The collapse of Bulb energy has been in the headlines as it has emerged that the tax payer is going to have to bail out its customers at a cost of £6.5bn. Chris O'Shea the CEO of Centrica has warned that other suppliers are technically insolvent and may fail this winter.21 February 2022Whoop Energy which was introduced as a “small, independent family-run company” supplied 262 customers – the majority of them were businesses.Xcel Power had 274 customer accounts, gas only and all non-domestic.10 January 2022Following on from the recent news of Together Energys' likely collapse, FRP Advisory are heard to have been lined up for the handling of the procedure. Administration is expected this week.05 January 2022Together Energy, of which has a 50% backing from Warrington Borough Council, is the latest energy supplier on brink of collapse.Without an emergency cash injection via a rescue deal, it will run out of funding this month.Close sources say that Alvarez & Marsal, was close to concluding its hunt for new funding for the business and that the prospect of a solvent deal was now remote.Sky News report more.01 December 2021Zog Energy is the latest energy firm to go into administration. The market regulator will appoint a new supplier for its 11,700 gas and electricity customers.25 November 2021Orbit Energy and Entice Energy are the latest energy suppliers who have collapsed following the surge in gas prices being seen at the moment.22 November 2021It has been confirmed that Bulb Energy is to enter "special administration" following the collapse of discussions with its secured creditor over a £50m loan. “We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members," said a Bulb spokesperson. "If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”Bulb is the first energy supplier to be placed into the Special Administrator Regime, where the government will take over and run its operations, through regulator Ofgem. Such a proces is only used when Ofgem struggle to find another supplier who can take over the collapsing suppliers customers.16 November 2021Neon Reef and Social Energy Supply have ceased trading, with 35,500 customers impacted.2 November 2021Another day and another four energy suppliers collapse; Omni Energy Limited, MA Energy Limited, Zebra Power Limited, and Ampoweruk Ltd become the latest to cease trading.Together, the companies supplied about 23,700 domestic and overseas customers.1 November 2021Bluegreen becomes the latest small energy provider to collapse, amid high gas prices putting a strain and leaving the company in an ''unsustainable situation''.The provider serves 5,900 customers, of which will be moved to another supplier - as stated by energy regulator, Ofgem.29 October 2021The Government has accelerated contingency plans for the collapse of Bulb, the seventh-biggest energy supplier in the UK. This could leave 1.7 million household customers at risk - it would be a big demise! Ministers and officials, as well as Ofgem, have warned the company could collapse as early as next week.Some interested parties are in talks, but others have pulled out in recent days. A solvent resuce is possible, but it is unlikely the supplier would then survive November, if they lack any new funding.Sky News reports more.18 October 2021British energy supplier GOTO Energy Ltd has ceased trading, regulator Ofgem said on Monday, becoming the 12th UK energy firm to go bust since the beginning of September as companies struggle with record wholesale energy prices.GOTO Energy supplied gas and electricity to around 22,000 domestic customers.13 October 2021According to BBC News, Pure Planet and Colorado Energy have added to the list of collapsed small energy firms.It is reported tonight that advisers of CNG Group are seeking offers for its commercial supply arm, which supplies more than 40,000 SME businesses. Bids are required by the end of the week.This comes as the energy supplier prepares to withdraw from the gas wholesale market, highlighting the worsening impact the energy sector crisis is having on those within.Sky News reported that sources said the group was working with legal and accounting advisers to prepare for an insolvency process, with an insolvency practitioner likely to be appointed next week.See more from Sky News here.12 October 2021It has been reported that energy regulator, Ofgem are expecting another wave of collapses from suppliers, amid the crisis the industry is facing.As shared by Sky News, it is understood that at least four suppliers were in talks with the regulator about entering its 'Supplier of Last Resort (SOLR)' system, which would result in adding to the amounts of households impacted by rapidly increasing wholsesale gas prices.11 October 2021As reported by Sky News, Pure Planet, which is partially owned by BP, is in talks with government regulator Ofgem to initiate the Supplier of Last Resort (SLR) process and transfer its 250,000 clients to other providers. Pure Planet was founded in 2017.29 September 2021Just a week later and three more energy suppliers have ceased trading; Igloo, Symbio Energy and ENSTROGA.Customers of the collapsed suppliers have been reassured that a new supplier will protect them, in due course.Sky News report on the issue.22 September 2021Not even 24 hours since the last news update and we have further to add!Now, Green, alongside Avro Energy, have ceased trading and fallen victim to the energy sector crisis. Together, these energy suppliers, serve over 800,000 customers.''Unprecedented market conditions and regulatory failings'' are to blame.More casulaties are expected.Whilst all this has been happening, is has been revealed that Igloo, a small player in the same sector, has called in advisers and stopped taking on new customers, hinting signs it could be next. See below for some of the latest news.https://www.energy-review.co.uk/guides/which-energy-suppliers-are-going-bust/21 September 2021Green, a small UK energy supplier, lines up advisers, Alvarez & Marsal, to oversee a potential insolvency. Administration could happen within days. This is the latest, but by all means, not the last, energy firm to struggle. Right now, there is an energy crisis being faced. Ministers rule out any help and action to assist companies on the brink of collapse.The advisors are working with Green to arrange plans, using Ofgem’s (energy industry regulator) Supplier of Last Resort mechanism.Around 200 people are employed with the firm. Unless state support is received, the CEO, McGirr, warns that the company may fail within three months.State support is unlikely. There are talks of support in some ways for larger energy companies, including extensions to state-backed loans, to subsidise the cost of taking on lossmaking customers from insolvent rivals.Sky News reports more.
New research by KSA Group shows that male-owned businesses were over 40% more likely to go into insolvency between October 2021-22 than those run by females.The study, which looked at the insolvency rate of companies with a 75%+ male or female board, showed that male-dominated companies went bust at a rate of 0.84%, versus 0.59% for majority-female companies.This means that companies were 42% more likely to become insolvent if their boards were male-dominated.The study also considered single-director companies, which had a higher overall insolvency rate than companies with two or more directors. Here too, company failure rates were higher for men than women, with insolvency rates of 1.08% and 0.77% respectively (a 30% difference).
