8th September 2020 Press Release from InfolinkGazette
Forthcoming service aims to reduce the critical time delay between the actual decision to appoint Administrators and unsecured creditors being aware of the fact. InfolinkGazette has advised that it soon intends to begin offering a new service to clients which aims to reduce the critical time delay between the actual decision to appoint Administrators and unsecured creditors being aware of the fact. Greg Connell, Managing Director or InfolinkGazette notes that occasionally the filing of a notice to appoint Administrators is picked up solely due to the fact that they form part of a Listed Company and are required by the Regulator to inform the Market of such events. When there is no such obligation, unsecured creditors are generally blindsided until the notice appears in the Gazette or is filed at Companies House. As Mr Connell stresses: "Clearly such a delay can make a huge difference to the quantum of any subsequent Creditor claim."
Arlington Engineered Systems Limited went in to Administration owing £17,294,300 to 630 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “Arlington were very late filing 2019 accounts, which not surprisingly resulted in the withdrawal of credit insurance; unable to secure credit terms, it looks like the group ran out of cash.”
Expensive burger chain, Byron Hamburgers Limited went in to Administration owing £15,378,000 to 139 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the Byron management had already realised that selling expensive burgers from 51 sites was unlikely to turn a profit and 19 or more locations would need to close, but when they all had to close as part of the Governments Covid-Countermeasures, Byron ran out of time.” Greg added: “Byron wouldn’t have qualified for access to CBILS because accumulated losses exceeded 50% of capital”.
FOUR SEASONS HEALTH CARE LIMITED (Company number 05165301), the UK's largest, but financially troubled independent health care providers filed an Administrator Appointed document at Companies House today. InfolinkGazette's Managing Director, Greg Connell, said: “the company filed a Notice of Intention to appoint an administrator at HM Courts on 04/08/2020, almost a full month before the official appointment.” Greg added: “Four Seasons Health Care Group Limited filed the notice of intent at the same time, but the Administrator Appointment was confirmed on 20/08/20.”
Archant Community Media Holdings Limited, part of the Norwich based Archant newspaper and magazine publishing group filed a Notice of Intention to appoint an administrator ahead of the bank holiday weekend. The group publishes four daily newspapers, around 50 weekly newspapers, and 80 consumer and contract magazines. InfolinkGazette's Managing Director, Greg Connell, said: “Archant appear to have been purchased by a private equity firm; the outlook for creditors is not yet know, but Archant’s defined benefit scheme had a £25 million deficit in 2018, and that deficit is likely to have grown since then”.
Suppliers are about to be hit by a Quadruple whammy: HMRC as a preferential creditor; the deferred insolvencies that have simply been delayed for the past 5 months; the insolvency growth of companies in at least 80 sectors that are no longer viable under Covid-Countermeasures; and, the collapse in asset values from what will become stranded assets (assets that can't be fully utilised under Covid-Countermeasures). The situation will be made even worse by the knock-on effect, whereby previously viable companies will fail as a consequence of mounting unsecured and uninsured losses from corporate failures.
Celine Group Holdings Limited, the parent Company of Debenhams Retail Ltd (in Administration) have filed a Notice of Intention to Appoint an Administrator and a further Notice of Appointment to appoint an administrator at the High Court. InfolinkGazette's Managing Director, Greg Connell, said: “Celine is controlled by Debenhams’ lenders and only took control of Debenhams on the 04/04/2020. Greg added: “we only see these types of High Court filings when companies are about to formally enter Administration, and a moratorium will already be in force.”
In the latest profit warning from Lookers PLC, the board reported that the temporary closure of the Group's dealerships throughout the lockdown period had made a significant impact on the Group's revenue and expects to report H1 revenue of approximately £1.6bn (2019: £2.6bn). In addition to the revenue decline, the Group also experienced margin pressure in both new and used vehicles with the former impacted by reduced levels of manufacturer volume bonus receipts. The Group expects to report a material underlying PBT loss for H1, after receiving c£29m from the Government's Job Retention Scheme. InfolinkGazette's Managing Director, Greg Connell, said: “the company has now issued 4 profit warnings in a little over 12 months and has also widened the scope of its audit into a £19m black hole in its 2019 financial results.”
CATH KIDSTON LIMITED (now CKL Realisations Limited) went in to Administration owing £6,874,509 to 430 UK unsecured creditors, plus £68,398,991 to unsecured group company Cath Kidston Acquisitions Ltd. InfolinkGazette's Managing Director, Greg Connell, said: “the private equity owners of the business held a secured charge, so it looks like they will come out OK, and dividends to unsecured creditors will be negligible”.
Chartered Surveyors, Fletcher King plc issued a profit warning today; the company had announced that performance to 30 April 2020 was not materially affected by the COVID-19 virus outbreak. However, the huge uncertainty and market dislocation caused by the current situation has had a material adverse impact on transaction-based fees. The Company has also been impacted by a severe contraction in the Professional Indemnity insurance market, particularly with regard to property valuation work, with the renewal premium more than doubled, increasing by just over £200,000 for the financial year. InfolinkGazette's Managing Director, Greg Connell, said: “property valuations are set to become extremely contentious; if The Trafford Centre was valued at £1.7 billion when it had an annual income of £85.3 million, what's it worth today if the annual income drops to £60 million, or £40 million.
