A significant rise in the number of companies suffering "critical" problems was noted during the first quarter, it has been revealed.

Figures from Begbies Traynor, which specialises in corporate recovery and restructuring, show that over 3,000 companies had county court judgements awarded against them during the first three months of the year.

This represents a four-fold increase from the same period last year and is a ten per cent rise compared with the final quarter of 2007.

Begbies Traynor forecasts that around 20 per cent of these firms will face insolvency over the next 12 months and that the number of insolvencies declared this year will rise to 13,492.

Among the sectors where most companies were facing problems were construction, professional services, retail and property with formal insolvency appointments up 19 per cent.

Nick Hood, a spokesman for the corporate rescue firm Begbies Traynor, told the Guardian: "We are getting busier, and the banks are telling us they have an increasing number of businesses in intensive care...This is not a good time for any business to fall out with their bank manager."


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The number of companies entering insolvency has risen to the highest level for five years due to the ongoing credit crisis.

According to PricewaterhouseCoopers, in the first three months of 2008, 3,359 companies failed across the UK - a 21pc jump on the previous quarter and a 17pc increase on the same time last year.

The figures from the accountancy giant showed that the last time the number of businesses collapsed on such a huge scale was in the first quarter of 2003 - during the dotcom crisis.

Insolvency partner, Michael Jervis, said: "It is not good for the wider economy. There is very little to hang your hat on, but you do not see consumer-type conditions getting any better."

The data showed the retail and construction sectors were seeing more companies being put into administration, liquidation, receivership or seeking voluntary arrangements, with 431 and 500 insolvencies respectively.

Mid-sized retail stores have been badly hit. Well-known high street brands to fail in recent months have included discount clothing group Ethel Austin, footwear manufacturer Stead & Simpson, shoe shop Dolcis and book retailer The Works.

They have been badly affected by consumers tightening their belts due to higher costs of living and less credit being available, combined with the poor UK weather.

However, construction companies' ability to operate profitably, Mr Jervis said, have been hit by issues such as less available working capital.



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Rotherham United may have to "close immediately", according to the club's administrators, who have blamed Millmoor landlords the Booth family for pushing the Millers to the edge of extinction.
Administrator Jeremy Bleazard said that demands made by former club owner Ken Booth over continuing 'privileges' were frightening off bidders – with a Russian billionnaire understood to be among those to have withdrawn to have withdrawn an offer.

If the Booths' demands are not met, said Bleazard, the family would seek an injunction preventing the sale of the club – which could have catastrophic results.

In a statement, Bleazard of XL Business Solutions said: "I have been in negotiations with the five bidders for the club and believed we were very close to striking a deal and announcing the preferred bidder.

"However, at lunchtime (yesterday) I received a fax from the landlord's solicitors demanding a personal undertaking that any sale of the club would include the benefits afforded to Mr Booth.

"These benefits include free tickets, hospitality, advertising and even use of a physio at no costs and would remain in place whether the club stayed at Millmoor or moved to a new ground."

"The fax went on to say that failure to give such an undertaking by 4pm (yesterday) could result in an application to court (today) requesting an order restraining the sale of the club.

"I am unwilling to give an undertaking to this effect.

"If the application were to be made I have no funds to defend the action and may have to close the club immediately.

"Of the five bidders, two have gone cold as a result of information they have unearthed relating to the leases and benefits packages.

"Of the remaining three bids, I was confident I had found the preferred bidder."


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Record numbers of people will become insolvent over the next two years, an accountancy firm predicted yesterday.

KPMG said at least 130,000 will become bankrupt or take out an Individual Voluntary Arrangement this year.

An IVA is a legal agreement that creditors will not take insolvency action while a debtor pays what he can afford for an interim period. About two-thirds of those who enter into an IVA are homeowners.

KPMG predicted that the first three months of 2009 will see a record-breaking 40,000 debtors taking out IVAs or going bankrupt - 10,000 more than in the same period last year.

Mark Sands, a director of personal insolvency at KPMG, said rising mortgage costs will tip many families over the edge.

Lenders have raised their rates by up to 0.75 per cent, despite the Bank of England cutting the base rate by 0.25 per cent.

With the average mortgage standing at £158,000 and energy and food bills rising at an inflation-busting pace, many families will need to pay out at least £2,000 more a year to avoid going under.

Figures for insolvency in January to March this year, due out next Friday, are expected to show a small fall in the number of personal insolvencies.

But experts said yesterday that this is only a temporary respite. Sarah Nancollas, from debt advisers Nancollas Greer, said: 'We believe that more people will come under severe pressure with their finances because of the added pressure of increasing mortgage payments and rising utility charges.' ˜ Economic growth fell to 0.4 per cent in the first quarter of this year, preliminary figures show. In the same period last year it was 0.7 per cent.

This suggests Chancellor Alistair Darling will not meet his forecast of 2 per cent growth for 2008, outlined in last month's budget. Jonathan Loynes, of forecasters Capital Economics said: 'This marks the start of a deep and prolonged slowdown.'


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Tony Curzon Price (London, oD): The Bank of England’ swap is a clever device. If banks are not lending to each other because they are hoarding cash, the swap will be popular and will solve the problem. If they are not lending to each other because they are worried that the borrower might go bust, then the swap will not restart bank lending. The FT’s editorial on this is admirably clear.

The detailed terms of the mechanism state that the BoE will not accept US mortgages or attendant securities in the swap. Presumably, those are considered to be at too high a risk of default. So the big question is whether the financial sector expects a non-US housing sector meltdown. If it does, even the best pieces of the mortgage backed securities will start to look risky. The credit crunch will turn out to have been an insolvency crisis, not a liquidity crisis. That’s something the BoE can’t do much about.

My hunch is that the swap will not be popular. The loans are bad. We’ll have to get over it.


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Hellish. That's how hairdresser Linzi Booth describes being chased to pay for an advert she didn't want and had never ordered.

Linzi is just one of countless victims of a rampant scam to fleece kind-hearted businesses.

Figures just released by the Insolvency Service show that 60 rogue publishing companies which claimed to publish "good cause" booklets have been shut down by the courts since 2000.

The Insolvency Service says it is second only to VAT fraud as the biggest scam operating out of the North West.

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The conmen claim their booklets, wallplanners and diaries will help drug awareness, road and fire safety and crime prevention.

They tout for advertising but what the generous victims don't know is that the booklets often don't even exist.

The latest bent firm to be shut down is Crime Prevention Advisory Services Limited.

Dozens of small companies complained to Trading Standards or Consumer Direct to say they were either being hounded to pay for an advert they hadn't ordered or had paid for an ad but no publication was ever produced.