Overall insolvencies up 200% post-COVID
Does the COVID pandemic have any bearing on these results, given that overall insolvencies have rocketed by 200% since 2018?It seems the gender difference was already in play, and in fact was more pronounced before the pandemic. When KSA Group ran its 2018 insolvency study, male-dominated businesses were 70% more likely to enter insolvency than female-dominated firms.The failure rate of female-owned businesses has increased threefold since the pandemic (from 0.20% to 0.59%), but this has increased less sharply for male-owned businesses (0.34% to 0.84%).
Key findings in 2021/22:Insolvency rate is over 40% higher in male-run companies
Four times as many companies are run by majority men than women
Overall insolvency rate in both groups has increased by a factor of 200%Do men run riskier businesses?
Are men less competent at running businesses than women, or could there be another explanation?Robert Moore, from KSA Group, points out that men might simply gravitate towards more risky business sectors: “It is apparent that the insolvency rate is higher in male-run businesses, but this may be due to a number of factors that have nothing to do with whether men are less effective at running businesses than women. It may well be that the types of businesses that men tend to run are more vulnerable to insolvency.”For example, construction was the most represented industry within male-dominated business insolvencies, accounting for 24% of all business failures looked at by the study. By contrast, only 7% of the female-dominated company insolvencies were in the construction sector.As depicted in the pie charts below, there are other noticeable differences in the sectors of male versus female-dominated company insolvencies, with a more even split of industries across the latter. This does suggest that a greater range of businesses are now at risk of insolvency: a legacy, perhaps of the pandemic and the subsequent economic shock?Insolvent Male Run Business By Sector, Female Run Insolvent Businesses By Sector, We did not collect data on the overall percentage of each industry across all active (non-insolvent) companies, so it is difficult to draw conclusions on whether this is a sector-specific problem.&nbs...
3 March 2022New Look's landlords have just announced that they have settled with the company on the day before a crucial hearing at the Court of Appeal.17 May 2021New Look Landlords have been granted leave to appeal to the Supreme Court over their treatment in the CVA.Yet again the High Court has upheld the power of the CVA mechanism as a way of ensuring that a company can survive if the majority of its creditors (by value) agree to allow it time to get back on its feet. Landlords feel that it is unfair but if it is not to be the creditors who else? A panel of "experts"? A quango? The Government?Landlords complained that the switch to turnover rent “fundamentally rewrites” leasing agreements. Unfortunately, when a company becomes insolvent and, in the case of administration, all contracts are "rewritten".There is a shift in the balance of power between landlords and tenants given the loss of footfall on the High Street and the rise of online shopping recently. However, if everyone rushes back to the shops, post pandemic, maybe the landlords will be able to take a share on the increased turnover?17 March 2021It has been reported that New Look has entered a High Court battle with two of its landlords; British Land and Land Securities, over its proposed restructuring plans.In total, there were four landlords who challenged the CVA which involved switching stores to turnover based rents.The argument is that switching to turnover rents ‘’fundamentally rewrites’’ leasing agreements and deems the payments of arrears as ‘’unfair’’.10th November 2020New Look announce completion of its refinancing scheme which included a debt-for-equity swap to reduce debt from £500m to £100m and a £40m cash injection.The refinancing scheme was first mentioned in August, at the same time as its (now approved) CVA was first announced.CEO, Nigel Oddy said: “I would like to thank our banks, bondholders, landlords and creditors for their support during our financial recapitalisation process and CVA. Completion of the transaction today means we now have significantly enhanced financial strength and flexibility, and a sustainable platform for future trading and investment. Looking ahead, notwithstanding the challenging market conditions, we are focused on delivering our strategy to enhance our position as a leading convenient broad appeal fashion destination''.2nd November 2020It has been reported that 2 landlords, British Land and Land Securities have challenged New Look's CVA casting doubt on the company's ability to survive. The new lockdown will hit New Look hard as they only have a small proportion of their sales online (20%). Challenges against CVAs have not been successful in the past.5th September 2020In an unexpected outcome - New Look's creditors have approved its CVA proposals when put to a vote today. Creditors approved with a 75% majority vote in favour.The CVA features no store closures and saves all 11,000+ jobs. It looks to move more than 400 of its UK stores to turnover-based rental models, have an enhanced landlord break clause, and a three-year rent holiday on its 68 remaining stores.14th September 2020British Land, a landlord of New Look, owning 19 of its stores, plans to oppose its CVA proposal laid down to vote on tomorrow. Landsec, of whom own 10 stores also are believed to oppose as are Hammerson.The possibility that New Look's biggest landlords will vote against the plan, does not appear good for the retailer. Its chance of survival is thrown further into red.What will the outcome be tomorrow?6th September 2020It is not looking promising for New Look since around ten of its landlords have been reported to of rejected its CVA proposals, to be voted on by creditors in the next 9 days. Can the table still turn? Or is liquidation coming even more unavoidable now?26th August 2020New Look has announced it has reached an agreement with its financial creditors. This involves investing £40m in new capital and ''significantly de-leveraging'' its balance sheet. The group expect this to be complete on or before 31 October 2020.The company has also announced that it is launching a CVA, so asking landlords to accept new turnover-based leases across its portfolio.The fashion retailer also said it is launching a debt-for-equity swap on its current debts, looking to lower those from £550m to £100m.The British Property Federation have criticised the CVA proposal due to ''inaccuracies''.Drapers report more.10 August 2020According to This is Money, New Look is reported to be considering a company voluntary arrangment (CVA) since it looks to switch to turnover-based rents.Advisors from Deloitte are expected to be appointed as soon as this week.If a CVA is used, this would not be the first time for the company. The retailer used one in 2018 when landlords voted in its favour as it was used to improve the operational performance of the company.01 July 2020It is reported that New Look has given an ultimatum to landlords; trying to reach an agreement to move to turnover-based rents for its 500-strong store estate.Consultancy firm, CBRE, have been hired to help with the process. If discussions with landlords are not successful, likelihood of the retailer falling into a pre-pack administration is high.If a pre-pack is used, this would be the second financial restructuring it has undergone in less than two years, after its debt-for-equity swap with stakeholders in January 2019. At this last restructuring, New Look moved onto monthly rents for most of its portfolio and asked for rent holidays for some of its stores.Talks with landlords have been happening for most of the month though concern rises that some will block the proposal.A pre-pack has been discussed and is ‘’the last thing it wants.’’A spokesperson said, ‘’We are committed to seeking a consensual agreement with landlords to move to turnover rents, and work in partnership with them as we continue to navigate these increbily challenging and uncertain times together.’’The retailer employs 12,000 people across its UK and Ireland business.New Look are not the first to look at a move to turnover rents amid the covid-19 pandemic. Frasers Group are the latest to be looking at doing so. Other retailers have appointed administrators as a result of the pandemic: Debenhams, Laura Ashley, Cath Kidston. Some have also refused to pay March quarterly rents.