Hammerson PLC continues to top the FCA Short Seller list with a total net short position in its stock of 14.29%. Eleven companies have taken a position shorting Hammerson’s stock with net short positions ranging in size from 0.6% to 4.33%. InfolinkGazette's Managing Director, Greg Connell, said: “Hammerson's rights issue should enable it to avoid breaching its banking covenants in the short term.”
Construction firm SQ-M2 Ltd went in to Administration owing £3,817,020 to 244 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the company’s problems stem from a project involving cladding issues, arising from a cladding supplier that ultimately went in to liquidation”. Greg added: “unfortunately, insolvencies like these have a serious knock-on effect and several of SQ-M2’s unsecured creditors will be forced in to Insolvency themselves”.
Logistics firm Amco Services (International) Limited went in to Administration owing £2,561,080 to 364 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “Amco was highly leveraged but seemed to be part way through a turnaround, which was snubbed out by the widespread economic decline caused by the effects of Covid-Countermeasures.”
This is not a normal cyclical recession, it has nothing to do with interest rates/inflation, or asset bubbles, it is a recession brought about by the government shutting down the economy as part of a package of Covid-Counter measures. Normal recessions end after around 11 months as part of the same cyclical process that caused the recession to begin in the first place, or after a period of expansionary macroeconomic policy. This recession is different, it won’t end as part of a cyclical process, or after a sustained period of expansionary macroeconomic policy, it will only end when the Covid-Countermeasures cease to be in force, such as lockdowns, closures, social distancing measures etc. If the Covid-Countermeasures end soon, the recovery will more closely resemble the much hoped for V-shape, but if the Covid-Countermeasures continue to be the norm, then the recovery will be disappointingly L-shaped.
Efecte Plc issued a Positive profit warning updating its guidance for 2020 expecting SaaS net sales to grow 20-25% during 2020, instead of 15-25% as per previous guidance. InfolinkGazette's Managing Director, Greg Connell, said: “at a time when profit warning numbers are still soaring, it is good to see some positive announcements. Companies that help organisations digitalise, automate, reduce costs and improve client experiences, still have the opportunity to buck the current trend”.
Profit warnings today from Bellway p.l.c and Cairn Homes plc warning of the impact of incremental costs. InfolinkGazette's Managing Director, Greg Connell, said: “both builders would have been adversely effected by extended site durations due to reduced productivity, enhanced health and safety requirements, and additional costs associated with site closures”.
50-year-old furniture store H & H (Retail) Limited t/a Alan Ward Furniture went in to liquidation owing £2,827,670 to 183 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “traditional furniture retailers were already facing challenging market conditions from having to deal with cost pressures resulting from the weakness of Sterling and a margin squeeze from online retailers; the effects of the Covid Countermeasures will be terminal for many companies in this vulnerable sector”.
Sanderson Contracts Limited, fitted out pubs and restaurants for Premier Inns, J D Wetherspoons, and Miller and Carters but went in to Administration owing £10,325,700 to 430 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the surviving pub and restaurant chains are putting refits on hold to conserve cash, which will be used to help deal with the fallout from Covid countermeasures”.
In a profit warning issued today, Fulham Shore PLC the operators of Franco Manca and The Real Greek restaurants, announced that 9% of the Group's restaurants will not be re-opened to dine-in customers until office workers and theatre-goers return to the City and the West End. The Board estimates that the re-opened restaurants will only be capable of operating at 60 to 70 per cent of their previous dine-in capacity due to social distancing rules. InfolinkGazette's Managing Director, Greg Connell, said: “all restaurant groups will need to make up a considerable proportion of sales lost to dine-in capacity, with takeaway deliveries if they are to remain profitable.”
Construction Partnership UK Limited, the main Contractor working on failed student development The Rise went in to Administration owing £9,911,510 to 815 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “The aged debtor analysis for Construction Partnerships reveals over £3 million owed by the main developer Hill Top Rise Ltd, who were wound up by the court on 10th June”. Greg added: “this example demonstrates the catastrophic consequences of unsecured creditor losses, whereby trade suppliers are forced out of business when a customer becomes insolvent. At InfolinkGazette, we estimate that at least 25 of Construction Partnerships sub-contractors will be forced in to insolvency by the knock-on effect of their unsecured loss. If limits are available, trade suppliers and contractors are well advised to take out credit insurance in the current environment.”
Pandemic control measures could mean it is game over for buffet style restaurant chains. HJ Tenger Holdings Limited, the operator of a chain of buffet-style Chinese restaurants went in to liquidation owing £2,932,180 to 42 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “some will adapt to the table service all you can eat style buffet but for many it will be too disruptive to their low-cost business model”.
There is a lot not to like about the controversial Go Outdoors Ltd Pre-Pack, which after being renamed GOL Realisations Ltd went in to Administration owing £27,999,000 to 590 unsecured creditors, including £15,539,239 to parent company JD Sports Fashion PLC. InfolinkGazette's Managing Director, Greg Connell, said: “Jd Sports Fashion Plc were the first charge holder and ultimate owner of Go Outdoors Ltd and as a charge holder, they were able to force their subsidiary Go Outdoors Ltd in to Insolvency by demanding repayment of loan they would have known couldn’t be repaid and effectively dump all of the restructuring costs on to creditors. Greg added: the Administrators proposal makes some vague commitment to pay suppliers of branded good in full, but go on to say that dividends to unsecured creditors will be low and paid out of the prescribed part, which would be a distribution of around £600,000”. Greg concluded by suggesting that trade suppliers to other Jd Sports subsidiaries might want to seek suitable guarantees from JD Sports before dealing on open credit terms”.