"In either case, Crime Prevention Advisory Services had aggressively pursued the small business for payment," says the Companies Investigation Branch of the Insolvency Service

The firm was run by 24-year-old Joseph Stringer and Edwina Dobbs, 29. "I don't want to talk about it," spluttered Stringer outside his grotty semi in Droylsden, Manchester.

"Why are you asking it, it's been closed down," he sneered before jumping into a top-of-the-range convertible Merc.

These rogues lie about how many copies of their booklets they'll print.

They lie when they tell unwilling businesses that they previously agreed to advertise.

They lie about suing their victims if they don't pay up... the last thing they want is a hearing in court.

They often even lie about who's behind these shameful operations.

Hourglass Design, one of the latest batch to be liquidated was run on paper by Susan Reid of Middleton, Lancs, but in reality the boss was her son Adrian, 25.

His previous bogus "good cause" publishers included Peterson Lloyd & Co, which cheated business advertisers of £500,000, Pemberton Slater, which raked in £157,000, and Ambito which skimmed an incredible £940,000.

Linzi, a hairdresser in Solihull, West Mids, was cold-called by a rep for something called Vardis, which publishes booklets for a children's charity.

Although she refused to place an ad, she did agree to receive more details through the post.

Then, she says, Liverpool-based Vardis used a recording of their conversation as "proof" that she placed an order and had put debt collectors on to her, demanding £524. This is despite Solihull Trading Standards telling Vardis that it needs evidence in writing that a contract with Linzi exists and that its recording "has obviously been edited".

Vardis manager Mark Andrews told us: "We are in a difficult industry with lots of publishers, some of who leave a lot to be desired.

"But we are one of the goods guys, working for a genuine charity."

Do they tell potential advertisers that the charity gets just 12.5 per cent of the money raised?

"We do if they ask," he replied.

But at least they won't be chasing Linzi any more.


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Elephant Loans & Mortgages Plc. said it has placed one of its operating subsidiaries, Elephant Loans Ltd., into liquidation as part of its continued restructuring efforts, and will now conduct its trading activities through another subsidiary, Elephant Loans (Direct) Ltd.

The company said that following the announcement of its membership of the FT-Partners network and proposed reverse takeover by Financial Trade Partnership Ltd. (FTP), it has decided to relocate operations to FTP's new corporate headquarters near Southend, and added that the move is expected to yield cost savings.

Chief executive Gary Miller-Cheevers said that by strengthening and re-organising the group, the business will be able to "look forward to the rest of 2008 with cautious optimism".


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Thames Water MBL.AX is among a list of 11 debt-laden utilities at financial risk from the credit crisis, an investment bank has warned.

The country's biggest water company, which has around 13 million customers in the greater London area, has debts of 6.8 billion pounds and a regulatory asset value (RAV) of just 6.5 million pounds, according to specialist bank Reynolds Partners.

"Utility companies have built up massive debts, leaving little scope for further borrowing if they are hit by a financial shock resulting from, for example, paying for repairs caused by natural weather disasters," Reynolds Chief Executive John Reynolds told Reuters.

Thames led a list that included 10 other utilities -- including Southern Water and Kelda's Yorkshire Water KEL.L. Together the 11 companies have borrowings of 28 billion pounds, against an RAV of 29.3 billion, the bank said.

However, Thames Water questioned the validity of the report, saying the debt figure used by Reynolds was for the group's holding company Kemble, owned by a consortium led by Australian bank Macquarie.

"Debt in Thames Water Utilities Ltd is currently 4.8 billion pounds, with our RAV at approximately 7 billion. Thames Water is in a strong financial position," a spokesperson said.

"We currently have cash reserves and committed bank facilities totalling over 1.2 billion pounds. Our insurance cover also protects the company ... This securitisation facility ensures our customers, lenders and the business are firmly protected," she added.

Reynolds said the vulnerability of some utilities could eventually affect customer bills, but gas and electricity regulator Ofgem said it would ensure customers would be protected by any company crisis.

"The regulated side of the network could not increase charges to customers as the price charge is set by regulators Ofgem and (water regulator) Ofwat," a spokesman said.


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Low wages and a large number of people working in the military sector have contributed to Plymouth having the highest number of insolvencies in the UK, according to new figures.

Academics at the University of Plymouth's Business School analysed the latest insolvency figures for their South West Economic Review.

They found there were a total of 819 cases of bankruptcy in Plymouth in 2006 - equivalent to 0.43 per cent of the population.



Torbay came second, followed by Kingston Upon Hull, Eastborne and Basildon.

Professor Peter Gripaios, editor of the review, said staff were investigating reasons for Plymouth's place at the top of the league table.

He said low wages and a high number of people employed by the military appeared to be big factors in the ranking.

The credit crunch is not being blamed, as the figures are two-years-old.

But Prof Gripaios predicted there would be more insolvencies to come as a result of the current economic downturn.

"These figures are going to go up across the board, they won't go up more just in Plymouth. Rates are starting to rise - that's something we're starting to see already," he said.

Steve Meakin, money advice coordinator for Devon and Cornwall Citizens Advice Bureau, said 40 per cent of people asking for advice from the CAB had debt problems.

"Clearly, the South West has had some of the highest bankruptcy rates for a number a number of years. Plymouth, Torquay and Truro have all recorded very high rates of bankruptcy," he said.

Mr Meakin urged anyone worried about debt to seek advice.

But he stressed this should be from a free, independent and impartial source rather than from a company which has a financial interest in debt management.

"We see too many people who have who have tried to get help, and they have just been ripped off by these companies and it's ended up compounding their problems," he said.


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Restructuring is flavour of the month right now, but even the experts know little more than the rest of us about the long-term implications of the credit crunch.

As John Houghton, the London-based global co-chair of insolvency at Latham & Watkins, puts it: "There are so many repercussions . . . in terms of consumer confidence and all the associated things like retail, homebuilding and so on. It's a big rock that's been dropped into the pool and the waves are spreading outwards. It could be very far-reaching, and no-one really knows how big the splash is going to be."

Houghton has spent 20 years advising companies and their lenders on how to cope when they run into financial difficulties, working out whether their problems can be solved with a restructuring or the injection of more cash or, failing that, dividing up any assets between creditors.

But the current crisis is different. There are now far more parties lending to companies than just high street banks. Hedge funds and investment banks increasingly buy and sell the debt of "distressed" businesses, hoping to buy low and sell high when things improve. That means there are a lot more parties taking an interest in how things work out for troubled outfits.

"The restructuring market is no longer bilateral, with a bank and debtor putting in receivers," Houghton says. "The capital structures have become much more complex and the constituencies around the table are far more varied."

