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.

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.

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.

 

Help is out there

It would be wrong to imply HMRC simply agree to TTP upon application. PBC Business recovery and insolvency practitioner

According to HM Revenue & Customs, as at 3 January 2023 almost half (5.7 million) of the 12 million individuals expected to file a tax return are yet to do so.  At the corresponding time in 2022 that figure stood at some 4 million.

HMRC have made it clear the forgiveness for late filing shall not apply in 2023 so many could face an initial £100 fine.  That fine can increase for continued non-filing.

No doubt there will be many reasons for late filing but one of those is likely to be a fear the taxpayer will be unable to pay the liability arising.  Burying your head in the sand is no solution.  Indeed, it can become a large and costly problem.

Contrary to belief, HMRC will look at assisting a taxpayer where affordability is an issue, especially now when the cost of living issues are taking hold of the Country.

Should you find yourself in a position where you cannot afford to pay your tax liability by the due date then HMRC will consider a time to pay agreement (“TTP”) that permits you to spread the payment over a period not exceeding 12 months.  If you owe less than £30,000 you can follow this link:

https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments?_

The principal criteria for a TTP are that you:

  • have applied for a TTP within 60 days of the payment deadline.
  • have filed your 2020 to 2021 tax return
  • owe £30,000 or less
  • have no other tax debts
  • have no other HMRC payment plans set up

It would be wrong to imply HMRC simply agree to TTP upon application.  Firstly, HMRC have no obligation to agree, and consideration is likely to include the above criteria, together with a review of your compliance history.  Should the tax liability be over £30,000 you are encouraged to telephone HMRC to discuss a TTP.  PBC are happy to advise anyone with debts owed to HMRC, whether as your only creditor or as part of a wider financial matter.

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.

Interim Dividend Declared

The approach taken by PBC on this case has avoided the company being wound up by the court, the increased level of costs associated with this process. business insolvency northampton and bedford

PBC are delighted to announce the payment of a significant interim dividend amounting to £500,000 to HM Revenue & Customs from an insolvency estate.  Following our advice, the Northampton based company was placed into creditors’ voluntary liquidation in August 2022 and a commercial approach adopted with regards to asset disposals.  Combined with further assets to realise additional payments will be made to creditors in the future.

 

Jamie Cochrane, who is dealing with the liquidation, said, “It is always pleasing to be able to return monies to creditors, albeit solely HMRC at this stage.  The approach taken by PBC on this case has avoided the company being wound up by the court, the increased level of costs associated with this process and allowed us to address asset realisations in an orderly manner, resulting in enhanced values.  All of which will lead to a higher return to creditors”.

 

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.