Luggage brand Antler Ltd went in to Administration owing over £1,697,010 to 89 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “The biggest losers would have been the Chinese manufacturers, with losses of over £4 million”.
Top-100 firm McMillan Williams went into administration owing £15,485,500 to 154 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “any law firm that is heavily dependent on high volume residential conveyancing work is likely to be facing severe difficulties, and those that are already highly geared are unlikely to qualify for CBILS”. Greg added: “McMillan Williams was probably number 5 in the residential conveyancing market, meaning there will be other highly exposed law firms out there”.
SPECIALIST LEISURE GROUP, known as Shearings and comprising of 8 Group companies, including Wallace Arnold went in to Administration owing over £332 million to 1021 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “travel companies have been severely impacted by the pandemic control measures, but unfortunately the loss making Group did not qualify for the Coronavirus Large Business Interruption Loan Scheme (CLBILS) ”.
No sign of positive improvement - Hays plc the UK based recruitment and human resources services provider operating across 33 countries issued a profit warning in a trading update yesterday. The company confirmed that Group fees were down 34%. InfolinkGazette's Managing Director, Greg Connell, said: “recruitment firms are a barometer for business confidence and the mercury isn’t rising, dashing hopes of a return to growth”.
The curtain has come down permanently at the Southampton Nuffield Theatre Trust t/as NST. The 50 year old theatre went in to Administration, owing £630,983 to 112 unsecured creditors InfolinkGazette's Managing Director, Greg Connell said: “NST was a major cultural institution in the region and its closure comes as result of a severe drop in ticket sales resulting from the pandemic control measures, and ongoing uncertainty over when theatres will be able to open again”.
The next big hit for the airlines will be aircraft asset impairment charges; the relatively high value of aircraft assets on the balance sheet coupled with a sharp reductions in earnings, together with a likely surplus of aircraft will result in sharp reductions in the recoverable value of aircraft. In an insolvency situation, how much is an Administrator going to be able to recover for a fleet of aircraft in the current market?
Digital Healthcare specialist Now Healthcare Group Limited went in to liquidation owing £2,921,570 to 29 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell said: “at the time of the liquidators appointment, the company was late filing its accounts and the accumulated losses in the last accounts had grown to 85% of capital”.
The government could improve supply chain resilience by being more open and transparent: HMRC keep to themselves all of the payment data on VAT and CT returns etc, only releasing a miniscule amount of their data, such as basic VAT registration details, and the deliberate tax defaulters list. Unfortunately, the government doesn’t release the abundance of useful data they own, or allow it to be shared, such as the plaintiffs in CCJ’s, late or skipped filings of VAT/CT returns and payments etc. A company may have filed its VAT return, or CT return but been unable to make the payment, and nobody other than HMRC has any visibility on the missed payment until HMRC issue a WUP. The ROI government makes all this information available, so why does the UK have to be kept at a competitive disadvantage.
Skoda and Suzuki dealer Progress Bedford Limited went in to liquidation owing £2,163,120 to 125 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell said: in the accounts filing, the company paid a dividend of £500,000, five times the pre-tax profits”. Greg added: “Metro Bank appointed a Receiver to the parent company PROGRESS BEDFORD (HOLDINGS) LIMITED”.
Debenhams Retail Limited followed Debenhams PLC in to Administration, owing 1,001 UK unsecured creditors £98,306,700. InfolinkGazette's Managing Director, Greg Connell said: this will have been the third insolvency process, for Debenhams long suffering creditors. Debenhams used a controversial pre-pack in 2019, which resulted in its shares being delisted; followed by a CVA; and the present light touch Administration”.
8th July 2020 Press Release from InfolinkGazette
Delays to the UK government's £10 billion trade credit insurance scheme create a real risk to supply chains. InfolinkGazette has advised that between the furlough scheme, CIBLS, bounce back loans and the forthcoming UK government's £10 billion trade credit insurance scheme, there are sufficient government stimulus measures in place to delay the day of reckoning, in terms of rising insolvencies, at least until October or November 2020. However, all of these measures are time-critical. Whether the trade credit insurance guarantee is being delayed by EU state aid objections, or for any other reason, InfolinkGazette's Managing Director, Greg Connell, stressed that: "the delay creates a very real risk to supply chains because businesses won't be able to get the cover they need." Initially, this hit the retail and hospitality sector hardest.
8 July: A sharp increase in UK insolvencies - but not straight away. InfolinkGazette has warned that the constraints put in place by the UK government to manage the pandemic will have a significant impact on profitability and cash flow for the majority of companies in the UK, and ultimately, this will lead to a sharp increase in Insolvencies - but not necessarily straight away. Greg Connell, Managing Director of InfolinkGazette, commented: "It is likely that UK banks will demonstrate a degree of forbearance, creditors are generally less keen to force businesses into insolvency during a crisis that is likely to pass, and government stimulus measures have the potential to make a big difference." These measures will delay "the day of reckoning, in terms of rising insolvencies, at least until October or November 2020.
Chrome (Services) Limited went in to liquidation owing £2,719,410 to 300 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “there was a floating charge to a company associated with one of the directors. Creditors trading on open credit terms should always be aware of who is entitled to preferential claims in the event of an insolvency”. Greg added: “if companies associated through the directors are not lending on open terms should 3rd party creditors be granting open credit”.
