The number of administration’s in the first quarter have
fallen by 7% in comparison to the previous quarter.   Administrations primary aim is to rescue all
or part of the business.  The fall in
numbers of administrations at a time when company insolvencies have increased
suggest that less companies have been rescued from insolvency.

These statistics are based on the first quarter’s results
and the county has entered into a recession since then.  The next six months results will be the ones
to show us how businesses are managing during the double-dip recession.

Retaining employees means that the Administrators have the
burden of their remuneration and will be reluctant to do this if there is no
benefit. They will often reduce workforce to a skeleton staff. Contracts will
be transferred if the company is sold as a going concern, and the purchasers
may attempt to clip the price to reflect the burden of inheriting employee
liabilities.

Directors fall into two categories – those who just want the
company to continue and the employees’ jobs to be saved and those who have their
own interest at heart. The latter may want to purchase the company themselves
and may even jeopardise the sales process by withholding information from the
Administrator or may even put the potential purchasers off. A judgement call is
needed early on whether to retain directors or to remove them from the scene.

Secured creditors generally leave you to get on with it and may
even finance the working capital for trading. Occasionally though, the secured
creditor is not so patient and I have even come across some who will try to
interfere with the Administrator’s decisions. The Administrator will aim to get
the highest realisations for all creditors and as the secured creditor is at
the top of the list, they will benefit from this. Yet some will try to force
Administrators to accept the quickest way out rather than the best solution.

Unsecured creditors are the stakeholders usually responsible for
taking up a lot of the Administrator’s time. They will try all ways to recover
their monies, including Retention of Title (ROT) claims, Lien claims, refusing
to supply to the Administrators unless their balance is paid – to name but a
few. Claims over title of assets need to be dealt with early on and are
generally straight forward; sometimes commercial judgements have to be made. Key
suppliers and hauliers sometimes threaten to interrupt the supply of the goods
or services to make demands or increase prices. Sometimes, utility suppliers fall
into this category too. Their blinkered view can halt the whole trading process
and force the company to be broken up; they often need to be reminded of the
opportunities that continued trade may have to them.

These are just many of the balls that Administrators have to
juggle.

Author: Claire Foster

Insolvency and business turnaround specialist, Wilson Field Ltd, has jumped into the top ten in the latest Corporate Insolvencies league table.
The firm, which is based on Ecclesall Road South, is continuing to thrive in a difficult market place.

Wilson Field finished in ninth place in the table, which is compiled by insolvency practitioners RSM Tenon using figures submitted to the London Gazette.
February’s league table sees Wilson Field rise up nine places beating off competition from some of the UK’s biggest players in the industry including Grant Thornton UK LLP, PKF (UK) LLP, and Deloitte & Touche LLP.

Wilson Field recorded more than 26 cases in the month including liquidations, administrations and Company Voluntary Arrangements (CVA).
Phil Meekin, head of marketing and business development, explains what the league table is, how the company is bucking the trend and what this new high ranking means for Wilson Field.

In addition to the head office in Sheffield, offices are now open in Birmingham, Leeds and Manchester.  With approximately 75 staff, Wilson Field are bucking the trend in the UK insolvency market.

The latest league tables for corporate insolvencies in the UK, that are published by RSM Tenon Recovery, show that Wilson Field had 26 appointments placing them 9^th in the table.

League Tables

Very often the only route available for the Administrator/Liquidator to collect monies due back to the company is via the court. All too often the insolvency practitioner asks faith with debtors who simply will not pay for no other reason than “the company is bust and it won’t be able to chase me”. Unfortunately it appears that these claims may fall at the first hurdle if the defendant simply asks the security for costs. There are other ways round this problem such as seeking a fighting fund from creditors, however the likelihood of this happening is remote as creditors will view this as simply throwing good money after bad. Wilson Field has successfully gained sanction from HMRC to fund litigation in certain circumstances. Claims can also be assigned where the Liquidator/Administrator can recover the benefit of the net recovery on a percentage basis.