Another complicating factor is that this time many of the problems are with the financial instutitions themselves. Some of the biggest banks have been exposed to huge losses because of their investments in complex financial instruments tied to the US sub-prime mortgage market.

Latham & Watkins has been advising on the restructuring of a number of structured investment vehicles (SIVs), which use short-term borrowing to buy higher yielding, riskier assets.

"Through our involvement in the SIV restructurings we have got a full appreciation of just how profound the sub-prime crisis and the credit crunch really is," Houghton says. "We've seen how far-reaching it is and that makes it very difficult to predict when and if we are going to reach the bottom."

Houghton predicts restructuring in the financial markets will continue until the end of the year and that the knock-on effects in the real economy could last for up to two years after that.

Houghton has been fascinated with the subject since his postgraduate days at Queen Mary College, London, in the 1980s. Initially, he says, he chose a legal career because "my father made me write it down on my university admissions form", but he was inspired to pursue restructuring by one of his professors. "Suddenly this whole new world opened up and I realised there was more to law than conveyancing, probate and matrimonial cases," he says.

Now 46, Houghton shares a birthday with rocker Jon Bon Jovi. Another dubious claim to fame is that he lives with his wife and three children opposite Boris Johnson in Islington. A life-long Manchester United fan, he spends his spare time composing electronic music and "buying modern art for my wife to hate".

After graduating from university, he joined what was then Cameron Markby, now part of CMS Cameron McKenna. "They were doing all sorts of insolvency work for Lloyd's Bank at the time," he says. "It was a very small world in those days: Wilde Sapte was acting for NatWest, Clifford Chance acted for Midland Bank and Barclays was advised by Lovells."

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Erinaceous, the troubled surveyors-to-buildings management company, has appointed administrators after failing to reach an agreement with its lenders on debt over £250 million.

The company, which was worth over £400 million a year ago, warned investors last month that it was unlikely that its shares had any value and today blamed the current state of the capital markets for not securing re-financing.

KPMG, the administrator, said that it had agreed the sale of the company’s insurance division and that its residential management and property maintenance divisions remain outside of insolvency and continue to trade as normal.

Jim Tucker, a partner at KPMG Restructuring and joint administrator, said: “Erinaceous has grown rapidly through acquisition in recent years. Although the insurance division continues to perform well, and we expect to announce the completion of its sale within days, the rest of the Group has struggled to integrate its acquisitions and has been loss making."
He added that discussions were taking place with a number of parties interested in the rest of the company's businesses and that the administrators hoped to conclude negotiations shortly.

There was no initial indication of how many of the company's 4,000 employees will be affected.

The suspension of the Erinaceous' shares this morning follows a strategic review of the company's operations, which looked at the possibility of refinancing borrowings, a sale, and raising funds, however, none of these options proved viable.


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Britons have "problem" unsecured debt of 25 billion pounds and the credit crunch could double the number of people succumbing to debt woes this year, according to a report.

Debt management company TDX Group estimates that one million people are struggling to cope with an average of 25,000 pounds-worth of unsecured debts out of a total UK consumer debt mountain of 1.4 trillion pounds.

That could see the number of people taking out individual voluntary arrangements (IVAs) -- an alternative to bankruptcy, which allows people to settle debts with less damage to their credit rating and employment prospects -- double this year.

Last year, 400,000 people entered into IVAs and debt management schemes.

The report, "UK problem debt -- consumer crisis or efficient market?", warns that there will be fewer refinancing solutions -- such as re-mortgaging and homeowner loans -- available to those struggle with debts, as banks and building societies tighten their lending criteria.

Other economic conditions, such as a slowdown in house price growth and increase in personal inflation, will also serve to stoke the figures.

But Mark Onyett, chief executive of the TDX Group, said many people were choosing the "wrong" solution for dealing with problem debts.

"This might help explain why we estimate up to 45 percent of individuals entering into an IVA don't complete them, with some 15 percent failing in the first year.



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Councils in Kent and Medway wrote off more than £3 million in unpaid council tax last year, according to figures released by the Government.

The highest amount forfeited was in Thanet, where £870,000 of council tax went unpaid, followed by Gravesham where £743,000 was uncollected.

Between them, the 12 district and borough councils, including Medway, gave up chasing debts of £3.71million, according to the Department for Communities and Local Government.

Thanet said the figure quoted was wrong and related to historic debts. A council spokeswoman said that in 2006-2007, £123,000 of council tax had been unpaid.

In a statement, Cllr Martin Wise, Thanet council finance spokseman, said: "We appreciate this is still a significant amount of money but we have procedures in place to ensure debts are only written off as a last resort and after every avenue open to collect them has been explored.

"The vast majority is a result of council tax payers absconding and we have been unable to trace them. This is a particular problem in Thanet due to the high transience of our population."

Ashford had the best record in chasing council tax. It wrote off just £4,000 in unpaid council in 2006-2007.

How your council fared

The figures for written off council tax for 2006-2007 are: Ashford: £4,000; Canterbury: £183,000; Dartford: £410,000; Dover: £71,000; Gravesham: £743,000; Maidstone: £148,000; Medway: £278,000; Sevenoaks: £270,000; Shepway: ,£145,000; Swale: £414,000; Thanet: £870,000; Tonbridge and Malling: £84,000; Tunbridge Wells: £93,000.


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Fired Apprentice candidate Ian Stringer has admitted that he is facing financial ruin.

The 26-year-old quit his job to compete for a career with Sir Alan Sugar on the BBC One reality show. However, he was rejected by Sugar in Wednesday night's episode of the programme and his old bosses do not want him back.

The home that Stringer previously shared with his wife Kirsty, who he walked out on last year, is now close to being repossessed. Ian also fears that Kirsty will take their two children to live with relatives hundreds of miles away.

"It has been hell. I'm on the edge of bankruptcy," Ian told the News of the World. "I can't pay my mortgage, I can't pay off my credit card, I owe my solicitor £600 but I can't even pay my £200 electricity bill. My home will be repossessed if we don't sell it fast.

"I've got zero money in the bank, an empty fridge, and just £15 in my pocket. That's all I'm worth."

In a recent interview with DS, Stringer insisted that he did not deserve to be fired by Sir Alan, blaming his team-mate Kevin Shaw for the boys' latest task failure.


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A COMPANY boss was involved in the running of three transport businesses after his original venture went bust, a court heard.

Gordon Glendinning was yesterday given a four-month prison sentence after admitting contravening an undertaking not to act as a company director.

Durham Crown Court heard that the pledge was made following the downfall of his original company, with debts of £738,649.

The business, Durham Fuels Ltd, of Finchale Road, Durham, was wound up after going into liquidation in March 2001.

