Restoration of Company Leads to Major Pay Out to Creditors

PBC are pleased to report that having already paid preferential creditors in full a dividend of 44.58 pence in the pound was paid to unsecured creditors in a liquidation that, at first, appeared to have no distributable assets.

The company was placed into creditors’ voluntary liquidation in 2010 and following closure of the liquidation the company was dissolved. PBC were subsequently approached to restore the company to the register and act as liquidators to realise the outstanding director’s loan of approximately £100,000 which was unrealisable in the previous liquidation.

With the assistance of Katie Summers, a partner at Howes Percival LLP, a successful application was made to restore the company to enable recovery of the loan and subsequently a payment to be made to creditors.

Joint liquidator, Gary Pettit, said, “It is always pleasing to see returns made to creditors but the outcome and “out of the box” thinking surrounding this matter was particularly pleasing. I must also place on record my gratitude to Katie for the advice and assistance received”.

What is insolvency and does it apply to me or my business?

Insolvency is a very simple situation that can need a very difficult and sometimes complex resolution. If you find yourself in a situation where you are potentially insolvent you will need to take a long, clear look at things and decide what is the best option. In this video, Kym Carvell looks at what insolvency means for a business or individual. With over 30 years of experience of insolvency, Kym is a respected member of our team who is able to explain financial situations with clarity, honesty and a sympathetic ear. If you think the situations described in this video may apply to you, or your accountant is flagging a potential issue, your best option is to contact us as soon as possible so we can begin working towards a resolution.

 

Leopards do need to change their spots

It is a common phrase but if a leopard does not change its spots then it remains a leopard. Probably the most recent example of that has been British Home Stores who did not keep up with shopping trends.

Now another big name has fell into difficulty with Toys R Us in the United States falling into Chapter 11. For those who are unaware, Chapter 11 of the US Bankruptcy Code is similar to administration in this Country.  It must be emphasised this latest news involves the American division and neither the UK, European, Australian or Asian operations are caught under the current issues.

The (chapter 11) process is being used to enable the company to restructure approximately $5billion of debt, aided by a reported $3billion of new financing. The issue I would be asking about is more of a practical one.  Recent statistics suggest buying habits for toys are changing with estimates indicating 2016 saw 13.7% of toys being acquired on-line, as compared to 6.5% the previous year.  You have to question whether the large warehouse-style outlet is becoming a dinosaur when compared to the laptop in the home.

Whenever we at PBC look at a corporate restructure we first look at trying to identify what are the reasons for the company experiencing difficulties. After all, a leopard that does not change its spots will only endure a reoccurrence of those issues at a later date.  Toys R US say all 1,600 stores and 64,000 employees in America will be preserved, yet retail has seen the on-line competition bite into their business by another 7%in 2016.  I may be guilty of being too simplistic but often at PBC we find it is the simple things that are over-looked and, in the end come back and bite you.

If you require any advice or assistance on any insolvency-related matter then please contact Gary Pettit or Gavin Bates at PBC Business Recovery & Insolvency on (01604) 212150.

When are creditors paid?

When a company or person is going through a financially difficult time common questions which occur are who will get paid and when? Many people often have a vested interest in a company and there is a very clear order in which they will appear in the order of payment. While this is sometimes frustrating it is a legal requirement and cannot be changed. In this video Gary Pettit, one of our directors and a licensed insolvency practitioner here at PBC, takes you through the basics of what will happen and who will be paid at what point in the process. He will also look briefly at the different ramifications of areas such partnerships and limited companies. As always the advice is to contact us if you feel we can help but this video should clear up some of the more regular questions we hear about payment before, during and after insolvency procedures.

What is Bankruptcy?

Personal insolvency, including bankruptcy is something that nobody wants to face. In this video Gavin Bates, one of our directors , explains a little more about what insolvency means, other options to potentially avoid bankruptcy and what could happen if you do need to take the bankruptcy option. Many people come to PBC with questions such as ‘will I lose my house if I take bankruptcy’ and ‘what about my car and other basic needs’ these are difficult questions and the answer will vary depending on your circumstances but we will work with you to make life improve as fast as possible. For many people, the relief of seeing a solution to their issues is the first sign that they are re-stabilising their life and turning the corner towards becoming solvent again. While the road may still be difficult (and we may not always say what you want to hear) talking and taking some advice could be the first step on your journey.

When do I need an Insolvency Practitioner?

Do have a dog but try to bark yourself? They (dogs) are pretty good at it and are certainly better than me so I tend to let them do what they are better at!