If you would like further information please do not hesitate to contact us on 0800 458 3320

In April 2003 the Government had to carry out reforms to the civil procedures which may result in the abolishing of the ability to recover a success fee from the other side. The CFA is an extremely useful tool that insolvency practitioners can call upon to settle proposed litigation early and it is hoped that an alternative will be available should the reforms go ahead.

For more information please do not hesitate to contact us on 0800 458 3320

Serious consideration should be taken before entering into an insurance policy in order to protect you from your opponent’s costs should you lose. There are a number of providers out there and it pays to shop around.

The cover offer will vary from each provider but can range from no up front fees or costs to a sizeable fee being paid on day one. The deferred policy will usually mean a greater percentage of realisations should there be a successful outcome to the litigation.

An important point to remember is a win does not necessarily mean you will get paid out. Does the policy require a payment on a win or on a recovery? Again, the best policy will be one that does not require a payment until the insolvency practitioner is actually in funds.

Once and after the event insurance policy has been signed, the insurer must be kept informed at all stages of the litigation. If an offer is made by the other side to settle, your insurer should be kept informed and their views sought on the offer made. The after the event policy can usually be recovered from the other side and may encourage your opponent to settle early, but be mindful of global settlements as all parties to the litigation, including the insolvency practitioner, the solicitor, counsellor and insurer will be sharing the same pot.

If you require further information, please do not hesitate to contact Wilson Field or call us on 0800 458 3320.

If the distributions are less than £25,000, then concessions can be obtained from HMRC for the company to pay these funds as a capital distribution and then strike the company off. However, the moment that distributions under this section exceed £25,000, all of the distributions will count as dividends, leading to an additional tax liability for higher-rate taxpayers.

Be warned, an improper application for a striking off can result in a fine of up to £5,000, up to seven years imprisonment and disqualification of acting as a director for up to 15 years.

If funds to distribute are in excess of this, the most appropriate way of doing this is by a Members Voluntary Liquidation (‘MVL’).

Shareholders receiving this distribution (up to £10million in their lifetime) will be entitled to entrepreneur’s tax at 10%. Significant taxation savings can be enjoyed by these shareholders.

An MVL is the most straightforward of all liquidations, involving the members passing resolutions to appoint a liquidator, the liquidator realising the assets and discharging any liabilities and finally distributing the funds to the shareholders. The liquidators may also make more than one distribution to shareholders if it is beneficial to shareholders to receive these in certain tax years.

The costs of an MVL will vary for different companies. In most cases, the savings in tax will more than compensate the costs of an MVL.

If you would like liquidation advice please do not hesitate to contact Wilson Field through the online form or call us on 0800 458 3320

1. The merit of the action – who is likely to benefit from successful outcome. Insolvency practitioners must act for the benefit of all creditors and consider whether a win would result in a distribution back to the creditors. Consideration should be given to ensure that sufficient evidence is available to support the claim.

2. Means to settle. The action may be against the company or an individual. There is little point in bringing an action if the company or person whom you are bringing the action against does not have the ability to pay.

3. Funding. Very often the company in Liquidation/Administration will not have sufficient cash available to cover the costs of litigation. Wilson Field have developed relationships with solicitors to act on a no win / no fee arrangement to enable the insolvency practitioners to commence recovery proceedings.

4. Insurance. All litigation will have an element of uncertainty regarding its success no matter how confident the insolvency practitioner is regarding the claim. If a claim proceeds to trial there is always a risk that the case will be lost with the losing side inevitably having to pay the costs of the winning party. One way to protect yourself against this is to take out an insurance policy.

5. Sanction/approval. Depending on the type of insolvency the appointment of an insolvency practitioner may need sanction from its creditors before commencing proceedings. In Administration there is no requirement for sanction, but a trust in Bankruptcy requires sanction before pursuing any claims. The Liquidator of a Creditors Voluntary Liquidation and the Liquidator of a Compulsory Winding Up need sanction need sanction for office holder claims but not company claims.

For any queries please do not hesitate to contact Wilson Field on 0800 458 3320

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