Coronavirus (COVID-19) has meant that the Government banks and other organisations are having to act quickly to offer help and support to companies and businesses affected. The government shut down of whole sectors of the economy is having a profound impact.This page is updated on news from the Banks, the Government, Suppliers, Local Authorities and the Law. There is a lot of information contained but all for your convenience and benefit, so take time and care to read all.**Important Notice** Most financial support and protections from creditor's actions have now been withdrawn. Do not delay but act if you think your company will not be able to pay back its loans or afford to trade.Prime Minister, Boris Johnson, takes the UK back into 'Plan A' - no mandatory face masks (but they are advised), no mandatory covid passes (unless a business wishes to use). Businesses are encouraged to return to the office as of Thursday 27 January.
So what has been done?
The UK GovernmentNew recovery loan scheme for all businesses 80% guaranteed by the government extended to run until June 2022. The UK Government will guarantee 70% of all funds provided to lenders instead of the 80% previously guaranteed.
The moratorium on commercial tenant convictions has been extended until March 2022.
Winding up petitions could not be served on companies over debts due to Covid-19 until 30 September 2021. Wrongful trading provisions have been suspended as at June 2021.
Rishi Sunak announced additional grants for businesses to survive the 3rd lockdown including; £4k for businesses with a rateable value of £15k or under, £6k for businesses with a rateable value between £15k and £51k and £9k for businesses with a rateable value of over £51k. A further £594 million is also being made available for Local Authorities and the Devolved Administrations to support other businesses which are not eligible for the grants but may be affected by the restrictions.
Wage subsidies
An extension to the VAT cut (now at 5%) for the hospitality and tourism industry, now in place until the end of March 2022.
Loan deadlines have been pushed back to allow flexibility for businesses. The scheme is called Pay as you grow. Bounce back loans are able to be extended from six to ten years. It is thought this will half the average monthly repayment. No companies can see their credit ratings affected, struggling firms can make interest-only repayments and anyone can apply to suspend repayments for up to six months
The government guarantee for business interruption loans has been extended to ten years
An extension to the self-employed grant
Announcement of the Jobs Support Scheme. This allows employers to keep employees in a job on short hours rather than making them redundant. It runs from December for six months.
Changes have been made to the Corporate Insolvency and Governance act, extending the measures put in place for the benefit of businesses.
Councils are being allocated funds to help hard-hit firms survive through lockdown through the £1.1 billion Additional Restrictions Grant. However, the level of funding is based on a formula of £20 per head of the local population — rather than the number of businesses in an area. Grants of £25,000 should become available.
The Government launched a support scheme for the incomes of the self-employed, the Self-Employment Income Support Scheme (SEISS). Eligible applicants will receive a single grant worth 70% of average monthly trading profits for three months, capped at £6,570. Those self-employed who have been hit by the pandemic since 14 July can submit a claim i.e. shopkeepers affected by lockdown or builders unable to work on construction sites due to government restrictions.
Rishi Sunak announces that there will be a £1000 per employee bonus paid to all employers that bring back a furloughed employee and the government will pay a proportion of wages to take on young employees as part of a Kickstart scheme
The furlough scheme continued until the end of September 2021, with employees receiving 80% of their monthly wages up to £2,500. From July, employers must pay National Insurance and pension contributions, then 10% of pay from July before this percentage rises to 20% in August.
From 26 May, there was an extension to the maximum loan size available through the CLBILS scheme from £50m to £200m. Note there will be restrictions on dividend and bonus payments by borrowers. More information can be found here.
Businesses can apply for a Coronavirus business interruption loan. Businesses will not need to make VAT payments until the end of June 2020 since payments are deferred. Businesses have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. The need for personal guarantees for loans up to £250,000 has been removed.
Bounce-back loans made available https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors The loan will be for 25% of turnover up to a maximum of £50k. Interest for the first 12 months will be paid by the Government.
Under the Coronavirus Job Retention scheme (CJRS), government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis.
An online system for making claims under CJRS launched https://www.access.service.gov.uk/login/signin/creds.
Income Tax payments due 31 July 2020 under the Self-Assessment system have been deferred to 31 January 2021, automatically without any applications needed.
HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes
A tax break on national insurance contributions. 500,000 people will no longer have to pay this tax. Those who still have to pay will save around £85 a year.
The Corporate Insolvency and Governance Act has been enacted that stops landlords forfeiting leases, issuing petitions or statutory demands where rent has not been paid due to Coronavirus. This is all good news for tenants struggling to pay the rent but it should be noted that it does not mean the liability has gone away...In fact, the debt will increase and interest charged will add to this. It is likely thought that a deal can be arranged with your landlord given the circumstancesYou can read the latest advice and guidance from government for businesses on its coronavirus pages, and by keeping up to date with the news (information for other areas such as Wales and Ireland can also be seen on key news outlets). HMRC have a dedicated phone number for the coronavirus helpline targeted at businesses and the self-employed: 0800 024 1222.