So, why is there an apparent reluctance to consult with an insolvency practitioner (“IP”) until the very last minute, if at all? I will say now I have a huge amount of respect for those who come to see me.  After all I am a stranger to them and they are being asked to reveal all of their issues on a point of trust I may steer them in the right direction.

Some of the subjects we have been approached to assist on include:

  • A customer has gone insolvent and the creditor is unaware of their rights or need guidance on the meaning of documents received.
  • A business is being handled by an administrator (or liquidator) and you are interested in the acquisition.
  • The IP is telling you that the goods you supplied are going to be sold for the benefit of creditors as a whole but what are your rights?
  • An IP is threatening me with all sorts of monetary claims.
  • My credit card and other domestic debts are out of control.
  • Our company is in financial difficulty.

 

The insolvency business is a highly specialised area with less than 1,100 appointment-taking IPs in the UK. The governing legislation provides some immense powers such as lifting the corporate veil and pursuing company officers personally for losses resulting from their conduct, the rights of landlords or suppliers can be controlled, or even prevented.  Contacting an IP at an early stage may make the necessary route you need to take smoother, it may even mean you have more than one option.  Leaving it until things are getting to a critical level often leads to a very costly and damaging outcome.

For those who need convincing, in a case I am looking at a gentleman tried to handle a bankruptcy petition that had been presented against him in person. Because he did not appreciate the court procedures he ended up being made bankrupt.  His asset value (home and land) is over double that of his principal debts but he is now facing the prospect of losing his home in order to clear the bankruptcy and the costs inherent with bankruptcy.  Had he taken timely advice this could have been avoided and the anticipated cost a fraction of what they are now going to be.

So, the message is clear. IPs are not monsters and are there to bark for you when the highly specialised subject of insolvency comes looming.

If you require any advice or assistance on any insolvency-related matter then please contact Gary Pettit or Gavin Bates at PBC Business Recovery & Insolvency on (01604) 212150.

PBC announce dividend from liquidation

PBC are pleased to report that having already paid preferential creditors in full a dividend of 9.72 pence in the pound was paid to unsecured creditors of GLA Stroud Limited when it was anticipated no funds would be available.

The company was placed into creditors’ voluntary liquidation on 4 June 2014 after the preceding company voluntary arrangement it had entered failed due to circumstances out of its control.

Joint liquidator, Gary Pettit, said, “Asset realisations in any construction industry insolvency can be complex but in this case they were significantly higher than originally anticipated with the retentions due to the company being recovered with the assistance of Leslie Keats.  Also, book debt recoveries were at 95% of the ledger which was achieved by pragmatic negotiation and assisted by good record keeping by the company in the first instance”.

Administration & Creditors’ Voluntary Liquidation

One common mistake that business owners, the press and many others make is to ask ‘is my business bankrupt’ or ‘can my business be bankrupt’. It is only possible for an individual to be bankrupt so a company will go through the process of liquidation or administration. In short, if you are looking at a company that is not in a position to pay the creditors and the situation is clearly not a short term issue then you may need to enter administration or liquidate.

This video clearly explains what the different processes are and Gavin Bates, one of our licenced insolvency practitioners with over 25 years experience, takes you through your options.

PBC announce interim dividend from an IVA

PBC are pleased to announce an interim distribution from an individual voluntary arrangement.

The debtor’s proposals were approved by creditors with modifications on 29 June 2016. The debtor has proposed monthly contributions together with 50% of commissions earned over £500 to her creditors, which are currently up to date.  The proposals anticipated dividends to creditors at each anniversary of the arrangement and I am pleased to report payment of a first interim dividend of 7.60 pence in the pound, as estimated, to unsecured creditors.

The debtor’s monthly contributions are continuing to be monitored, together with her commissions earned and a second interim dividend of 10 pence in the pound is expected to be made to creditors at the second anniversary of the arrangement in June 2018.

For more information on voluntary arrangements, please see the video here.

What is the difference between Corporate and Personal Insolvency?

When you realise you are potentially in a position where you or your company is insolvent you will need to take action as soon as possible. It is sadly not uncommon for corporate and personal insolvency to be bedfellows, but they are different so you will need to make sure you are approaching it from the right perspective. One of the very early discussions we often need to have with our clients is the difference between their personal and corporate financial responsibilities. Kym Carvell explains how to answer the question ‘what is personal insolvency’ and the difference between that and corporate insolvency in this video. She also discusses some of the confusion surrounding the liability status of sole traders and the common reasons why some companies can become insolvent.