Analysts assessing the Covid-19 risk by industry need to look beyond the most obvious hard hit sectors - British multinational medical equipment manufacturing company headquartered in Watford, SMITH & NEPHEW PLC issued a profit warning today confirming that trading performance across the first and second quarters was substantially down on the prior year. Greg Connell, MD of InfolinkGazette said: “in common with many companies in the medical and pharmaceutical sector, Smith and Nephew are suffering the consequences of an unprecedented decline in elective surgery”.
Unsecured Creditors of NMC Health PLC got away relatively lightly when the former FTSE 100 Group went in to Administration with losses of £2,111,410, but up to 80 international banks look set to be big losers after NMC Health’s debt ballooned from $2.1 Billion to $6.6 Billion in the space of 9 months. Greg Connell, MD of InfolinkGazette said: “if we are going to expect audit firms to detect accounting fraud, maybe we need them to have the capital buffers to be able to cover the losses associated with their errors and omissions rather than relying entirely on professional indemnity cover”.
Casual dining chain Carluccio’s went in to Administration owing £6,756,920 to 304 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the ownership details were very opaque in Companies House filings, but the ultimate owner was Dubai based Landmark Group, which is one of the largest retail and hospitality organizations in the Middle East, Africa and India. What remains of Carluccio’s is now owned by Boparan Restaurant Group (BRG), who also own the Giraffe and Ed’s chains. A subsidiary of BRG paid £3.2 for the UK restaurant and another £125K for the 1 restaurant based in Dublin”.
NHS Nightingale joinery firm J & P Carpentry and Joinery Limited went in to Administration owing £2,655,860 to 120 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “possibly with an eye on a future that involved a pre-pack, a previously dormant company, with common directors, changed its name to JPC CONSTRUCTION (MIDLANDS) LTD on 4th April 2020. Greg added: despite the extra time to file, resulting from a 6 month extension to the accounting period, J & P Carpentry and Joinery Limited were 5 months overdue on their accounts filing by the time Administrators were appointed and also had faced a First Gazette notice for compulsory strike-off”.
The punishing cost of High St failure falls on Unsecured Creditors – Eponymous retailer Laura Ashley Limited went in to Administration owing £68,405,100 to 549 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the brand, which began in the 1950s, quickly becoming famous for its unique printed fabrics, but will now be opening its doors for one final sale; if there is to be a future, it will be on-line only”.
Oasis Fashions Limited went in to Administration owing £7,117,970 to 227 UK Unsecured Creditors. Greg Connell, MD of InfolinkGazette said: “the online businesses of Oasis and Warehouse has been purchased by Boohoo, who raised nearly £200 million in May through a share placing, stating that company planned to use the proceeds to take advantage of any suitable merger and acquisition opportunities that may arise in the coming months”.
Environmental Consultants HOLMES ENVIRONMENTAL SERVICES LIMITED went in to liquidation owing £2,234,730 to 120 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The company had debts of almost £1.5 million from a 2015 CVA; continuing to trade on open credit terms with a company subject to a CVA is fraught with risk for trade suppliers”.
Celebrity Chef backed Cookeze Ltd T/A Patisserie by Nigel Smith, the Lancashire based event catering business went in to Administration owing £1,486,250 to 67 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the events industry has been one of the worst effected sectors of the Covid-19 pandemic control measures, due to the complete suspension of sporting events.” Greg added: “this sector will see a second wave of failures when the government stimulus measures are withdrawn.”
High Speed 2 (HS2) bidder Van Elle issued a profit warning – such is the adverse impact of the Covid-19 outbreak on the final six weeks of the year the Van Elle board expects to report an underlying pre-tax loss for the year. Greg Connell, MD of InfolinkGazette said: “Balfour Beatty, HS2 Engineers with a combined total contract value of £5 Billion also issued a profit warning earlier this week”.
Plastic product manufacturer Braitrim (UK) Limited went in to liquidation owing £2,264,090 to 72 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Braitrim UK was owned by Braitrim Group Limited, who are late filing their accounts”.
28th May 2020 Press Release from InfolinkGazette
UK regional carrier Flybe Limited went in to Administration owing £22,947,900 to 297 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the biggest losers were ST Engineering along with the main UK airport regional hubs in Southampton, Birmingham, Belfast and Manchester”.
Boohoo group plc became the latest UK retailer to come under attack from short-sellers claiming that the group had overstated its free cash flow. The leading online fashion group issued a statement to the market vigorously refuting the allegations believed to have been made in a research note from Shadowfall. Greg Connell, MD of InfolinkGazette said: “nothing was disclosed in yesterday’s short-selling report published by the FCA, but we should be able to see the size of the net short positions in the report published tomorrow”. Greg added: it will be interesting to see who gets burned, the owners of the shares, or the borrowers with their short positions”.
Fit out specialists Styles & Wood Limited and its parent company went in to Administration owing over £90 million to 641 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company had been racking up trading losses since 2016, which were exacerbated by £12 million of losses on the India Buildings contract in Liverpool, plus £7 million of losses on the Mosley St and St Ann’s contacts”. Greg added: “the Administrator stated that the losses had not been fully recognised at the time they were incurred”.