BanksBusiness and mortgage customers do not have to pay back the capital on their loans for a period of 3 months, meaning they will only be paying the interest on their loans
Extension to overdraft facilities
Barclays and Natwest announced (26th March 2020) that they will NOT be requiring a personal guarantee on Business loans of less than £250k
Commercial banks are NOT paying dividends to shareholders to preserve cash
Santander launched a £40m fund, via its Fintech provider Ebury, to provide loans to SMEs
The Bank of England pump £100bn into the UK economy to help fight the ''unprecedented'' coronavirus-induced downturn. The BOE also made an emergency cut to interest rates from 0.75 to 0.1 per cent
HSBC, Barclays, Santander and Natwest announce a number of supportive measures for its customersBusinessesBusiness rates holiday expired on the 30th June 2021 but is still be discounted by 66% until the 31st of March 2022
For businesses who deferred paying VAT between 20 March 2020 and 30 June 2020, and are struggling to pay by 31 March 2021, a new payment scheme has been created where VAT can be deferred over a longer period. The online service for the VAT deferral payment scheme opens on 23 February 2021 until 21 June 2021. Businesses are able to make interest free monthly instalments (up to 11) – the idea being the earlier you join the more months you have to spread the VAT payments across. To join simply go to the UK Government portal site during its opening period. If you need more time to pay deferred VAT, it is advised to contact HMRC or get in touch with us, at Company Rescue, who can assist.
Rishi Sunak unveils a £5bn scheme for High Street shops and hospitality firms in England
Chancellor, Rishi Sunak, has set out a £1bn fund to help businesses hit by the rise in Covid cases, - namely, the leisure and hospitality sector. Included is cash grants of up to £6,000 per premises for each eligible firm. It has also been announced that the Government will cover Statutory Sick Pay for absences for small and medium sized employers across the UK due to COVID and will assist local authorities to support other businesses by making available £100 million discretionary funding. There will be £30 million additional funds available through the Culture Recovery Fund too.
Morrisons announced that suppliers with between £100k and £1m turnover will be paid immediately on presentation of their invoice. Over £1m turnover the term will remain 60 days. Companies with less than £100k must wait 14 days
Aviation industry suffers leaving airlines to reduce capacity
Businesses i.e. hotels and supermarkets look to offer the vaccine
All businesses able to open are advised to return to work in a Covid secure way
Tens of thousands of England’s retail, leisure and hospitality firms have been made exempt from paying any business rates in the coming year (eligible for the ‘tax holiday’)
There is a package for the self-employed
Businesses with less than 250 employees can reclaim the cost of having to pay Statutory Sick Pay whilst eligible employees take the 14 isolation days off, due to the coronavirus. Those who are not eligible to sick pay (the self employed) are able to claim Employment and Support Allowance from the first day of illness rather than having to wait until day eight. An online service has been launched by HMRC for SMEs to recover Statutory Sick Pay Payments they have made to their employees amid the pandemic; The Coronavirus Statutory Sick Pay Rebate Scheme. Employers can use the service to make their claims, allowing them to receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13 March 2020. More information can be found here.
An 'eat-out-to-help-out' scheme was launched in August, offering a discount of £10 per head on all meals out, Monday-Wednesday in August at participating restaurants. Some restaurants continued this on into September.Devolved Regions of UK, Scotland, Wales and Northern IrelandScotland's Finance Secretary, Kate Forbes, announced a 12 month extension to the business rates holiday for the retail, hospitality, leisure and aviation sectors.
The NHS covid pass scheme extended its uses across Wales, Scotland, UK and Ireland - with the aim to keep everyone safe by doing this.
A support package of £40m was agreed for businesses in the hospitality sector within Northern Ireland, to assist them through the interruptions caused by Northern Ireland's Covid restrictions.
Additional support for hospitality in Wales is available. The Welsh Restrictions Business Fund will enable eligible businesses in the hospitality, tourism and leisure sectors which pay non-domestic rates (NDR) to access grants of up to £5,000. It is estimated around 60,000 businesses, with a rateable value of under £150,000 will receive this support.
Scottish retail, hospitality and leisure businesses, closed due to level 4 restrictions are to receive up to £9k of 'one-off January' grants through the Strategic Business Framework Fund. It is set that it will be a one off grant of £9,000 for larger retail and leisure businesses on top of the 4-weekly £3,000 and a grant of £6,000 for smaller retail and leisure businesses on top of the 4-weekly £2,000
Since the start of the pandemic Scottish Government support for business and the economy has reached almost £3 billion
The Scottish Government launched a website and helpline for small businesses struggling to cope. They also announced a £320m support package for affected businesses
The Scottish seafood sector received a package of more than £5 million in financial support during the COVID-19 outbreak
The Northern Ireland Executive announced a £367m package of grants to provide funding to around 30,000 businesses in Northern Ireland
Liverpool's metro mayor announced a £400,000 support package for the region's music, film and TV industries. A fund will provide up to £10,000 in grants or loans to support small and medium-sized businesses in the music sector. Companies working in film or TV will be able to apply for investments of up to £25,000 per project to help them through the pandemic.Regulations, Employment and Insolvency Law
Companies are legally entitled to cancel holidays due to staffing shortages. However, they must give notice equivalent to the length of holiday. If an employee cancels their holiday, the company does not have an obligation to allow them back into work if they have made alternative arrangements. Be aware that you can lay off staff without resorting to redundancies. For more information on this see the Government site.Being an employer you may be worried about your rights and duties, The Federation of Small Businesses has a useful page with advice on this here.If you need to make employees redundant during furlough then make sure you do it properly and don't rush it.The government has enacted the Corporate Insolvency and Governance Act which allows up to a 20 day moratorium, extendable with creditors permission which stops creditor actions against a company struggling due to the pandemic. The act also means that Landlords cannot forfeit leases or issue winding up petitions against companys that cant pay their rent due to the pandemic until 31st March at the earliest.Companies House has said that companies have an extra 3 months to file their accounts due to Coronavirus.For further information regarding winding up petitions and their temporary ban see here: DLA Piper
How can businesses mitigate their problems?
