Category Archives: Insolvency issues

Will new Insolvency Practitioners keep Portsmouth FC in existence?

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Portsmouth Football Club has entered into Administration for the second time in three seasons.

The 2008 FA Cup winners were placed into administration at a High Court hearing on Friday 17 February 2012 after they were issued with a winding up petition by HM Revenue and Customs on 03 January.

The club received a 10-point deduction due to the administration, deepening the threat of relegation as they now currently sit at the forefront of the relegation battle. Should the club be relegated it would have a detrimental effect on the attract-ability of new investors to keep the club alive.

The club has debts of around £4m, of which around half is owed to HMRC in unpaid tax.
Other creditors include West Bromwich Albion, Wolverhampton Wanderers and Bristol City Football Clubs, the Football League itself, and Portsmouth City Council.

The administration order came after the club’s parent company, Convers Sports Initiatives, went into administration in November 2011.

Former professional footballer Trevor Birch, of the accountancy firm Pannell Kerr and Forster, has been appointed by a judge as Portsmouth’s administrator.

The administration allows the club to access its bank accounts after they were frozen following HMRC’s winding-up petition. It also enables Portsmouth FC to continue trading while searching for new owners, but the future of the Fratton Park club is looking uncertain.

It is less than four years since Portsmouth won the FA Cup, beating Cardiff City in the final at Wembley, the club became the first Premier League club to be placed into administration in February 2010. This resulted in them being deducted nine points and relegated at the end of that season. Now, as members of the Football League, the automatic penalty is a 10-point deduction, and that has seen them drop to the relegation zone.

A spokesman from HMRC said they were pleased the court had appointed different administrators to those of parent company, “HMRC is pleased that the Court agreed with our view that the creditors of any business have a right to expect that the administrator in these circumstances is completely independent. This is why we suggested the appointment of PFK whose knowledge of the football industry and lack of previous connections to Portsmouth FC should reassure creditors,” said the spokesman.

Insolvency practitioners are being brought into financially struggling football clubs more and more. Lisa Hogg and David Elliot of Wilson Field Limited were appointed Joint Administrators and then Joint Liquidators of Gretna Football Club when it ran into difficulties; they had no interest with the investors.

Andrew Bilby

Redundancy tit bits

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Why should employees feel like they’re left in the dark when it comes to how their claims are processed and calculated in insolvency??

In many redundancy scenarios, employees can be left with unclear answers about how much they can expect to receive, who the payment will come from and the timing of any payments.

Whilst the government (in the form of the Redundancy Payments Service) issues guidance for employees and provides contact numbers for individual offices, those with experience of attempting to contact them will appreciate how difficult, time consuming and frustrating this can be!!

Payments are made up of arrears of wages, accrued holiday pay, notice pay and redundancy (subject to length of service).The Redundancy Payments Service will pay each element of claim upto a maximum of £430 per week.

At Wilson Field Limited we appreciate the devastating effect redundancy can have to individuals and families and therefore we prioritise employee claims to ensure they receive their entitlement as quickly as possible and also provide support and assistance to individuals.

To make the process run as smoothly as possible, here are a few guideline points;

Return your RP1 form to the Insolvency Practitioners office as soon as possible
Ensure your RP1 form is completed as fully as possible
Don’t be afraid to ask questions-call the Insolvency Practitioners office and ask for help
Understand your claim and its different elements
Never send your RP1 direct to the Redundancy Payments Service
Don’t forget to return all forms
Acknowledgement of the payment you will receive will be sent direct to employee’s from the Redundancy Payments Service
Notice pay is subject to deductions such as jobseeker’s allowance, irrelevant of whether you’ve claimed. Therefore ensure you sign on if entitled.
Check your payment once received; contact the Insolvency Practitioner if incorrect
You should check dividend prospects with the Insolvency Practitioner regarding any balance of your entitlement

If in doubt, please contact Wilson Field or contact us on 0800 458 3320 for FREE confidential advice.

Administration – a powerful & positive tool

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At a time when the economy is shrinking and unemployment is rising, many of the tools of trade of the insolvency profession exists to minimise the number of failed businesses which simply “disappear” and on the back of that to preserve jobs.

Unless you have chosen an insolvency-related career or you have been unfortunate enough to have experienced severe financial problems in the past, there is a good chance that you will have limited knowledge of what services are available from an insolvency practitioner.

Many people see headlines about large employers “going into Administration” and immediately assume the worst – it all sounds pretty grim and terminal. And some of it is – particularly if business owners fail to take early advice when they face financial difficulty. But the insolvency industry does much more than “bust” companies.

Administration is a powerful tool. It is a temporary arrangement whereby insolvency practitioners are appointed by the court to take control of the company. During their period of office they look into the viability of the business to see if part or all of it can be salvaged. And whilst the company is in Administration it is in a protective bubble – safe from potential actions taken by creditors, such as bailiffs seizing essential equipment, until a solution can be found.

