PBC set new ground-breaking law

On Monday 14 November 2016 at 10.12 a.m. Gavin Bates and Gary Pettit from PBC Business Recovery & Insolvency were appointed joint administrators of Bradford Bulls Northern Limited. They were asked to consent to the appointment just over an hour beforehand.

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Bradford Bulls are former World club champions and Super League champions but over the past four years have crashed into a depth of financial difficulties. Faced with a winding up petition presented by HM Revenue & Customs it was administration or just 18 minutes after the administration appointment the club were due to be wound up.

The administration appointment was made by the holder of a floating charge that secured personal lending. Once appointed the administrators expressed some concern the loan agreement may be flawed in terms of the power to enforce its security and having raised this with their solicitors it was agreed to seek court directions to declare the appointment as valid.

For those not involved with insolvency, if the appointment of an administrator is deemed invalid the adminstrator can be held guilty of trespass. Also, the appointment of administrators is determined not only by the date but the TIME of appointment.

Based upon advice two applications were filed, namely:

  1. Seeking a declaration that the appointment by the floating charge holder is valid, or failing that;
  2. The court make an administration order with retrospective effect.

The applications came before Justice Mann in the High Court on Monday 21 November 2016. On considering the applications the judge noted HM Revenue & Customs supported the appointment of Gavin Bates and Gary Pettit and that administration would serve a better purpose for the stakeholders than the alternative of liquidation.  The judge also had to consider whether the court had the power to make the appointment retrospective.  In not doing so he automatically places the adminsitrators in a position where they were trespassers for the previous week.

After considering the insolvency provisions, the benefits of administration and the support from the largest un-connected (and petitioning) creditor Justice Mann decided the court did have the power to make retropsective orders. Rather than consider the legal arguments over the vailidity of the floating charge security he terminated the original appointment with effect from 14 November (ie the date of the original appointment) and made an administration order including the appointment of Gavin and Gary effectively from 10.13 a.m. on Monday 14 November.

Can your advisor advise?

Let us start with a question. If a stranger came up to you and asked to borrow your car for a couple of weeks would you simply hand over the keys, walk off and trust the car will be returned in good order?  Hopefully, your answer will be along the lines of “Don’t be daft” or, quite simply, “No.”

So, why is it then, when confronted with an issue that could have serious financial implications, both on your business and you personally, many still refer to unlicensed or unregulated advisors?

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Recently, I have had the misfortune of coming across two examples. The first was a director who was advised his company was insolvent and steps ought to be taken to place the company into liquidation.  So far, so good.  However, that advice included selling the principal business pre-liquidation where the sale included a tidy £80,000 windfall for the directors!  A fee of over £16,000 was demanded and paid pre-liquidation.  That director is about to be confronted with a number of claims where the liquidator can “Lift the corporate veil” and hold the director personally liable.  The second is of a similar tone and with every day that passes the directors appear oblivious to the fact the advisor is steering them towards personal liability claims and, potentially disqualification from acting as a director.

To make matters worse, when using such advisors you have no guarantee of their knowledge or skill. Furthermore, there is likely to be little (if any) redress in the event of a complaint or challenge to their advice.

The Association of Business Recovery Professionals have been so concerned with this (growing) problem they have published two guides:

“Don’t be misled by advice from an unlicensed advisor”

“My business is in financial difficulty”

These can be found on the Association’s website (www.r3.org.uk) or on our website at www.pbcbusinessrecovery.co.uk/Links/.

Every insolvency practitioner (“IP) has to be licensed through a professional body and are regulated by statute, their professional body and the Government through the Insolvency Service. IPs also have professional guidelines to follow and are insured so there is recourse if things go wrong.

Perhaps the anomaly in the capacity of an IP to advise surrounds personal insolvency. If during a meeting with an individual the IP concludes that individual should go bankrupt and, as a result the IP will not be appointed to act the IP must cease the meeting forthwith because he is not permitted to provide bankruptcy advice!  The exception is if the IP holds a licence issued by the Financial Conduct Authority, which I am happy to say PBC are licensed in that respect.

At PBC there are two IPs, regulated through the Institute of Chartered Accountants of England and Wales and the Association of Chartered Certified Accountants. The directors in both Northampton and Coventry have well in excess of 100 years’ experience between them and, as mentioned, licensed by the Financial Conduct Authority.

Personally, if it was my financial welfare on the line I could not comprehend seeking help and guidance from anyone who is not qualified. That is not me being a control freak; merely seeking the best and most appropriate steer.  That is my view so why would you think differently?

PBC appointed joint administrators of The Castle (Wellingborough) Ltd

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The Castle (Wellingborough) Limited, operators of The Castle Theatre in Wellingborough, entered into administration on Wednesday 13 April 2016, with Gary Pettit and Gavin Bates of PBC being appointed joint administrators.

 

The directors were compelled to act in the best interests of the company’s creditors following the recent announcement by Wellingborough Council that they had terminated the contract to operate The Castle Theatre. Legal advice is being sought on this matter and nothing further can be added at this time regarding the administration and its circumstances.

 

All performances and other community activities will, as far as possible, continue to go ahead and staff and performers will be paid by the administrator through ticket sales and merchandise revenue. Gary Pettit, joint administrator, commented “This is very sad news for the Wellingborough community and, whilst we are working hard to find a solution so that The Castle can remain a focus in Wellingborough, we would encourage you all to continue to support the theatre.”

 

The full level of debt is still being quantified, however it is known that the company inherited a £500,000 pension shortfall and this is their biggest outstanding liability. All known creditors will be notified of the administration and registration procedure within the next 5 working days and any creditors who have not received information from PBC Business Recovery & Insolvency, the appointed administrators, by Thursday 21st April should telephone 01604 212150.

 

There are 38 staff involved at The Castle Theatre and, although there are no immediate plans for redundancies, sadly this cannot be guaranteed.