Later that year, Glendinning, of Long Garth, Whitesmocks, Durham, agreed to be banned from acting as a company director for seven years.

He was given leave to act as a director of another company, WA Glendinning Ltd, but only for 12 months, from October that year.

It was later extended to April 2003, on the basis that he received supervision from "a mentor", a chartered accountant.

Roger Moore, prosecuting, said an accountant was identified, but during the entire period was never consulted by Glendinning.

That business was wound up and taken over by Minecourt Finance Ltd, which in turn went into liquidation, in January 2005, with more than £450,000 worth of debt.

Meanwhile, Glendinning Transport was incorporated as a limited company, in September 2004, and by July, 2006, went into liquidation with £52,500 worth of debts.

"So, although disqualified, Mr Glendinning has operated as a director of three companies between November 2001 and July 2006, and all three have collapsed,"

added Mr Moore.

Glendinning, 56, admitted three charges of contravening a disqualification as a company director, brought by the Government's Department for Business Enterprise and Economic Reform.

His barrister, Benjamin Williams, told the court: "These are technical breaches of a sort.

"There is nothing covert or any element of subterfuge here.

"What you have is someone who has quite openly acted as a director in breach of these orders."

Mr Williams said Glendinning, of previous good character, was, "a member of the old school", steeped in the family transport business which stretched back more than 100 years.

He added that as a result of the business failings Glendinning is left "financially ruined".

Imposing the prison sentence, Judge John Evans adjourned a confiscation hearing against Glendinning to a date to be fixed after June 30.



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The fact that in a country of principal winding-up of a company in liquidation there would be a class of preferential creditors who would not have priority under English insolvency law was insufficient reason for an English court to refuse to exercise its discretion, under section 426 of the Insolvency Act 1986, to order remission of assets located in England to the country of principal winding-up.

The House of Lords so held in allowing an appeal by (i) Anthony McGrath and Christo-pher Honey, the Australian liquidators of companies in the HIH insurance group and (ii) Amaca Pty Ltd and Amaba Pty Ltd, insurance creditors of those companies, against the dismissal by the Court of Appeal (Sir Andrew Morritt, Chancellor, Lord Justice Tuckey and Lord Justice Carnwath) ([2007] BusLR 250) of their appeal against the refusal by Mr Justice David Richards ([2005] EWHC 2125 (Ch)) of the Australian liquidators’ application, under section 426 of the 1986 Act, for directions to the provisional English liquidators of the companies, Thomas Alexander Riddell and John Mitchell Wardrop, to transfer the assets collected by them to the Australian liquidators.

Section 426 of the 1986 Act provides: “(4) The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory. “(5) For the purposes of subsection (4) a request made ... by a court in ... a relevant country ... is authority for the court to which the request is made to apply, in relation to any matters specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction. In exercising its discretion under this subsection, a court shall have regard in particular to the rules of private international law."

Mr Jonathan Sumption, QC, Mr Simon Mortimore, QC and Mr Tom Smith for the Australian liquidators; Mr Geoffrey Vos, QC and Mr Peter Arden, QC for the insurance creditors; Mr William Trower, QC and Mr Jeremy Goldring for the English provisional liquidators.

LORD SCOTT said that Australian law had certain statutory provisions relating to insurance companies which departed from the insolvency principle of a pari passu distribution of assets among unsecured creditors. Most particularly, it gave preference to insurance creditors in priority to other creditors.

However, by the Cooperation of Insolvency Courts (Designation of Relevant Countries and Territories) Order (SI 1986 No 2123) Australia had been designated a relevant country for the purposes of section 426, part of the English insolvency scheme.

To hold that the power under the section to direct the remission of assets from the country where an ancillary liquidation was being conducted (England) to the country where the principal liquidation was being conducted (Australia) could not be exercised if the effect would be to reduce the amount of dividends receivable in England by any class of creditors, or by any individual creditor, would be to deprive the section, at least in relation to remission of assets from an ancillary to a principal liquidation, of much of its intended potential to enable a single universal scheme for insolvency distribution to be achieved.

If the country of the principal winding up was a relevant country for section 426 purposes and the liquidators in that country had requested English liquidators to remit to them the assets collected in England so that the principal liquidators could, under the insolvency law of that country, implement a universal scheme of pari passu distribution to ordinary unsecured creditors, the request was one to which, in principle, the English liquidators ought to accede.

There might be other circumstances in which a refusal to remit assets pursuant to such a request might be justified. It had been suggested that a refusal would be justified if it would give rise to manifest injustice to a creditor. So indeed it might.

But reliance simply on the fact that under the insolvency scheme applicable to the principal winding-up there would be a significant class or classes of preferential creditors whose debts would not have priority under the English insolvency scheme was not sufficient to justify a refusal.

The Australian statutory scheme allowed insurance and reinsurance creditors of insolvent insurance companies to be paid in priority to ordinary creditors. There was nothing unacceptably discriminatory or otherwise contrary to public policy in those statutory provisions.

The general acceptability by English law standards of the Australian insolvency scheme was confirmed by the designation of Australia as a relevant country or territory for section 426 purposes.

There was no sufficient reason why the Australian liquidators’ request for the remission of the English assets should not be acceded to.

Lord Phillips and Lord Neuberger delivered concurring opinions; Lord Hoffmann and Lord Walker delivered opinions concurring in the result.



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The Transport Minister Noel Dempsey has said he expects the break-up of the State's three main airports at Dublin, Cork and Shannon to be completed within the next 12 months.

He said the break-up can go forward since the board of Cork Airport Authority accepted proposals to resolve the row over who should pay the €220m debt there.

However, unions representing the airport's 300 staff say they will continue to oppose the deal, which they claim will leave Cork with a debt of more than €100m.

Cork had been holding to a promise that it would begin its commercial life debt-free.

But now Government plans to break up the State's three main airports have been boosted by the six-to-five vote by Cork Airport Authority's board to finally accept paying a portion of the €220m debt built up there.

This decision by the Cork Airport Authority undoubtedly represents a significant development in the plan to make the airports autonomous, but it remains to be seen if this is now the end of an affair that has dogged the separation of the State's three main airports for almost five years.

Background of dispute


In June 2003, the Government decided to break up Aer Rianta and create three independent, commercial airports at Dublin, Cork and Shannon.

At the time the Government announced that Cork and Shannon airport authorities would be established on a debt-free basis, but it later back-tracked on this commitment and since then the break-up of the three airports has been delayed by a row over who should pay Cork's €220m debt.

Initiatives by successive ministers and even by the Taoiseach himself failed to resolve the dispute.

However, a series of recommendations put forward by former Congress of Trade Unions General Secretary Peter Cassells were accepted by the board of Cork Airport Authority last night.

