This week’s expert is Kieran Wallace, a partner with KPMG in Dublin, specialising in company restructuring.

QUESTION
I am the owner/director of a manufacturing company. We have faced difficulties meeting payment obligations over the past 18 months and I have decided to wind up the company. I believe that an arrangement can be made whereby creditors accept less money than the full amount due to them. Can you explain this procedure and its benefits?

ANSWER
You will often hear references to companies going into liquidation or being ‘wound up’.

A company liquidation or ‘winding up’ is a process by which the assets of a company are realised and the proceeds are distributed to the creditors and members. The order of priority of the distribution of assets is determined by company legislation.

However, not all liquidations are the same. In fact, there are three types: creditors’ voluntary liquidation, members’ voluntary liquidation and court liquidation.

In a members’ voluntary liquidation, the directors and members of a solvent company decide to wind up the company, primarily for the purpose of realising its assets and distributing the surplus to its shareholders.

On the other hand, a creditors’ voluntary liquidation is usually initiated by an insolvent company, acting through its board. In such a case, the liquidator is primarily concerned with the interest of the creditors of the company.

Finally, a court liquidation is commenced by order of the courts on foot of a petition. The petitioner in a compulsory liquidation will usually be the company itself, or a creditor who will pet it ion on the grounds that a company is unable to pay its debts.

The arrangement you are referring to is the voluntary arrangement under Section 279 of the Companies Act, 1963.

The legislation provides that, if a company is about to be - or is in the course of being - wound up, a voluntary arrangement can be entered into between the company and its creditors, whereby the creditors agree to accept less than they are owed.

This arrangement will be binding on the creditors of a company only if 75 per cent of the creditors - in number and value - accept the terms of the scheme. If you decide to pursue this route, you should engage an experienced insolvency practitioner to set up and administer the scheme.

Once a proposal has been drawn up, the company will set up a meeting of its creditors and issue notice and proxy forms for the meeting. At this meeting, the proposed scheme will be put before the creditors, and they will be asked to vote for or against the scheme.

If the scheme is accepted, then your company’s assets will be realised and the dividends paid over to the creditors.

There are benefit both to you, as the owner of the company, and the creditors in accepting the terms of these schemes, rather than taking the traditional route of a creditors’ voluntary liquidation.

For directors, once the creditors have accepted the scheme and the payments have been made, the company is considered solvent and can be wound up as a members’ voluntary liquidation.

This means that it will not be subject to a report being filed with the Office of the Director of Corporate Enforcement - which would be the case if the company was liquidated as a creditors’ voluntary liquidation.

The main benefits for the creditors are that they get a dividend against their debt and it is paid in a timely manner. Typically, in insolvent liquidations, unsecured trade creditors get little or nothing. Even if there is a dividend, it can typically take years for it to be paid.

As ever, it’s worth securing professional advice in these matters.


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Four Seasons debt blow

THE consortium of banks that backed the takeover of the Four Seasons nursing-home chain by Qatari investment vehicle Delta Two is facing combined losses of up to £400m from its exposure to the £1.4 billion deal.

Delta Two has already had to inject a further £100m of equity into the company to avoid breaching banking covenants. The Qataris are struggling to refinance Four Seasons’ £1.2 billion debt by the September deadline.

Royal Bank of Scotland, which led the deal and has a seat on the Four Seasons board, is believed to be facing a £100m loss. Ten other banks, including Credit Suisse, are looking at combined losses of £300m.

Vodafone fees warning

VODAFONE will argue in a submission to the European Commission later this year that millions of customers could give up their mobile phones if proposals to reduce wholesale fees are forced through by telecoms commissioner Viviane Reding. The mobile giant says its research across eight European countries found mobile-phone penetration could fall from 85% to 75% if cuts were passed on in higher charges for light phone users on prepay tariffs.

Red faces for BP in Moscow

BP’s row with its Russian joint-venture partners descended into farce last week, after the dispute between the two sides erupted in front of Kremlin officials. Tim Summers, the chief operating officer of TNK-BP, was summoned to a hearing at the Moscow City Inter-Disciplinary Commission last week to attempt to resolve a long-running row over work visas. However, Viktor Vekselberg, one of the four Russian oligarchs who jointly own 50% of TNK-BP, also turned up at the hearing – and argued against Summers. As a result, a quarter of the foreign workers employed by TNK-BP could now be deported.

Insinger pulls out of Britain
THE Dutch investment bank Insinger de Beaufort is largely withdrawing from Britain after selling institutional broker Monument Securities for an undisclosed sum. It is being bought by Oakley Capital, a private-equity fund. Monument was acquired by Insinger three years ago for £15m. Martin Burton, who founded Insinger in 1991, will stay in charge.

Kuwaitis shop for hotels

A KUWAITI investment firm that owns luxury hotels across Africa and the Middle East is planning a shopping spree in Europe. Sovereign Hospitality Holdings has been looking to buy a luxury London hotel as the first step in a programme of acquisitions.



