.

Paying less tax!

kalkulation am rechner

calculator

Business Asset Disposal Relief (“BADR”) – (in old money known as Entrepreneurs’ Relief) may be available to company shareholders who wish to wind-up their solvent company via a Members’Voluntary Liquidation (“MVL”) process.  This is a long-standing method to reduce the standard capital gains tax paid to a rate of 10%.  At PBC we advise and formally act in MVL’s to assist business owners to maximise their return(and pay less tax) in conjunction with the company’s accountants.

There is always speculation pre budget that BADR will either be scrapped or reduced – the most recent reduction was in the March 2020 budget which changed the lifetime relief capped from £10 million to £1million.  Since then, BADR has not been changed.  However, given the level of Government support since Covid, is BADR an easy target for further scrutiny?

The next budget is scheduled for 15 March 2023 and, whilst the view is BADR will not be scrapped altogether, it may be that further reductions/restrictions could be in the offing.

If you are a company owner or advisor to the company and wish to discuss an MVL in more detail, please call PBC on 01604 212150 or email enquiries@pbcbusinessrecovery.co.uk.

Redundancy for Directors

At PBC we are often having directors express surprise when they are told they have employment rights and that it is possible to claim for their redundancy entitlements against the Redundancy Payments Service (“RPS”).

 

However, late last year the Government updated their guidelines for directors making redundancy claims.  While the guide looks “Innocent” and helpful, the practicalities are far from straight-forward.

 

The RPS introduced a painstaking questionnaire that directors must complete.  Cynics would say this questionnaire was designed to ensure directors cannot claim their legitimate entitlements, but directors are encouraged to grit their teeth and complete it all the same.  Questions you will be asked include:

 

  • Were you a shareholder of the company?
  • How much did you earn over the past 3 years?
  • Were you paid less than the minimum wage?
  • Were you responsible for starting company insolvency discussions with an insolvency practitioner?

 

These questions are designed to imply you made yourself “Voluntarily redundant,” so should not be entitled to your employment rights. This is an argument the RPS have previously lost in court where the court questioned the RPS on whether they support directors breaching their statutory duties and continue trading whilst insolvent or, to follow the law, cease trading and make all employees redundant.

 

Further, if you have an adverse loan account (i.e. you owe the company money) then the RPS will automatically claim a right of set off and not pay any entitlements.  This approach is woefully unsound but until challenged they will continue to apply it.

 

In essence, a director needs to prove they were an employee.  The view of the RPS is that an employee would not loan to (or borrow from) their employer, they merely fulfill their job role and are paid accordingly.  With this in mind, the RPS may also ask for evidence such as pay slips, P60s, details of any dividends paid, copy accounts and bank statements.

 

So, while the RPS have set out a procedure that seeks to reject employee claims from directors, it is still possible to claim nonetheless.  Who knows, one day a director will take such an exception, they may appeal a rejection and see this practice challenged in court again.

 

If you require any advice or assistance on mediation or any other 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.

 

Have your say!

This article was published recently by BBC which prompted this email from Gary Pettit to the BBC in response…….bang goes Gary’s knighthood!

 

 

Warning that thousands of firms face collapse – BBC News

 

 

I read your article headed, “Warning that thousands of firms face collapse” and concur with Julie Palmer’s views. However, there are some further points to consider.

Firstly, it should not escape our minds that corporate insolvencies slumped during the pandemic as enforcement restrictions, introduced primarily by the Corporate Insolvency & Governance Act, prevented debt enforcement in some key areas. In addition to the (ill-thought out) bounce back loans, together with other financial support available, the Government created a false economy by financially assisting many companies that ought to have failed during 2020-21.

As an insolvency practitioner I am seeing similar patterns across all fields of industry including:

• Those companies kept “Alive” due to COVID support are now started to fail. In other words, current corporate failures include two years’ of relative inactivity on top of usual annual statistics.
• Companies are struggling to secure raw materials. Without those materials they are unable to complete sales and without sales they are being starved of income. This comes to the fore when I am selling company assets, with purchasers paying above market value, primarily due to the extended lead times through “Normal” delivery/ordering routes. Probably the most stark example I can comment on was a compulsory liquidation in late 2022 where the (kitchen fittings/displays) assets were professionally valued at £35-50,000 by my agent, only to realise £180,000 as competing businesses came forward scrambling to secure the goods. It does suggest there is money out there.
• Many are still trying to restore pre-pandemic trading levels but are being caught up by the need to repay BBLs, CBiLS or rent arrears that accrued. This is in addition to the end of the job retention scheme, resulting in overheads returning to previous levels. Utility bills are the latest attack on cash flow and that is probably the core reason for many struggling; they are simply running out of cash.

What does not get mentioned is the Government declined to listen to the dissent shown towards re-introducing preferential status for HMRC. While it is classed as “Secondary preferential” it elevates HMRC up the order of priority of payments. Again, COVID is partially responsible for a high level of tax debt. I believe it went from £16 billion pre-pandemic to circa £39 billion now. However, what we are seeing (and will continue to see) is more “Phoenix” liquidations because the secondary preferential status of HMRC makes restructuring through the likes of a company voluntary arrangement non-viable. That is evident when you consider the insolvency statistics, which report very high liquidations (in terms of percentage of all corporate failures) while CVA numbers are negligible. The implementation of secondary preferential status was ill-thought, misguided and, actually costs the Government with liquidations paying out lower returns to creditors (meaning HMRC recoveries are lower) and the additional burden on the Government of costs inherent with liquidation (ie higher redundancy and other employee entitlement claims, loss of business rates for local counsels, increase in unemployment benefit claims, to name but a few). This practical effect is like ever decreasing circles as creditors of the liquidations are forced to write off debt and, in turn have to review their own financial structure, or even became another statistic of the Insolvency Service, adding further cost burden on Government funds.

 

If financial problems are being experienced or, indeed, they appear to be on the horizon, then take advice early from PBC.  01604 212150 or email enquiries@pbcbusinessrecovery.co.uk.

 

You must be busy……?

 

Whilst it is well reported that insolvency numbers are on the rise and likely to continue given the current economic difficulties, the above is a question frequently asked of us here at PBC Business Recovery & Insolvency.

 

The answer to the question from our perspective is, yes, we are. However, busy is not always gauged by the number of formal appointments we undertake. Undoubtedly, formal appointments help pay the bills but from our perspective “busy” is generally based on the amount of advice being sought when financial difficulties are experienced. To this end, yes, we are busy, but busy looking to help companies and individuals avoid formal insolvency processes and to fight another day. Of course, some companies are unable to be saved and it is appropriate that the doors be closed once and for all, but this is not for a want of trying, on our part, and those we advise.

 

If financial problems are being experienced or, indeed, they appear to be on the horizon, then take advice early from PBC. The adage of  ‘a problem shared is a problem halved’ is generally very true – at PBC we are just at the end of a phone or email if needed – 01604 212150 or email enquiries@pbcbusinessrecovery.co.uk.

 

The initial meeting is always free of charge, confidential, no obligation and impartial, with the appropriate advice given.