In all honesty, the best advice for businesses is to follow the same advice given to the general public...keep an eye on what is happening in your local area/country and be sure to follow the measures suggested.
How can we help?
We have numerous guides of options you can look into to help...download our CVA experts guide here or view our pre pack page. If you feel you must close down permanently then see our page here on liquidation. If you are in the hospitality industry we do have a rescue guide, not specific to the current situation but still relevant.Meanwhile, if you have any serious concerns about cashflow then you can make use of some of our tools for free. Prepare a cashflow forecast using our template here, regularly updating it as this will help wish cash planning. Remember to be realistic. The more realistic you are the better you will see a true reflection of your future cash situation, any deficiencies to be able to address any issues in advance.Company Rescue have been providing services to distressed company directors for over 20 years and we will continue to try and help businesses of all shapes and sizes through what could be, a very turbulent, few months.If you have serious concerns about the ability of your company to pay it’s bills and survive beyond the current situation please do give us a call, FREE on 0800 9700539.Amid this crisis, we are all working from home so can answer your enquiries as normal. We also have a 24 hour online chat service on this website, manned by real people, not robots. If our chat team are unable to answer your questions straight away, then within a few hours one of our experienced team members will call you, listen to your concerns and offer some advice and suggest steps you can take.
The Recovery Loan Scheme.
What is it?
The Recovery Loan Scheme (RLS) is a new loan scheme put in place by the Government, to support UK businesses with access to finance as they try to grow and recover from disruption caused by the COVID-19 pandemic.It was first announced by the Chancellor, in the latest Budget.
What is the offering?
Businesses can access loans and other types of finance up to £10 million per business, following the closure of existing loan schemes:Invoice finance (for up to three years) and asset finance (for up to six years) available between £1,000 and £10 million per business
Term loans (for up to six years) and overdrafts (for up to three years) available between £25,001 and £10 million per businessHowever, from the 1st of January 2022 the maximum loan is £2m per business.A number of accredited lenders who are involved can be seen here. All lenders are accredited by the British Business Bank and any new lenders under the scheme will fall under this list as and when they become accredited. As always, first approach your own finance provider when looking to borrow.Note: those involved will be asked not to take personal guarantees or secure the lending on the borrowers home. RLS gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you are always fully liable.The finance provided is to be used for any legitimate business purpose only; growth and investment included.70% of the finance to the lender is guaranteed by the Government, to ensure the lender has confidence to continue to lend to businesses.
Is there an interest rate?
Yes. Interest is expected to be capped at 15%.
Who is eligible?
The RLS is open for businesses of any size though there are some criteria to match:The business must be trading within the UK
You must show that your business is viable or would be viable, if it was not for the pandemic
There must be proof that your business has been impacted by the coronavirus pandemic
Your business must not be in any insolvency proceedings
Open for all businesses excluding state-funded primary and secondary schools, public-sector bodies, banks, building societies, insures and re-insurersNote: even if your business has accessed previous COVID-19 guaranteed loan schemes i.e. CBILS, CLBILS and/or Bounce Back Loans, you can still apply and be eligible if you meet the above criteria, just the amount you are able to borrow will depend on the scheme requirements and the lender’s assessment of your business.For more information on the RLS, visit the Government website here and find an overview from the British Business Bank.If you have been rejected for a recovery loan scheme then there are other options
UPDATE 25/10/2021A year on from being placed into administration and we hear there is a chance of rescue for Bury FC.According to latest news, a group of Bury FC supporters, called Est 1885, has struck a deal to purchase the club and Gigg Lane from administrators - and this has been accepted, meaning they could get keys to the stadium as early as December.Included in the deal is the intellectual property of the club; assets, history and trading name.The fan group hope that this can save the club, and bring them into a position ready to start the 2022-23 season, after three years of not playing football.UPDATE 30/10/2019Two weeks ago, Bury FC hit the news for being presented a Winding Up Petition.Today, lawyers for the club have told the court that an extension is required to investigate if too much tax was paid by the club to HMRC. The case has therefore been adjourned until December 4th.Despite an extension being granted, plans are being put in place for a phoneix club to be created, if liquidation does occur. The new club would need to apply to the Football Association for entry at the non-league level of the pyramid.Bury FC face a Winding up Petition today at the companies court. It is understood to have been presented by former assistant boss Chris Brass, who is claimed to be a creditor. This is the second winding up petition to have been served on the club in the last year. HMRC launched a claim for an undisclosed amount but the debt was understood to have been paid and the petition was dismissed. It was said at the time that the club was facing financial pressures and was working through them.Yesterday, the club issued a statement confirming it was experiencing "internal financial restrictions" and that this had been discussed with players and staff.
01 October 2021The High Court has dismissed an application by a landlord creditor to overturn a company voluntary arrangement (CVA) implemented by coffee shop chain Caffé Nero. The CVA, previously approved by its creditors, compromised rent arrears and reduced future rents for the company's premises. The decision follows a series of previous high-profile challenges to retail and leisure CVAs.22 July 2021Young, one of the Caffe Nero's landlords has challenged the CVA in court.Marking the start of a four-day trial, the company said that Young, has no right to bring the challenge due to an arrangement he has with EG Group Ltd. EG is run by Mohsin and Zuber Issa, billionaire brothers who launched a takeover bid for Nero on the eve of the CVA vote.04 January 2021Some landlords, including Lord Sugar, are seeking to challenge Caffe Nero's CVA. The chain had proposed landlords receive 30p for every £1 of rent they are owed, and was seeking to move most stores to a turnover-rent based model. If there are any closures these are expected to be minimal.13 November 2020Last night coffee chain, Caffe Nero put itself into a company voluntary arrangement.Founder, Gerry Ford, explained that this was due to the second lockdown which has caused the chain to suffer, from limits to socialising, less shoppers in town centres and workers being told to work from home.KPMG are working with the company on this insolvency procedure. The CVA needs to be backed by landlords and creditors to be successful.The hope is that from doing this, rent negotiations can be made with landlords, so costs can be reduced and the company can be in a better position to rebuild itself post-pandemic.The chain employs more than 6,000 people across its 800 UK stores. Any job losses or store closures are unknown as of yet.6 November 2020A group of Lenders to Caffe Nero have been reported to of drafted in FTI Consulting.The financial advisers have been brought in by Alcentra and Partners Group, in preparation for the launch of a restructuring deal, involving a CVA, which could result in permanent store closures and job losses.23 October 2020Caffe Nero becomes the latest big name to look into a company voluntary arrangement.The insolvency mechanism is being considered since the coffee shop operator has been hit from coronavirus, alike many other high street hospitality businesses. It needs to restructure its financial liabilities, reduce its rent bill and exit loss making outlets.Details concerning the amount of shop closures or job losses are so far unclear.KPMG are working with Caffe Nero on its options.As it stands current, it operates from 660 UK stores, of which more than 90% have opened since the UK-wide lockdown ended in June and employs 5,000 staff.