What future for the Harry Fairclough Group now? Harry Fairclough Limited went in to Administration owing £7,426,400 to 21 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company was part of the Harry Fairclough Group of companies and was the principal asset holding of the group, owning the freehold premises in Warrington, from which the group companies operated”.
London Steel fabricators A13 Steel Ltd went in to liquidation owing £2,329,330 to 96 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “A13 Steel was extremely highly geared before the Covid-19 business disruption; taking on more debt could never have been part of the solution”. Greg added: “this same scenario will play out thousands of times over the remainder of the year, as overly leveraged companies realise more debt is not going to part of the solution to getting beyond the covid-19 disaster”.
What’s in a name - £10 million actually, that is what Eddie Stobart Limited has paid Stobart Group Limited for the ‘Eddie Stobart’ brand. Stobart Group Ltd is required to change its name by February 2021. Greg Connell, MD of InfolinkGazette said: “£10 million sounds pretty cheap when the annual licencing agreement was £3 million a year”.
Mechanical engineers Hullmatic Engineering Limited went in to liquidation owing £2,631,240 to 121 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “creditors could be excused for wondering what was the point of the CVA, which only completed in October 2019”.
Five subsidiaries of County Tyrone construction Group MC ALEER & RUSHE PROPERTIES LIMITED have recently entered Creditors Voluntary Liquidation, reporting combined unsecured losses of over £40 million to a mixture of internal group company creditors and HMRC. Greg Connell, MD of InfolinkGazette said: “MC ALEER & RUSHE PROPERTIES is a holding company filing unaudited total exemption accounts, making it difficult to see the consolidated financial position of the group”.
WILL NIXON CONSTRUCTION GROUP LIMITED went in to Administration owing £3,276,290 to 266 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “The beneficial owners held a charge over the properties, so Will Nixon Construction's unfortunate suppliers may be asking themselves why they extended open credit, when even the owners wouldn’t operate on an unsecured basis”.
Gelert Group Limited has allowed motor insurance broker STAVELEY HEAD LIMITED to go in to Administration owing £9,825,290 to 24 unsecured creditors, including £9,740,000 to its appointed representative PolicyPlan Limited (also a subsidiary of Gelert Group). Greg Connell, MD of InfolinkGazette said: “Staveley’s gross written premiums was around £9.5 million in 2019, with an average commission of 18.1%, so the £9.8 million in liabilities is a puzzle?”
This is a difficult time for the aerospace & defence industry - Tods Aerospace Limited went in to Administration owing £13,950,300 to 417 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “Tods was owned by AGC AEROSPACE LIMITED and if the 2018 accounts are anything to go by, they are in deep financial trouble.”
UPVC window & door manufacturer, Aperture Trading Limited went in to Administration owing £3,275,120 to 262 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “£12 million of assets were only expected to realise £2 million, with over £7 million of stock written down to less than £1 million”. Greg added: “unfortunately, trade creditors would never have known about the woefully inadequate capital base revealed by the statement of affairs, because in Aperture’s short history, it never filed a set of accounts”.
12th May 2020 Press Release from InfolinkGazette
Tips for understanding and maintaining your company credit score
Credit Reference Agencies (CRAs) offer their clients universal coverage on company credit scores, which are used by banks, credit insurers, alternative finance providers and trade suppliers to arrive at the terms under which they are prepared to do business with a company.
Credit scoring assumes that experience can be used as a guide in predicting credit worthiness and the process of developing a credit score generally relies on the analysis of historical data and or, the experience of credit risk professionals. In other words, what did companies that failed have in common, and how were they different to companies that did not fail.
The most common approach amongst CRA's is to adopt statistical models where the choice of factors to be scored and weighted is determined by mathematical to identify the relevant trade-offs among factors and assigns the statistically derived weights used in the model. The statistical scoring model predicts the probability that a case would become insolvent within a given timeframe, incurring losses for creditors. These statistical models will often be complemented with other judgmental, such as payment performance or adverse news media.
The most predictive financial ratios tend to revolve around liquidity and gearing, and most importantly, movements in those ratios; in most circumstances, the trend is as important as the absolute ratio.
All of the CRAs have their own models but they are all using the same basic scientifically proven techniques and they are all likely to be coming out with similar results and be influenced by similar factors, such as:
Liquidity Ratio - calculated from the balance sheet by deducting stocks and work in progress from the current assets and dividing by the current liabilities. Businesses are more likely to fail because they run out of cash, rather than of a failure to generate profits and the liquidity ratio is one of the sternest test of a company's ability to convert current assets into cash. A lower liquidity ratio is an indication of potential cashflow/liquidity problems.
Current Ratio - used an absolute ratio, or as a percentage change on prior year, this figure is calculated from the balance sheet by dividing the current assets by the current liabilities and is generally regarded as the benchmark liquidity ratio. Retail businesses will generally have a lower current ratio because they purchase stock on credit and sell for cash but a current ratio of less than 1 is generally regarded as having an elevated risk of incurring cash flow problems.
Shareholders' Funds Total Asset Ratio (or similar) - used as an absolute ratio, or as percentage change on prior year, this figure is calculated from the balance sheet by dividing the shareholders’ funds by the total assets. The higher the number the better because a higher number indicates a higher proportion of shareholder investment and a lower proportion of loan capital or alternative sources of finance, which might be interest bearing.