Recently the retail group, Peacocks, went into administration. Part of that group is the women’s clothing retailer Bonmarché and this has been sold for an undisclosed sum. Although there will be some job losses, 2400 jobs will be preserved. Historically, the alterative would have been that the company would have simply ceased to exist and all the staff would have been unemployed.

The outcome of administration varies tremendously. In theory, the administrators could manage the business until it has recovered and then hand it back to the directors. In reality there are usually underlying problems which frequently result in the healthy parts of the business being sold on. Once no further improvements or sales can be brought about the administrators role is completed and they usually then take on the role of liquidators.

Running a business is not easy. If you are running a business, whatever the size, and are worried about any issues, the worst thing you can do is nothing. Discuss the problems without delay with a licensed insolvency practitioner. They have a number of tools at their disposal including access to private investors and specialist lenders.

For free confidential advice, please contact Wilson Field.

The positive side of the insolvency

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Unless you have chosen an insolvency-related career or you have been unfortunate enough to have experienced severe financial problems in the past, there is a good chance that you will have limited knowledge of what services are available from an insolvency practitioner.

Headlines about football clubs “going into Administration” or large employers “going into Liquidation” are commonplace as well as mentions of winding up orders, LPA Receiverships and voluntary arrangements – it all sounds pretty grim and terminal. And some of it is – particularly if business owners fail to take early advice when they face financial difficulty.

But the insolvency industry does much more than “bust” companies. Recently, the prompt and pro-active actions of the director of a business in seeking advice from Wilson Field had far reaching consequences. The company provided care assistants into the homes of people needing help. Faced with the fact that the company could no longer trade profitably the director could have walked away from the company and the main creditor (the taxman) would have received nothing. Instead, the company was placed into Administration until its sale as a going concern could be arranged. The result – 60 staff retained their jobs, numerous vulnerable and elderly clients were not abandoned and Her Majesty’s Revenue & Customs whilst not fully repaid did receive a significant amount. The director gained nothing other than the knowledge that his staff and clients had not simply been abandoned.

Running a business is not easy – particularly in the current climate. Businesses depending on public sector contracts or operating in industries such as retail, leisure, construction or haulage are probably concerned about future sales. They are also probably wondering if their bank will support them if they hit a snag. And heavily-borrowed businesses will doubtless be concerned about the prospect of interest rate increases.

Insolvency practitioners have a number of tools at their disposal including access to private investors, sources of finance and equity in certain circumstances.

Behind every business is a person – or people. If you are running a business and are worried about any issues mentioned above the worst thing you can do is nothing. Discuss the problems without delay with a licensed insolvency practitioner. The sooner you take advice the more options are usually available and the better chance of survival your business will have.

For free confidential advice, contact Wilson Field.

Insolvency and Rescue Awards 2011 Update

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Wilson Field have recently entered for ‘Corporate Recovery Firm of the Year’ through the Insolvency and Rescue Awards 2011.  This award is open to UK Corporate Insolvency Firms with four to twenty appointment taking Insolvency Practitioners and we are delighted to find out that we have been shortlisted for this award.

The companies shortlisted in this category are yet to be revealed but we’re thoroughly excited to be a part of this.  Click here for more information and update of the event.

Are You a Shadow Director?

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A recent story in the news covered the sentencing of a man who received 50 weeks imprisonment suspended for two years, disqualification from being a director for eight years and an order to pay prosecution costs of £2,000 for contravening an undertaking not to take part in the management of a limited company. Whilst he had not been a registered director of any limited company after signing the undertaking, it was concluded that he had in fact been acting as a shadow director.

So, what is a shadow director and how could it affect you in an insolvency situation?

As described in the definitions of the Insolvency Act 1986, a shadow director is a person in accordance with whose directions or instructions the directors of the company are accustomed to act.

In an insolvency situation, this distinction is important, as a shadow director is considered to be just as accountable for the company as any formally appointed director.

If you think that this describes your position within a company, you are equally as responsible as the formally appointed directors and that you have a duty to act in the best interest of the company at all times.

Bankrupts are not allowed to act as company directors, but if they are acting as shadow directors they could fall foul of the law.

If you are worried that you may be a shadow director please contact Wilson Field Limited now  on 0800 458 3320 or visit our web site at www.wilsonfield.co.uk and we’ll be happy to provide further information.

High Street Retail Casualties

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Rather predictably, there has been a flurry of retail casualties on the High Street. This sector obviously depends directly on the public and consequently is now feeling the effects of poor consumer confidence. With job insecurity, the VAT increase and government cutbacks all starting to bite and the fact that inflation has eroded spending power, the public are cutting back with a vengeance. Higher fuel prices have also contributed to the equation as a result of which retail sales in clothing and non-food have tumbled.