5 May 2021An update on the status of Debenhams stores.All stores will close for good by 12 or 15 May 2021. Currently 52 stores have been closed, as stock has been sold off. But for the remaining 49, stock continutes to be sold, with 'unmissable discounts' for the final few days.Boohoo will then take the brand online only, changing the Debenhams retail business model completely.25 January 2021Boohoo, the fashion retailer, has paid £55m to purchase Debenhams' brand. The intention is to relaunch the collapsed brand online only.The cut-price deal for the brand name, intellectual property and customer lists will eventually lead to the closure of Debenhams' 118 stores since no sites are included in the sale.Administrators at FRP Advisory confirmed that once COVID-19 restrictions permit, stores would re-open for the purpose of clearing stock. A fire sale will continue online.This leaves over 10,000 staff facing the prospect of redundancy.On the matter, Boohoo say: "Debenhams is a long-standing and leading UK fashion and beauty retailer with high brand awareness, and an established online platform with approximately 300 million UK website visits per annum. This makes it a top 10 retail website in the UK by traffic. The transaction represents a fantastic opportunity to grow the group's target addressable market and increase the share of wallet opportunity through a new capital light and low-risk operating model that is complementary to the group's highly successful direct-to-consumer multi-brand platform."13 January 2021Today's news hits that Debenhams confirms plans to close six of its stores for good. This includes its London flagship store on Oxford Street, which will affect 320 members of staff.FRP Advisory continue to work with the department store chain and enage in conversation with a number of third parties regarding the sale of all or parts of the business.As of the announcement made on December 1st 2020, Debenhams will continue to plan for the ongoing wind-down of the business.7 December 2020This morning we have confirmation that Mike Ashley's Frasers Group is in talks over a potential rescue deal for Debenhams.Discussions and negotiations are being held with administrators of the collapsing retailers UK business.When announcing this update in a stock market statement, it was also said: "Whilst Frasers group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia group, Debenhams' biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly."1 December 2020Debenhams likely to close following the collapse of talks to buy the department store by JD Sports. The business will trade until all stock is cleared. It is possible that a buyer will reappear later but it is unlikely. 12,000 jobs are at risk as are 124 sites.JD Sports were thought to be the only entity left in the sale process which administrators initiated after the department store chain collapsed earlier this year.It appears the collapse of Arcadia Grroup spooked the sportswear chain into their decision.Debenhams released a statement on the matter this morning: ''JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated."19 October 2020Mike Ashley renews his bid for Debenhams.This comes as Lazard's auction for the retailer, nears its final stages. It is heard Mr Ashleys' offer is somewhat improved.11 October 2020Mukesh Ambani, India's richest man, has pulled out of the race to buy Debenhams. Other parties remain interested.23 September 2020Though there is no certainty that his interest will develop into a formal bid, Mukesh Ambani, India's richest man and the powerhouse behind one of the country's largest conglomerates, has joined the listing of parties who are in discussions with advisers about acquiring part or all of the 242-year-old struggling retailer.The emergence of Mr Ambani and his Reliance retail empire comes as a shock, especially amid the struggling retail market conditions being faced by the coronavirus pandemic.01 September 2020Debenhams set a deadline for takeover bids to 5pm today. Lazard, who are overseeing the sale process request this as administrator, FRP Advisory, seek to conclude a sale of the business by this month end. If a sale is not complete then alternative options will be looked at, putting job losses on the line.15 August 2020In the latest news, Debenhams' owners have appointed Hilco Capital to begin drawing up liquidation plans for the struggling department store chain, in the event that a sale comes unsuccessful.Contingency planning is underway this weekend as a future is seeking to be found for the 242-year-old retailer, ahead of the crucial pre-Christmas trading period.26 July 2020It has been reported by The Guardian that the 242-year-old department store chain, Debenhams, has appointed investment bank Lazard this weekend to oversee a sale process. Hopes are that a buyer is secured before the end of September.This becomes the third time in a year that the struggling retailer has gone through a type of insolvency procedure. Last year it went through a pre-pack administration before a company voluntary arrangement.FRP Advisory is working alongside the management team as it goes through a ‘’light touch’’ administration, meaning directors are running the business instead of handing over control to administrators completely.18 stores have been shut, creating a loss of over 1,000 jobs from its shops and London HQ. 124 stores continue to trade after lease negotiations with landlords went underway.‘’Now that Debenhams has 124 stores in the UK open and is trading ahead of expectations, the administrators of Debenhams Retail Ltd have initiated a process to assess ways for the business to exit its protective administration.’’Outcomes as a result of this vary from the sale to a third party (of which several buyers have already expressed interest), a potential new joint venture arrangement and even the current owners retaining the business. Liquidation has not yet been ruled out, if further investment is not found.‘’The administrators will be guided by what delivers the best outcome for creditors.’’The retailers’ Irish arm has already been placed into liquidation, but liquidation of the whole group is unlikely and would only occur if all other options have been expended.Debenhams is not the only retailer to be hit by Covid-19. John Lewis and Marks and Spencer’s are also among those hit and having to cut jobs and close stores in order to survive. Debenhams however faced difficulty pre-virus since they already were struggling with a £600m debt pile. This followed by havign to adapt to changing consumer habits brought on from the unprecedented pandemic, encouraging consumers to move to shopping online accelerated its difficulties.