Statistical scoring models will normally contain between 7 and 10 factors, or attributes and will often take account of whether any debt is secured/unsecured, plus compliance factors such as adherence to public registry filing deadlines, and detrimental data, such as judgments, insolvency events, adverse auditor opinions; news feed content etc.
The ability to manage your own company’s credit score will depend on the company’s specific circumstances and not all of the tips can be applied by companies materially affected by COVID-19:
avoid taking on too much debt too soon, the more highly leveraged the company, the greater the probability of failure and the lower the score;
don’t allow default money judgments (CCJs etc) to be registered against your company, even if the company can’t pay, try and work out an informal arrangement with the creditor, or defend the judgment, but don’t let CCJs happen by default because the adverse effect on your company’s credit score could be disproportionate;
never file your accounts late, even if the financial situation doesn’t look good, file the accounts on time, because the credit scoring algorithms will pick up on late filings, the CRAs scoring models recognise it is a sure sign something is wrong;
don’t make more than 1 change in accounting periods in an attempt to buy more time to file accounts, you might avoid the fines imposed by Companies House, but again the scoring models will have identified multiple accounting reference date changes as a precursor to insolvency and it will hit the score; and,
as for CCJs, never let a debt get to the stage that a Winding up Petition (WUP) is presented, even if you successfully defend the WUP and avoid being wound up, the petition will adversely impact your companies score for years to come.
For partnerships, the financial factors don’t apply because they are not available, but one additional factor that will make a difference is the number of partners; firms with 4 or more partners are less likely to go into bankruptcy than firms with 3 or less, and the number of directors can make a difference in the early days before accounts have been filed.
It is also worth bearing in mind information the UK CRAs would love to have from HMRC, like payment data, VAT and CT returns etc, but it isn’t made available; there are only a handful of items release by HMRC, like for instance the basic VAT registration details, and the deliberate tax defaulters, but the government doesn’t release the abundance of data they own, or allow it to be shared, such as the plaintiffs in CCJ’s, late or skipped filings of VAT/CT returns and payments etc. So, your company may have filed its VAT return, or CT return but been unable to make the payment, and the CRAs won’t have any visibility on the missed payment, and may never have any visibility on the missed payment, unless it is clearly signalled in your company accounts, or results in HMRC issuing as WUP. Be careful if you are reading this in Ireland because most of this type of data is available in the Republic of Ireland, and it is definitely included in the scoring algorithms.
Some of the CRAs over emphasise the importance of their own proprietary payment data where they are trying emulate what happens in the consumer credit industry sharing payment data, but for the most part, they have sufficient critical mass, to make a meaningful difference to the performance of their scoring algorithms. For every case where they predict a failure using payment data that wasn’t predicted by other factors, there will be a false positive.
Finally, make sure you know your credit score, and don’t just check with one CRA, check them all: Dun & Bradstreet, Experian, Graydon, Creditsafe, Red Flag Alert, Equifax, Company Watch, & Vistra.
Harrogate-headquartered Pure Collection went in to Administration owing £5,101,630 to 197 UK unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the statement of affairs blames Covid-19, but the company was obviously in deep trouble well before the start of the pandemic in China”.
Quarterly revenues down 7% to £694m at ITV impacted by restrictions on working practices due to COVID-19; advertising revenues from April were down 42%. Greg Connell, MD of InfolinkGazette said: “advertising spend is a barometer for the nation’s economic health with spending rising or falling with economic well-being”.
Net Communications Limited went in to liquidation owing £2,538,840 to 88 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the liquidation was preceded by several Gazette strike-off notices and a £6,300 County Court Judgment.”
Aerospace component supplier AIM Design Co Limited, went in to liquidation owing £4,636,180 to 27 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “from a glance at the latest accounts, it was obvious that the company was in deep trouble when they delayed filing their March 2018 accounts until April 2019, the 2019 accounts were never filed at Companies House.”
Ipswich-based container haulier Go Freight Transport, which operated 42 trucks and 62 trailers went in to liquidation owing £2,920,170 to 82 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “a quick look at the balance sheet reveals that the business was woefully under capitalised for the size of the undertaking”.
Iconic carpet manufacturer Axminster Carpets Limited went in to Administration owing £1,748,030 to 88 unsecured creditors. Axminster Carpets Limited changed its name to ACL 2020 Limited shortly after entering Administration. Greg Connell, MD of InfolinkGazette said: “at the time of the insolvency, the 2019 accounts were 3 months overdue and it doesn’t look like there will be any dividend for unsecured creditors”.
The drop of in retail sales is faster and steeper than anticipated – That is the latest warning from Next plc in a trading statement issued today. Greg Connell, MD of InfolinkGazette said: we review all of the UK profit warnings and hadn’t seen any other UK public company make a better job of Covid-19 sales scenario planning, so the latest news from Next is alarming“. Greg added: “ the worst-case scenario for Next is now a 40% drop in sales”.
Trilandium LLP was building the luxury 191-apartment X1 residential block in Manchester and went in to liquidation owing £2,767,870 to 120 unsecured creditors. Trilandium LLP changed its name to Manchester Dev One LLP shortly before entering liquidation. Greg Connell, MD of InfolinkGazette said: “when Trilandium should have been filing their 2019 accounts, which would have presumably have revealed the perilous state of the business, they shortened their accounting period twice, which perversely gives them six more months to file accounts”.