But Cork Airport Authority is not happy and in a statement the board said it was extremely disappointed with the separation process up to now.



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We are way out in the high desert with no access to the news. This gives us a chance to think.

What we’re thinking about is that we have entered a much more dangerous and troublesome period in world financial history. The planet was leveraged up. Now it is going to be deleveraged.

We have been talking about the battle between the forces of inflation and the forces of deflation. It is not clear which way it will go…or when. The feds – who favour inflation – seem to have the upper hand one week. The next week, Mr. Market – who seems to have thrown his lot in with the force of deflation – seems ahead on points.

Meanwhile, many of the foot soldiers are lost, separated from their units… shooting at their own men…and often blowing themselves up. Many don’t know which side they are on and are willing to switch sides at any minute. But in the fog of war you always get a lot of people bumping into one another. That’s why we get such peculiar reports from the front – such as when the feds cut short rates (which is inflationary)…but long rates nevertheless go up (which is deflationary). Or when the unemployment numbers go up (which is deflationary)…causing the dollar to fall (because investors expect another inflationary rate cut!)

No, we don’t know exactly which way it will go (so don’t ask us when gold will hit $2,000…or when the Dow will break below 10,000). But it scarcely matters. Because, we’re like the innocent civilians caught in the crossfire. Sooner or later, our assets are going to be shot down…and our liabilities are going to blow up. In other words, dear reader, this is not a war in which you should try to speculate on which side will win…this is a time to keep your head down.

It’s a Liquidation War…in which mistakes will be corrected BOTH by inflation and deflation. Take stock prices, for example. Our guess is that they’ll be taken down – either by inflation or deflation, or both. Prices will fall either in nominal terms, in other words, or relative terms. Already, adjust the Dow to the price of gold, or wheat, or oil, or copper and you get a very different picture. Instead of being flat over the last 10 years…the Dow is down a half to two-thirds.

“It’s the Greater Depression,” said Doug Casey at dinner Monday night, with a satisfied look on his face. “I’ve been expecting it for a long time. I was a little early. But now, it seems to be finally getting going.”

What happens in a Greater Depression? We don’t know, but we think we’re going to find out.

And we imagine its most important feature will be a general mark-down of debt and the relative value of Western assets – stocks, houses, currencies, and labour. The East and developing world is on the rise; even if it stays put, the West, in relative terms, will sink.

Some assets will go into default – which is what is happening in the financial industry lately. UBS alone has lost $38 billion. Hedge funds are going broke. And the captains – present and past – of the financial industry are pointing fingers at each other.

Many people say we’ve seen the bottom for equities and the financial sector in particular. Maybe in nominal terms. And maybe in the East and the developing world. But in America, in real, inflation-adjusted terms, we’d expect more of a sell off. The S&P is still selling for more than 18 times earnings; there’s still plenty of room on the downside.

The financial sector looks particularly bad; there’s probably a lot more bad news coming. And since it was the big winner for the 25 years, it probably needs a bear market of at least five or ten years. At the beginning of the boom in finance, which began roughly during the first Reagan Administration, people still wanted their children to grow up to be doctors, lawyers and businessmen. At the end of it, every mother’s son was encouraged to into ‘finance.’

But now, the bubble in finance is over. It will probably take many years before values appear and prices begin to rise – just look at what has happened in the Nasdaq. Or look at our favourite example – Japan. Many people thought Japanese stocks were a once-in-a-lifetime bargain after the Nikkei Dow crashed in 1990. Well, they’re an even bigger bargain today!

*** “Senor Bonner….I have to tell you. I won’t be able to work here anymore.”

Francisco, who has been our ranch foreman, quit. He explained why:

“There’s no money in cattle now. So my father sold our ranch over in Angustura. We’re buying a big farm in Bolivia. It’s about 7,500 acres. Very rich. And with lots of water. It’s not in the high part of the country. It’s out on the eastern plain, where the Amazon begins."

“The place we’re getting is practically virgin land. It was farmed many years ago, and then abandoned. I don’t know why. And we’re going to plant soybeans. You just stick the seeds in the ground; three months later you have a crop you can market. And with prices this high, we can’t resist.”

“Farming soybeans is about the easiest farming there is. You only have to go out to the farm a couple of times. And you don’t need any labour – it’s all mechanised. Labour is cheap in Bolivia, but it’s still a lot easier when you don’t have to deal with farm labour. And now with these genetically modified plants, it makes it easy to kill the weeds. We just spray herbicide from the air; it kills everything but the soybeans, because they’ve been modified to resist it.”

“We’re going to plant about 1,000 acres this spring. Then, we’ll add another 1,000 next year. Some of the land is still covered by jungle. It’s just the opposite of here. Here it never rains. There, they get plenty of rain. We would plant more land, but the Bolivian government has banned clearing any more jungle. At least, there’s some restriction on it.”

“And in Bolivia, the government lets you sell your crop on the world market, without taking half of it. [He was referring to the Argentine government’s tax 49% tax on soy exports].”

“Everybody is planting soybeans. But I’m not worried about the price going down. It can fall in half, and we’d still make money.”

*** We took a look at farm prices. Even with the huge recent increases most farm prices are still much lower - in real terms - than they were 100 years ago. What made them go down? Technology…cheap, abundant water and fuel…and huge new areas of the world became accessible to mechanised agriculture.

We’re just wondering if those advantages have been pumped out.

As to technology…breakthroughs don’t always come when you want them. Except for parts of Africa, there are few areas that haven’t already been introduced to the plough. Australia…Brazil…Russia…North America…Argentina – millions of square miles were brought into service during the last two centuries. Much of this land is less fertile today than it was 100 years ago – requiring higher inputs of fertiliser. Some of it has been taken for cities and highways. Some has been made unusable by overwork or contamination. If we haven’t achieved it yet, we assume we are getting close to maximum usage of the world’s arable surface area. As to new technology, we doubt that mechanisation has much more to offer. And genetically-modified plants may lead to much higher yields, but who knows at what price? But it may be the constraints imposed by water and fuel that really hobble agricultural output in the future.

Colleague Byron King has some thoughts on this subject:

“For 200 years, the material wealth of the world has improved because of increased access to ancient stores of energy. We are mining the Devonian Era, the Pennsylvanian, the Permian, the Jurassic...hundreds of millions of years of stored energy, to release it within a span of two centuries or so. It's been fun while it lasted, eh? And the whole concept of ‘economics’ rests on that upward - ever upward - trend. Heck, cheap oil made it all look easy. Any damn-fool, poorly-run, hodge-podge of a country could act like a "nation state" in the realm of world affairs, or how else to explain Mexico? ("Failed-State Walking.")”