April 2021Many jobs are at risk at Bonmarché as administrators decide how many stores will reopen as non-essential retailers open their doors to the public today.Previously the retailer was part of the group owned by Philip Day, but it collapsed in October. In December, Steve Simpson, Edinburgh Woollen Mill Group COO agreed a deal to take over 72 stores and 531 staff with backing from an international consortium.RSM Advisory administrators have been reviewing the options of the retail estate throughout lockdown. Either all, or just some of the remaining 148 stores may never reopen.What will happen today as shoppers are set to return?December 2020Just months after being brought out and around a year after first falling into administration and saved via a deal with Peacocks, the fashion retailer collapses again.RSM Restructuring Advisory has been appointed to handle Bonmarches' second administration. A rescue deal is to be sought. In the meantime, all 225 stores remain open and no redundancies are to occur.The brand struggles with rising costs among dwindling footfall on UK high streets. The impact coronavirus and local/national lockdowns has brought has only worsened the issue.This being said, Damian Webb, joint administrator of RSM Restructuring Advisory, stated: ''Bonmarche remains an attractive brand with a loyal customer base.''He goes on to explain that they will work closely with management to explore options for the business.''We will shortly be marketing the business for sale, and based on the interest to date we anticipate there will be a number of interested parties.''November 2019UpdatePeacocks has been named the "preferred bidder" for the business, although further negotiations are needed before the deal is secured.However, 30 Bonmarché stores will now be closed by 11 December, the administrators said, putting up to 240 jobs at risk.Bonmarché's 285 remaining stores will continue to trade.Bonmarche, the women’s fashion chain specialising in clothing for those aged over-50, appointed administrators, FRP Advisory, leaving uncertainty for the company’s future.The chains 318 UK stores will remain open whilst a buyer is sought – with 2887 jobs at risk.Chief Executive of the Yorkshire-based chain, Helen Connolly, blames the tough High Street trading conditions for the tough decision she made, putting the firm into administration. As heard in the news, Bonmarche are not the first or only retailer to experience issues. They add to the long list of struggling high street retailers, such as New Look, Topshop’s Arcadia, House of Fraser and DebenhamsBoth refinancing and a rescue deal, known as a CVA, had been looked into. However, they came to the conclusion that neither option would benefit the business and change the challenges being faced.‘’We have spent a number of months examining our business model and looking for alternatives. But we have been sadly forced to conclude that under the present terms of business, our model does not simply work’’.Supposedly, this comes as not too much a surprise since the struggling retailer warned earlier this year that trading was deteriorating. The company has gone into administration before, in 2012, when it was rescued by private equity firm Sun European Partners.Despite the news, FRP Advisory reassured the public and all of Bonmarche's internal stakeholders, including employees, that trading will continue, and no immediate redundancies will be made.''There is every sign that we can continue trading while we market Bonmarche for sale and believe that there will be interest to take on the business.’’If you are a worried employee, please see our guide here.
New laws regarding Pre Pack Administrations come in April 2021. It mainly governs the process where the sale is made to a connected party. An evaluator will be required to approve the transaction.
19 January 2021Deloitte, administrators of Sir Philip Green's Arcadia empire announce its Outfit operation will close down by the end of the month, with more that 700 jobs lost.Outfit brings all of the tycoon's retail brands, including Topshop, under one roof.It has 21 sites, mainly in out-of-town shopping destinations.In regards to other brands, so far Evans is the only which has been sold - and this did not include its store network.Next and JD Sports are rumoured to be among the competing bidders for the brands, with Topshop the most valuable and others including Burton, Wallis and Dorothy Perkins.This being said, any deal is expected to result in the loss of some jobs as the new owners are unlikely to retain the group's entire estate of around 400 stores in the current market.21 December 2020It has been announced today that Evans' brand, commerce and wholesale business has been sold to City Chic Collective for £23 million.A deal is expected to be completed on December 23, which will lay out the terms of the sale of the brands' intellectual property, customer base and inventory, to City Chic. Evan's store network will not be purchased and administrators, Deloitte state stores will continue trading for now.Evans, plus-size clothing and footwear retailer is a part of Sir Philip Green's collapsed retail empire, Arcadia.City Chic Collective is listed on the Australian stock exchange and specialises in plus-size women's fashion. It operates mainly online in the US, Australia and New Zealand.Deloitte said that the process to find new owners for the other Arcadia brands i.e. Topshop, Topman and Dorothy Perkins, was ongoing and that there has been significant interest expressed for each.30 November 2020Arcadia Group collapses into administration. The collapse of Sir Philip Green's retail empire leaves 13,000 jobs hanging on a thread. It becomes just another corporate failure from COVID-19.The retail empire operates from 444 UK sites and 22 overseas. It also has an online arm.As of yet, no redundancies or store closures have been announced. The business will rather trade as normal, with stores ready to re-open ahead of the UK lockdown restrictions being lifted this week.Appointed administrators from Deloitte begin the search for a buyer for the business.27 November 2020It has been reported by Sky News that Arcadia Group is facing collapse within days.As soon as next week, administrators from Deloitte are thought likely to be appointed to Sir Phillip Green's retail empire.Arcadia Group owns Topshop, Burton and Dorothy Perkins. 