Statistics for the first quarter of this year showed the number of retail companies going into administration increased by a massive 30% compared with the same period last year. Well known operators Focus DIY, Habitat, Jane Norman and now T J Hughes have all recently suffered and HMV and JJB Sports are known to be experiencing problems.

It is only the well known names which hit the press but many smaller retailers are similarly suffering. If you own a retail business and are worried, visit our website at www.wilsonfield.co.uk or for free advice ring Freephone 0800 458 3320 .

Opportunities Are Not Lost – Somebody Else Takes Them…

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Opportunities in life don’t simply evaporate – if we turn a blind eye or ignore them, somebody will steal them. It can apply easily to business deals, investment opportunities as well as general business decisions.

The concept is simple, if you dither about and are indecisive or if you allow yourself to be distracted, a sharp opportunist could easily take from under your feet, that which you comfortably thought was “in the bag”.

Look at the banks, for example. Whilst they are blaming low levels of lending to SMEs on a lack of demand, the ABL sector has seized the opportunity and is booming – funding those businesses which are seeing growth in their sales and whose banks have abandoned them. They are not reporting a lack of demand for finance. When the banks do return to the market they will realise that customers have long memories and many would readily trade a few percentage points in the interest rate for the confidence of knowing that funding will be available when it is needed moving forward.

Taking opportunities usually involves an element of risk. Do you bid for a new contract which involves increased capital expenditure, additional staff and training costs when confidence in the economy is at rock bottom or do you simply batten down the hatches and let somebody else take the risk (and potentially reap the reward). Running a business and taking chances is not for the feint hearted.

And if your business is already struggling or has recently suffered a financial body blow, there is the opportunity to do nothing or be proactive and accept professional advice while there are still various options available.

If you feel that you have missed out and are now regretting it, there is always hope. You have to deal with it and move on and in business obtaining quality, timely, professional advice is the best starting point, particularly if you are experiencing cash flow problems. For friendly, confidential, free advice call Wilson Field on 0800 458 3320.

On the positive side you may look back and realise that that missed opportunity would have been a bad move anyway.

Time to Become a Company Director?

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Many small business owners are sole traders or partners. Frequently, perhaps in the excitement of starting their new venture, they fail to seek professional advice to look at the alternatives.

Since April 2011 there have been a number of articles written by experts, advocating the benefits of incorporating small business for tax reasons. But there are other reasons to incorporate, not least of which is the protection to shareholders of limited liability. As far as the law is concerned, a limited company is a separate legal entity to its shareholders. As long as the directors and shareholders conduct themselves properly and do not commit themselves by signing such as guarantees they are not liable for the company’s debts. The concept of limited liability was created to encourage investment and entrepreneurial spirit. Without it, it is difficult to imagine how the stock market would exist

Nobody goes into business expecting it to fail. Regrettably, running a business can be a minefield, particularly for inexperienced owners. But in a period when in recent years huge companies such as Woolworths and Lehman Brothers have toppled, no business owners can be complacent.

So if you are starting up in business or are already a sole trader or partner, take professional advice about whether or not you would be better off incorporating. Don’t delay, do it now.

For free confidential advice call Wilson Field.

Who’d Be a Shopkeeper?

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Latest statistics from the Insolvency Service suggest that now is not a good time to be “a nation of shopkeepers”. This supposedly derogatory remark is usually attributed to Napoleon but in fact was used earlier by the famous economist Adam Smith in The Wealth of Nations.

Corporate insolvencies (includes all processes) in Q1 of 2011 show an increase of some 55% compared to the same period last year for companies in the wholesale and retail sectors. Traditionally, businesses which are already struggling and are in the retail sector often see the busy Christmas and sales season as a last chance of survival. The quiet period which follows is when many businesses fail. But poor weather hit sales in the run up to Christmas 2010.

Perhaps the biggest issue is confidence by the public. The combination of high unemployment and concern over job security, the VAT increase in January and anxiety over the impact of government cutbacks has seen the man-in-the street tighten his belt.

The latest statistics have shown a substantial rise in the number of retail administrations and retail company voluntary arrangements (CVAs) for the first quarter of 2011, compared with the last quarter of 2010. Administrations in retail have seen a 55% jump from 80 in the Q4 2010 to 124 in Q1 2011, while CVAs in retail have risen by 30% from 23 in Q4 2010 to 30 in Q1 2011. The overall number of administrations was up by nearly a quarter from 642 in Q4 2010 to 782 for Q1 22%.

If you own a retail business and are worried, visit our web site at www.wilsonfield.co.uk or for free advice ring Freephone 0800 458 3320 .