“But now we have reached the plateau in "easy" energy...the best of the coal, the oil, the natural gas, the uranium...it has all been drilled and mined, and now we are going for the lower quality stuff, worse EROEI (Energy Returned on Energy Invested). Costs are going up. Quality is going down. The currency is degrading, so you cannot even do long term planning any more - in what denomination, pray-tell? You know the drill. Can the world transition to something else? Well the key point in this is that we are not "running out of oil," but we are running out of time.”

Running out of time? Aha! Here is the sense of urgency. Every day is a lost day. One day closer to...well, to what?

We can’t see any farther ahead than Byron or anyone else. But when we read in the paper about food riots breaking out in various countries, we think we are getting a peek.


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Long-haul budget carrier Oasis Hong Kong Airlines went into liquidation today, leaving hundreds of travellers stranded.

After 18 months in operation, flights were cancelled with immediate effect. Its collapse comes amid a time of spiraling fuel costs.

Oasis launched in October 2006, flying daily from Gatwick to Hong Kong, and then added flights from Hong Kong to Vancouver.

Under its mantra: “making frequent long-haul travel accessible to all” Oasis had been offering fares to Hong Kong for as low as £65.

According to local newspaper reports Oasis accumulated losses of HK$1 billion during that time.

"It is with great regret that Oasis Hong Kong Airlines has today voluntarily applied to the Hong Kong courts to appoint a liquidator," said chief executive Stephen Miller.

Industry analysts have suggested Oasis’s business model was optimistic in what is a highly competitive sector.

Cathay Pacific has stepped in to help stranded passengers. A special one-way economy class fare of £160 is being offered to Oasis passengers who have confirmed bookings on the airline over the next two weeks on the London to Hong Kong route.

Travelmood, a longhaul operator, was working with 17 affected passengers on Wednesday to find alternative flights.

Richard Twynam, Travelmood’s sales director, said to operate on the lucrative London-Hong Kong route it is essential to have through traffic to other destinations.

“Hong Kong is essentially a stopover destination and much of the traffic is corporate and locked into premium carriers like Qantas and Cathay Pacific,” he said.



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Watchdogs are clamping down on the bully-boy tactics of 13 debt-collection companies.

The Office of Fair Trading has written to the firms after being flooded with complaints.

Among the underhand methods they're accused of using are phoning debtors in the middle of the night and every hour.

Others complained of being chased for money they didn't owe.

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It's also claimed the firms refused to deal with third parties such as Citizens Advice bureaux to resolve disputes.

Complaints to the OFT soared last year and the fear is more families could find themselves falling foul of the fierce firms as the credit crunch tightens its grip.

Officials refused to name the 13 companies last night, blaming "legal reasons".

But it means banks, credit card companies, energy suppliers and others could still be passing business their way without knowing.

The firms have been given four weeks to respond.

If they don't, or fail to satisfy the OFT about changes, they could be fined up to £50,000 or lose their licence to do business.

The OFT's David Philpott said: "It is unacceptable for debt-collection businesses to engage in unfair practices and we will continue to take action where we find evidence of this."

Members of debt collectors' trade body the Credit Services Association have seen their workload soar from £15billion in 2006 to £16bn last year.

It stressed there is a big difference between people who can't pay and those who won't.

In a statement it said: "Our members are obliged to adhere to a strict code of practice, developed with the OFT, and it is clear within that code where the boundaries lie."

COMPLAINTS TO THE OFFICE OF FAIR TRADING ROCKETED LAST YEAR 38 PER CENT TO 6,824


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The number of insolvencies rose to 4,798 during the first quarter, as the credit crunch begun to impact on UK businesses.

This figure is 374 more than in the preceding period and an increase of 124 on the final quarter of 2007.

Furthermore, the increase of 8.5 per cent represents the first rise in 12 months, suggesting that the squeeze on credit in the financial markets is beginning to impact on the wider economy.

Tony Pullen, managing director of Experian's business information department, said: "Company failure has far-reaching consequences for the broader economy and people's livelihoods. Failed companies expose their suppliers to bad debts, which could push some creditors into insolvency themselves.

"It's never been more important for companies to ensure they take every step they can to protect themselves, including checking to see if their customers are taking longer to pay their invoices - not just to themselves but to their other suppliers."

The sectors experiencing the largest rise in failed businesses were agriculture and financial services with increases of 109.1 per cent and 36 per cent respectively.


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It is thought that 1 million families will end up in court over unpaid debts in the coming year.

As the effects of the credit crunch continue to hit consumers, more than 2,700 people are expected to face the courts every day over unpaid items such as personal loans, car loans, store cards, credit cards and bills.

The news comes as personal debt in the UK is reported to have hit £1.4 trillion. This, together with the fact that banks are less willing to lend, is making life difficult for consumers who are struggling to meet every day costs. This week, the Liberal Democrats predicted that around 60,000 families were at risk of having their homes repossessed as they are unable to manage their debt.

Mark Sands, from the accountants KPMG, said: "Everything points to more pain for the consumer, which will translate into increased county court judgments over the course of this year. If county court judgments go up anything like as quickly as we expect bankruptcies to go up, we could easily see a million of them this year."

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BAA, the airports operator, hopes to begin the refinancing of its massive debt within the next couple of weeks when it syndicates a £1.2 billion loan.

The loan will be secured against revenue from BAA's regional airports, including Glasgow, Edinburgh and Aberdeen. This element of BAA's refinancing is being arranged by Macquarie, and the Australian bank is understood to be close to finalising the deal.

Ferrovial, the Spanish infrastructure company that bought BAA two years ago, is under pressure to cut the £10 billion debt it took on to buy the airports operator. Its interest payments have nearly doubled to €1.9 billion (£1.5 billion) a year and the company is seeking better terms. If BAA fails to refinance by the end of June the credit agencies have told the company that they will downgrade its debt rating, possibly to junk status. Such a move would make it much more expensive to borrow money, and analysts have given warning that this could lead to the company running out of money or being forced to sell one of its airports.

There are understood to be three elements to BAA's refinancing package, and banks are working to complete them all in the next couple of months. The largest part is a £5 billion-plus bond that will be secured against the revenues of Heathrow, Gatwick and Stansted. A further £3 billion loan will also be syndicated.

The bond is expected to be finalised by the end of this month and the loan in May. However, BAA is thought to have been unable to secure refinancing at the rate it was initially seeking. Reports yesterday suggested that the interest rate would be 1.5 percentage points above the bank lending rate, compared with BAA's present rate of 2.25 per cent. BAA declined to comment.

Steven Fernández, an Exane BNP Paribas analyst, said: “The market conditions have changed the interest spread and the rate has increased.”