Architectural Ironmongers Laidlaw Ltd went in to Administration owing £1,842,001 to 153 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “unsecured creditors will share the prescribed part, which will be £91,000 at best, but the owners of the business held a secured charge and are set to receive up to £460,000”. Greg added: “trade creditors may feel a little aggrieved about the respective distributions, but suppliers should think twice about trading with a business when the owners have a secured charge; if the owners won’t lend to their own business on an unsecured basis, why would anyone else”.
Fashion retailer, Blux Limited t/a House of Hanover Ltd went in to liquidation owing £25,120,500 to 9 unsecured creditors, including £15,872,216 to NH Finance. Greg Connell, MD of InfolinkGazette said: “between 2017 and 2018, Blux Ltd made 4 accounting period adjustments and between 2018 and 2019 there were 3 compulsory strike-off notices; at the time of the insolvency, the 2018 accounts were 12 months overdue ”. Greg added: “the liquidators statement of affairs showed assets of £17,750,000 expected to realise just £14,000.”
Care providers, Safe Hands Group Limited went in to liquidation from receivership owing £6,370,230 to 15 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “with assets subject to a fixed charge realising no value what so ever, Clydesdale Bank became an unsecured creditors and were owed £6,311,504”. Greg added: “the owner, also a director of Safe Hand Group held a debenture”.
Diageo Plc the world’s largest spirits maker discarded its market guidance for the year and called a halt to its £4.5 billion share buyback programme in response to the coronavirus pandemic. The board statement said: “Given the global nature of the COVID-19 pandemic, and the uncertainty around the severity and duration of the impact across multiple markets, we are not in a position to accurately assess the impact of this on our future financial performance.” Greg Connell, MD of InfolinkGazette said: “having already wasted £1.25 billion via share buybacks, despite an adjusted net debt to EBITDA ratio of 2.8 times, the company has now had to commit to the issuance of new euro and sterling bonds totalling approximately £1.9 billion”.
The Bank of England's Prudential Regulation Authority wrote to UK banks advising them to cancel dividends, but PCF Group plc the AIM-quoted parent of PCF Bank Limited has announced that the final dividend will go ahead. In a statement issued on 07/04/20 the company claimed: “the final dividend approved by shareholders at the Company's AGM represents a debt due to shareholders and, having taken legal advice, the Board has concluded that the Company is legally bound to pay it”. Greg Connell, MD of InfolinkGazette said: “this may fuel the discontent of other bank shareholders where the banks have complied with the regulators request and cancelled the dividend.”
7th April 2020 Press Release from InfolinkGazette
Many of us are wrestling with the dilemma of whether the treatment for COVID-19 will produce a worse net result than the disease; the lockdown will slow down the rate at which a human tragedy unfolds, helping the health services cope, but at great risk to the economy. Without the lockdown, the human tragedy would unfold more quickly, overwhelming the health service but with less lasting damage to the economy. Thousands of distressed companies will fail as a consequence of the lockdown, but many thousands of viable companies will also decide to call time by placing their companies in to Members Voluntary Liquidation (MVL). Company directors are grappling with the quandary of whether to risk family homes, pensions, and savings by investing more money into a business that might not survive a prolonged lockdown. The longer this goes on the more likely it will be that more viable companies will cease trading immediately to protect their personal assets and retained earnings by placing the company into a MVL, with the consequent loss of jobs and tax receipts.
Acquisitive business information company Crif acquires FinTech company Strands, specialists in Big Data, AI and Machine Learning. Strands also offer an open banking solution.
RTA claims management company Instant Assist uk Limited went in to liquidation owing £4,200,320 to 17 unsecured creditors, including over £2million to firms of local solicitors based in the North West. Greg Connell, MD of InfolinkGazette said: “the latest accounts for Instant Assist were dire and there was an unsatisfied CCJ outstanding; if solicitors believe they are immune to bad debt, and wouldn’t benefit from the services of a CRA, or a Trade Credit Broker, that is evidently not the case.”
Worrying news for Pension Trustees! As part of a general COVID-19 response many companies are cancelling dividends and terminating wasteful share repurchasing programmes, but some are also seeking to revisit pension deficit contribution commitments. In a trading statement today, Scapa, the diversified Healthcare and Industrial group said that it was exploring all necessary contingency plans, had commenced discussions with lenders and had also entered discussions with the pension trustee regarding the bi-annual contributions. Greg Connell, MD of InfolinkGazette said: “tPR have up to date advice on their website offering guidance for DB scheme trustees whose sponsoring employers are in corporate distress.”
COVID-19 has caused disruption and uncertain times for businesses and as of today, businesses will be able to apply for a 3-month extension on filing their accounts. All companies who apply for an extension as a result of COVID-19 will automatically be granted the extension without needing to provide evidence. Greg Connell, MD of InfolinkGazette said: “companies should think twice before they avail of the 3-month extension because there is no guarantee that the Credit Reference Agencies will apply a 3-month extension to their credit scoring algorithms.”
Recyclers, Energy 10 Huntingdon Limited went in to liquidation owing £5,536,840 to 17 unsecured creditors, including £4million to Standard Gas Limited. The liquidator served the property owner with a notice of disclaimer. Greg Connell, MD of InfolinkGazette said: “a disclaimer is a formal notice issued by a liquidator in respect of onerous property (forming part of the estate, which is unsaleable). It has the effect of removing from the liquidator all responsibility for the property disclaimed.”
any property, forming part of the estate, which is unsaleable, or not readily saleable or which may give rise to a liability to pay money or perform any other onerous act.