15,000 jobs are at risk.A retail industry figure said that the collapse of Arcadia is inevitable following unsuccessful talks with lenders about an emergency £30m loan.If insolvency is confirmed it is thought this will be a catalyst for creditors scrambling to get their hands on the companies assets, even its online operations!Sky News report more.14 November 2020It has been reported that Arcadia Group is in a race to secure £30m.Talks with a number of parties are underway, in hopes to get the funds needed to prop up the business after the second English lockdown halted its pre-Christmas trading plans.Without this financial backing, will Sir Philip's empire survive the coronavirus pandemic?27 July 2020The latest on the situation of Arcadia Group is that they are said to be on the verge of launching another restructure, after being battered by the coronavirus lockdown. If another restructure is launched, it would be the second for the retail giant in just over a year.According to The Sunday Times, the company recently put forward a cost-cutting plan to the Pensions Regulator. Though exact details are unknown, it is reported that Arcadia has a deficit of £727 million in its pension funds.The Retail Gazette report more.09 April 2020An update on the situation of Arcadia Group is that they are seeking £50 million worth of funding, approaching banks and hedge funds.The funding is to be for its distribution centre in Daventry, Northamptonshire, to help support the business through the coronavirus crisis.A potential lender, approached about the plan has said that the company indicated its interest in getting a deal agreed as soon as it can. Currently there is no further update as to if a deal has been reached or not.06 April 2020Arcadia Group is rumoured to be facing a winding-up petition as it cancels orders to suppliers in a bid to stay afloat amid the coronavirus outbreak.According to a spokesperson for the company, no decisions have been made yet. But, the terms of a rescue plan which was agreed with creditors in June 2019, provided possibility of more store closures than the initially planned 22.Last week it was reported that court records showed Principle Systems, a subsidiary of marketing company Principle Global, filed a winding-up-petition against Sir Phillip Greens’ retail empire. This is likely to be resolved but indicates a bigger matter than Arcadia are joining other retailers in delaying payments to suppliers in order to conserve cash. It is also likely that the petition wouldn't be heard for a long time anyhow with many hearings being pushed into the Summer.Principle Systems developed furniture and branding for the latest Ivy Park and Kate Moss collections in Topshop.It is also heard that Arcadia are likely to serve notice on landlords to walk away from many of its 550 stores this week.With the coronavirus pandemic hitting, there has been a dramatic fall in revenues for the business amongst other fashion retailers. Many retailers are scared that the once stores can re-open, the economic impact left with greatly reduce demand.Following the governments lockdown measures, all stores have been forced to shut temporarily. Its e-commerce arm continues, despite a small proportion of sales coming to the group this way, compared to rivals such as Next.Arcadia Group took further measures and cancelled orders with suppliers and changed payment terms on items already delivered, extending payment terms by 30 days.Last week, Arcadia Group made 14,5000 of its 16,000 total workforce furloughed, under the government’s Coronavirus Job Retention Scheme. This was for all store staff with the majority of it’s HQ employees to follow this week. Its senior leadership team and board will take salary cuts of between 25 and 50 per cent, whilst group chief executive Ian Grabiner has elected to receive no salary or benefits until the pandemic ends. With regards to fixed-term employment contracts, employees were told they would end early.The pandemic has worsened Arcadia’s problems after several years of decline and a delayed entrance to the online retail market.Background to Arcadia’s CVA:Last year, after weeks of bargaining with landlords, the group moved to paying monthly rent rather than quarterly, with large rent reductions imposed at many trading locations.The Company Voluntary Arrangement (CVA) it was under also included break clauses that allowed either the company or its landlords to break leases at certain intervals. The agreement covered for 20 Topshop and Topman stores where the company could trigger a break clause within six months of the CVA and a further 19 where leases could be broken after a year. The locations included Westfield Stratford and provincial towns such as Doncaster.
Since 1 December 2020 a change in the law has meant that the way in which some liabilities due to H M Revenue & Customs (“HMRC”) are dealt with in an insolvency situation has changed. Previously, monies due to HMRC are dealt with in exactly the same way as monies due to trade suppliers, landlords, utility companies and so on. However, as of 1 December 2020 this changed and some monies due to HMRC will become “preferential” and will therefore come before other creditors.The reform only applies to taxes which are collected and held by businesses on behalf of other taxpayers, i.e VAT, PAYE, Income Tax. For taxes owed by businesses, the changes are non-applicable i.e for corporation tax and employer’s national insurance contributions.It’s believed that this decision will add £185 million to the treasury’s overall tax intake, over a year.HMRC will continue to offer time to pay arrangements if viable businesses with tax debts need to avoid insolvency. The measure is expected to combat tax avoidance. But doubts arise in that it will transfer the losses to the private sector, have a knock-on effect of borrowing costs and leave employees and suppliers with smaller pots when businesses go bust. However, the Treasury states that most unsecured creditors are unable to recover their debts anyway, so will be unaffected.On the face of it, this might not seem too important, but it could really impact on both your company and any personal guarantees you may have given to say banks or other lenders.
What are the implications for directors that have given personal guarantees?
The issue is that many banks and other lenders rely on what is called a debenture, which creates fixed and floating charges, to give them security over the assets of a company. In essence, this means that in a formal insolvency, such as liquidation or administration, monies realised from the sale of assets, or the collection of book debts, go to repay any sums due to the bank or other lender. However, where the assets are covered by a floating charge (usually plant, machinery, vehicles, stock, cash balances, book debts which are not subject to a factoring agreement), then any monies realised from those assets MUST first go to pay any preferential creditors.At the moment, the only preferential creditors are certain employee claims which are usually fairly modest, so the bank or lender gets most (c80%) of the money realised after payment of the modest preferential claims and after providing a percentage of the monies to deal with the claims of all other creditors. This is known as the Prescribed Part, it is set down in statute and usually equates to somewhere just over 20% of the monies realised.However, after 1 December 2020, the claims of the preferential creditors might be significantly higher due to monies due to HMRC. This would therefore mean that the monies paid to the bank or other lender might be significantly reduced. If this results in a shortfall to the bank or lender which you as a director have personally guaranteed, this could be a MAJOR concern. It might also result in significant concerns for your bank or other lender!Obviously, not all companies are the same and each companies' individual circumstances may vary. However, this could be quite a problem for some companies and directors.
See Below Creditors Priority