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Independent web-to-print publisher The Friday Project Ltd (TFP) formally went into liquidation this week, leaving scores of creditors out of pocket.
Stephen Franklin of liquidators Panos Eliades Franklin & Co told PN: "There is approximately £360,000 owed to trade and expense creditors alone". He said that TFP's assets are valued at £50,000, but that beyond this amount, there is no funding to pay creditors. "If any payment reaches the creditors, it will be a minimal sum."

Interestingly PN reports that "TFP's employees, consisting of five editorial staff, including directors Clare Christian and Scott Pack, would be joining HarperCollins"



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Against the background of considerable uncertainty in the financial markets and a deepening economic gloom, there are some very real risks for accountants in the work lying ahead of them.

Recently each month has seemed to bring a new chapter in the unfolding horror story of the European financial market’s investment in mortgage-backed securities, collateralised debt obligations and credit derivatives linked to sub-prime lending in the US mortgage market.

Accompanying this have been the attendant evils of credit crunch, Northern Rock and its ‘outlier’ business model, asset write downs, and the closure or insolvency of a number of hedge funds and structured investment vehicles.

Claims often follow hard on the heels of corporate insolvency. The exercise of judgment on complex issues is always vulnerable to challenge in the light of subsequent developments.

It is obvious, for example, that significant adjustments to valuation opinions over a short-time scale will attract the attention of any stakeholders who have lost out. The sale or refinancing of a hedge fund with a large holding in mortgage-linked structured credit investments rapidly starts to look like a high risk operation for any accountant involved.

This heightened risk environment has been recognised by two Financial Reporting Council publications. The first is intended as a checklist of key factors for audit committees, in particular those in financial institutions that are holding some of the affected investments or have sponsored some of the investment offerings concerned. The second (APB Bulletin 2008/01), summarises guidance on relevant issues for auditors.

The Financial Services Authority has also published a reminder to listed companies about the need for prompt disclosure of price-sensitive information and the desirability of providing information to investors about issues currently under the spotlight such as special purpose vehicles.

The FRC documents highlight the two major risks in terms of financial misstatement: valuation and going concern.

The litigation risks for accountants posed by current circumstances extend beyond audit engagements for financial institutions.

The availability of credit is in a state of flux as lenders continue to tighten up their criteria and lending policies. In the context of transactional reporting, or reporting to lenders for example, the current turbulence in various markets such as in the UK property market, will require considerable care in relation to determining appropriate assumptions and identifying or evaluating sensitivities, since recent past experience may no longer be such a reliable guide.

The challenge

The risk management challenge for all concerned is to be able to demonstrate that sufficient care has been taken to identify and address those risks of financial misstatement that have been heightened by current conditions (for example, provision for bad debts in some of the more badly affected sectors of the economy).

It is of course the directors of companies who are chiefly responsible for the content of the financial statements (including complex investment asset values and debt provision) as well as for the business model being operated by the company.

This legal responsibility for addressing these matters cannot simply be delegated to the auditors, no matter how complex the accounting issues might be.

The FRC has rightly directed part of its guidance at financial institutions. A range of risks (in particular the cost of borrowing and going concern issues) are raised by the credit squeeze affecting SIVs and funds that are dependent on short term finance.

Valuation is clearly one of the key risks that arise in connection with mortgage-backed securities and related CDOs and credit derivatives. The problem is essentially a two-fold one: identifying assets which are impaired or at risk of being impaired, and valuing these assets.

The complexity and illiquidity of these asset types presents some major challenges for their valuation. Some financial institutions (especially end investors such as pension funds and insurers) will require external specialist advice, and may look to accounting firms for this. Any future claimants will be on the look out for auditors and advisers without an adequate grasp of the issues, or who fail to make a robust assessment of the reliability of valuations, or for those who overlook unusual or inconsistent methods and assumptions.

Based on the disputes linked to mortgage-backed securities, CDOs and credit derivatives, valuation of these assets is heavily dependent on information in the hands of third parties and requires specialist expertise using a ‘mark to model’ approach where there is no current market (as will be the case for subprime mortgage-linked securities).

Criticisms made in the past by the Audit Inspection Unit regarding the use of in-house specialists in audit engagements suggest that a major challenge for auditors might be fielding appropriate valuation expertise of their own.

Assessing the reliability of the valuation used by the audit client will also be difficult. Last month there were press reports of Credit Suisse being forced to revise the values of its own asset holdings downwards because of deficiencies in its valuation work. The independence of third party valuations may be an issue due to the affiliation between valuers and the originators of these securities.

The valuation issue catches accountants between the devil and the deep blue sea: under-valuation may be as mortal a sin as over-valuation, causing institutions to engage in undesired capital-raising activities or asset sales, and perhaps pushing them towards insolvency.

If the underlying opinions were at fault, then under-valuation could in some circumstances be a source of claims against firms for even larger losses than over-valuation.

Given market volatility, it is probably no longer a question of whether claims will be made against accountants, but how many.

Economic downturns have historically led to increased claims against accountants and auditors. Very often, the driver for those claims is of course the headline losses which a financially-strained claimant is seeking to recoup, not the quality of the underlying work at all.

That said, whatever the ultimate motive for claimants, the difficult accounting and auditing judgments made in the current environment are likely to be subject to close judicial scrutiny in a court room.



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The term 'credit crunch' is now commonplace as economic slowdown has hit the headlines.

It will have escaped nobody's attention that the economy in general, and therefore construction in particular, is expected to suffer a setback in the coming year. It is expected that this will be driven by the enormous write-downs the global banking community has had to implement due to its exposure to the US 'sub prime market'. Quite what all this means will probably be lost on the small subcontractor facing severe cashflow problems in the heat of battle with his employer. Nor, indeed, will he care. In the final analysis, his problems are closer to home.

In the most cases, construction insolvency is due to cashflow or, more particularly, the lack of it. How many times has it been said that turnover is vanity, but cashflow is king?

All too often, company directors embark on missions of rapidly increasing turnover in the mistaken belief that to do so will undoubtedly improve the bank position and, therefore, profitability. If only they would realise that returning a loss of, say, £10,000, on a turnover of £1m, is more than likely to result in a loss of at least £20,000 on a turnover of £2m, and in all probability much more than that. The wise directors will turn to reducing overheads and costs, while carefully selecting the projects upon which they both wish to be engaged and can afford to take on.

Managing risk
Cashflow is directly related to the management of risk, be it while preparing a bid, performing on site, or dealing with change when on site. Early identification of a contractual problem, followed by swift attention to it, will invariably result in the protection of cashflow. Indeed, this is the main thrust of adjudication under the Housing Grants Construction and Regeneration Act Failure to identify risk to cashflow will inevitably result in problems with suppliers and subcontractors, causing damage to contract programmes and relationships with employers. On some occasions, insolvency may result.