As part of its COVID-19 response, IWG plc (formerly Regus) has cancelled payment of the final dividend and suspended the £100m share repurchase programme that was announced on 3 March 2020. £27.5m had already been spent on this programme. Greg Connell, MD of InfolinkGazette said: “Companies buy back shares when they think the price is undervalued, hoping to boost their price by increasing earnings per share, but every pound paid out on the share buyback is a pound less in shareholder equity, so there is no logic in the belief that it drives shareholder value.”
The FCA has written to all public companies planning to publish preliminary financial statements requesting them to delay forthcoming announcement of preliminary financial accounts, stating that: “the unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly. It is important that due consideration is given by companies to these events in preparing their disclosures. Observing timetables set before this crisis arose may not give companies the necessary time to do this.” Greg Connell, MD of InfolinkGazette said: “whilst this measure will give companies more time to consult and prepare the appropriate disclosures under unparalleled circumstance, it will considerably slow down the flow of price sensitive information”.
T W Construct Limited went in to liquidation owing £3,482,470 to 149 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “at the time of the last filed accounts, the liquidity looked fine, but the shareholders' funds/total assets ratio was 0.09, and trade suppliers who were not deterred by the eye watering high level of gearing probably didn’t see the warning signs until payments slowed”. Greg added: “Registry Trust Ltd published a CCJ for £6,472 one week before the meeting of creditors was called, and CCJs are always a useful warning sign, but unfortunately on this occasion, didn’t come soon enough for suppliers to bail out”.
In the post covid-19 environment of uncertainty over demand and supply, automotive distributors Inchcape plc have joined a growing number of public companies announcing the temporary suspension of share buybacks . Inchcape have suspended the £150m share buyback programme that was launched in February; £25m had already been spend with £125m to go. Greg Connell, MD of InfolinkGazette said: “share buybacks divert investment away from the future growth of companies and those that continue to invest in share buybacks before more is known about the severity and duration of the Covid-19 impact may be jeopardising much more than their future growth”.
REM Engineering Limited went in to liquidation owing £5,533,340 to 79 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the company entered a CVA in July 2019, which was approved in August 2019, but clearly didn’t improve the outlook for unsecured creditors, who won’t be receiving any dividend”.
The board of Shoe Zone joined the growing trend of public companies taking the decision to defer the payment of dividends already approved at the AGM. The Shoe Zone board will propose a further resolution to cancel the 2019 Final Dividend. Greg Connell, MD of InfolinkGazette said: “with the full extent of the coronavirus on the short to medium term environment still unclear, companies are taking steps to conserve cash balances in the face of potentially prolonged challenging trading conditions.”
Global Ports Holding Plc the world's largest independent cruise port operator suspend the dividend for full year 2019 on Covid-19 impact. Global Ports were careful to stop short of warning on profits, but acknowledge the spread of Covid-19 has had a significant impact on the cruise industry, with a number of cruise calls cancelled in Asia and Europe and several 2020 cruise itineraries in Asia also cancelled.
The board and management team remain alert to the fact that the situation is still evolving, and the company continues to monitor the situation closely. In light of this unprecedented level of disruption to global trade and the cruise industry and the associated short term uncertainty, the Board of GPH has decided that it is prudent and in the best interests of all stakeholders to temporarily suspend the dividend for full year 2019, until the situation becomes clearer.
Online gaming software provider GAN PLC announced an upbeat trading update in Italy following the imposition of movement restrictions in Italy. Year-to-date the Company had experienced an 8.4% increase in bets online in the Italian regulated market, but since 23/02/20, the increase has leapt to a 13.9% increase. Greg Connell, MD of InfolinkGazette said: “the coronavirus will create few economic winners in what looks set to be a rout.”
10th March 2020 Press Release from InfolinkGazette
Old established commercial printers Taylor Bloxham Group Ltd, went in to Administration owing £4,697,000 to 302 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “the latest financial statements revealed a serious deterioration in the company’s liquidity.” Greg added, the dividend prospects for unsecured trade creditors look dismal, except for those with trade credit insurance”.
Clugston Construction Limited went in to Administration owing £14,283,200 to 538 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “when Clugston should have been filing their 31st January 2019 accounts, they deployed the all too common ruse of reducing their accounting period by a single day, which illogically gives a company another three months to file their accounts”. Greg added: “this effectively meant that trade creditors never got to see how a sub optimal financial situation had become dire”.
Manchester based construction firm Bardsley Construction Limited went in to Administration owing £14,170,300 to 486 unsecured creditors. Greg Connell, MD of InfolinkGazette said: “contractual issues from 2018 adversely impacted profits to the tune of £2.6 million, which meant the company did not have the cashflow to see through its current order book”.
The Coronavirus might not always be bad news for corporate profits - mobile payments platform provider Boku reported larger than expected volume increases in countries that are most affected by Coronavirus; much higher than in those countries where the virus has had a more limited impact, so far. Correlation doesn’t always mean causation, but, in general, the more time people spend indoors, the more Boku’s platform is utilised and if large numbers of people are forced to self-isolate, as seen in China, this would lead to an increase in the usage of online games and streaming services.
JR Prop Limited, which was controlled by Peter Jones and Jessops Europe Limited went in to Administration owing £2,038,480 to 88 unsecured creditors. Greg Connell, MD of InfolinkGazette sa