In earlier years, the main subcontractors were afforded some financial protection and enjoyed nominated status, but this is less popular now. The contractual stability and protection that employers want from a suite of contracts cascading down from principal contractor to the very lowest level of supplier is understandable, given the need for diminution of liability. But the financial effects of the economic failure of one of the companies in the chain, while shared by all, is mostly felt by those lower down.

The government's latest initiative to see the introduction of project bank accounts seems laudable on the face of it, but the system will not be legally enforceable at the outset, will only benefit the key subcontractors and suppliers wanting to enter into the trust arrangement, and is likely to be tested by the interruption of an insolvency event.

There is also likely to be much debate about rights to set-off, and the fact that it will only be the main contractor that decides how much is due. Furthermore, from what information is available, monies in such a fund will only represent the current month's certified sums, and will not address work in progress. However, it is a step in the right direction, but may not satisfy small subcontractors.

One issue that frequently arises in dealing with construction company investigations is retention. There are not many businesses in the contracting world that regularly return more than between 4% and 5% gross profit on a year's trading. Some do, some don't. If you were to take an industry average of withheld retention of around 2% to 3%, the significance of this figure to cashflow and profitability becomes apparent.

Subcontractors particularly feel the impact of being denied this money and frequently have great difficulty in recovering it. Indeed, many businesses believe it is irrecoverable in real terms.

Employers have been encouraged to set up trust funds to afford some protection to these monies in the event of an insolvency, but in practice the industry seems not to have adopted the idea. As an alternative, retention bonds can be offered, but it is likely that these have only been economic where sums in retention funds are large.


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Insolvency practitioners warned yesterday that banks were forcing entrepreneurs and family-run firms to take second mortgages on their homes and offer personal guarantees before agreeing to provide business loans.

Many banks also charged penal rates of interest or refused to extend loans to small businesses unless they agreed to offer their personal assets as security, and in particular their main home.

Nick Hood, a spokesman for the corporate rescue firm Begbies Traynor, said: "We are getting busier, and the banks are telling us they have an increasing number of businesses in intensive care ... this is not a good time for any business to fall out with their bank manager."

Mark West, of chartered accountants Burley, said firms were rushing to their banks for unsecured loans only to find strict conditions applied. "The credit squeeze has given lenders the opportunity to compel SMEs and specifically the directors to provide personal guarantees to secure the corporate borrowings of their business, clearly at a time they need the most help," he said.

Business insolvencies have remained steady over the past two years despite a huge rise in personal insolvencies. But insolvency practitioners said they expected a steep rise in the number of corporate victims over the coming months as businesses run out of cash.

Unsecured loans are preferred by small businesses because they shift the risk of failure to the lender. Increasingly, directors are being asked to offer their homes as security before taking out fresh loans, which could result in them being left homeless if their business goes bust.

Recent research by the Small Business Research Trust, funded by the Forum of Private Business, showed that smaller firms faced rising costs of borrowing.

During the first quarter of 2008, it found that three quarters with both overdrafts and loans reported an increase in lending rates over the last six months, with three in every five respondents indicating that they had a "negative" or "very negative" impact on investment.


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West London and online retailer Chatterbox has gone into liquidation with debts of over £1m after it struggled to pay outstanding cashback to customers since May last year.

The London-based retailer still owes £900,000 to 3,800 to customers – largely on 3 – with the rest of the outstanding debt owed to suppliers. Accountants appointed to wind up the business say there is no likelihood of them being paid.

Creditors were informed of the decision to appoint a firm of accountants last week.

With only £40,000 of assets remaining, Lane Bednash of accountants Valentine and Co. said it would be uneconomical to redistribute it.

Chatterbox MD Kevin Patel said he had been trying to repay as many customers as he could for several months while downsizing the operation.

In 2004 the company was connecting 2,000 customers a month, but it stopped taking on any new customers in May last year when it ran into trouble, Patel said.

Since then, Patel has been campaigning for networks take a share of the responsibility for the fallout created by collapsed cashback retailers, claiming that networks encouraged retailers to adopt a 40% redemption model.

Chatterbox first wrote to customers in September last year to say the company’s resources had been ‘drained’ due to the redemption model. A second letter was sent in December last year to ask customers to put pressure on the networks.

Patel said: ‘I asked all 25 people present at the creditors meeting if they thought the networks were responsible, and they all said “yes”.’

Patel said the networks had hinted that they will step in and pay customers if the business went into liquidation.

And Patel said that if no satisfactory conclusion was reached legal action in the form of a class action could be pursued, on the basis of anti-competitive practices and misrepresentation through misleading cashback advice.



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Living in Brighton and Hove is so expensive it is impossible for more than 13,500 adults to save money, a new study has claimed.

The rise in day-to-day costs, including tax and energy bills, has been blamed for making people unwilling or unable to set up savings accounts.

People's concerns about the security of their money follow a string of high profile bank collapses in the UK and US have been identified as factors in the study by the Post Office.

It said around 17 per cent of the city's population of 181,000 adults did not save and in its representative study almost half of those said it was because they could not afford to.

The study indicated around 13,600 people were in the position of being unable to set any money aside.

Other experts warned the real number of people unable to save could be even higher than the study showed.

Sarah Nancollas, director of insolvancy experts Nancollas Greer, said: "I'm surprised the figure is that low. There is a real issue in this generation that people do not save. People seem more inclined to borrow and then try to pay back than to save and then spend."

The Post Office said the reluctance of people to start saving was coupled with a rise in what it called "bouncers", people who would put money into a savings account on pay-day but be forced to withdraw it again by the end of the month.

The study showed that in the past 12 months this had been done regularly by 48 per cent of people in the Brighton area who paid into their accounts.

Eighteen per cent of those surveyed admitted to bouncing every month.

Richard Norman, director of savings at the Post Office, said: "Our research shows that thousands of people in the Brighton area are missing out on earning interest on their savings and have to live without the security of having a 'savings safety net' if they ever found themselves in financial trouble.

"In times of economic uncertainty, it's more important than ever to try to put money away. Our advice is try to keep saving regularly, even if it's just a small amount, and consider saving less frequently such as every other month."

The survey showed ten per cent of people nationally were wary of savings accounts and 11 per cent were unsure of and products linked to the stock market.

Almost half, 47 per cent, said their savings behaviour had not changed and 57 per cent said they felt instant access accounts were the best home for their cash.

The Post Office figures were based on an online poll of 2,003 British adults March 7 and 11 and weighted to nationally representative data.



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