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THE Hampshire bridal shop that closed abruptly is to go into liquidation, the Daily Echo has learned.

Arvella Bridal's director Lisa Clarkson has been in talks with UK Bankruptcy Ltd who appointed insolvency practitioner Nick Peat to assess the business' assets to see whether they would cover the cost of any liquidation process.

Mr Peat found the company had enough assets at its store in the High Street, Lyndhurst and at its shop in Bradford on Avon to cover the costs.

Now Mr Peat is due to have a meeting with Mrs Clarkson on Monday to get a list of creditors, including customers and suppliers who are owed money.

All of them could potentially have a claim on the company's assets and a meeting for creditors will be arranged within the next few weeks.

The latest development comes soon after Mrs Clarkson, 33, spoke out publicly for the first time yesterday. She said she was "very sorry" but that she had been let down too and that threats had been made to her and her family.

She said: "I am so sorry that people have been caught up in this mess. None of this was intentional."

The director of the limited company added that everything was being done to help brides-to-be getting married in the next few weeks.

"Myself and my staff have tried everything possible to make sure that they are all sorted as much as we can.

"We are still working together to get them dresses."

She said she was "really, really sorry" for the way the business had gone.

Commenting on why Arvella had closed she said: "It is the way the market is. We tried desperately within the shop not to be in this position."

She said that she herself had done nothing wrong and had been let down by suppliers.

"I have worked my hardest with suppliers to carry on and the suppliers have let me down."

Mrs Clarkson, who lives in Warsash, also confirmed that threats had been made to her and her family including the kidnap of her two Labradors.

"These things have happened and the police were present," she said. However, the police have received no formal reports of these incidents.

Suppliers to Arvella Bridal have denied they are to blame for the business failure.

Wedding dress designer Amanda Wyatt said that she had 60 dresses ready to be dispatched to brides - but had never received any payment from Arvella Bridal despite customers paying for them in full.

She is also owed £13,000 for dresses that were already sent out to Arvella Bridal.

"Mrs Clarkson has not done badly because she has been able to take orders. I don't think she can blame the suppliers because we had the merchandise ready to go."

Hatmaker Vivien Sheriff who runs Vivien Sheriff Millinery near Salisbury said: "We always kept up with delivery contracts.

"We bent over backwards to support Arvella. We have had 30 separate inquiries relating to orders that were never placed with us, despite the customer paying Arvella between half or full price."


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The appellant accountants (M) appealed against a decision ([2007] EWHC 1826 (Comm), [2008] Bus LR 304) refusing to strike out the claim against them. The respondent company (R) had commenced proceedings against M claiming that M negligently failed in the course of various audits to detect the dishonest behaviour of the individual (S) who was at the relevant time the sole directing mind and will of R. The nature of S’s dishonesty was to procure R to engage in a letter of credit fraud on banks which enabled substantial sums of money to be channelled through R and applied elsewhere for the benefit of S and others also party to the fraud. The frauds gave rise to liabilities by R to the banks, in particular to a Czech bank. That bank sued R and S in deceit and was awarded substantial damages against both. R could not pay and went into liquidation. Its claim against M, brought by its liquidators, was for just under US$174 million. M denied negligence and applied to strike out the claim or for summary judgment contending that R was seeking an indemnity against liabilities it had incurred by its own fraud and that such a claim was barred by the principle of public policy expressed in the maxim ex turpi causa non oritur actio. The judge declined to strike out the claim. R submitted that (1) the ex turpi causa maxim did not prevent it from suing for recovery in respect of its own losses caused by the individual who was its directing mind and will in relation to the frauds because R was itself a victim of the frauds and should not have any knowledge of them attributed to it; (2) the ex turpi causa maxim did not provide a defence to M when the detection of dishonesty in the operation of R’s affairs was the “very thing” that M, as auditors, was retained to do.


ISSUES


(1) Whether the ex turpi causa maxim did not prevent R from suing for recovery in respect of its own losses caused by the individual who was its directing mind and will in relation to the frauds.


(2) Whether the ex turpi causa maxim did not provide a defence to M when the detection of dishonesty in the operation of R’s affairs was the very thing that M, as auditors, was retained to do.


HELD (appeal allowed)


(1) If, in order to advance a claim, it was necessary for the claimant to plead or rely on illegality, the claim was automatically barred, however good it might otherwise be, and the court had no discretion in the matter, Tinsley v Milligan [1994] 1 AC 340 applied. In the instant case, R’s claim relied upon, was based substantially on, arose out of and was inextricably linked with the fraud that was perpetrated on the banks. That fraud was actually perpetrated by S, who was R’s sole directing mind and will.


(2) A company would not have attributed to it knowledge of a fraud when that fraud was being practised on the company itself, Hampshire Land Co (No2), Re (1896) 2 Ch 743 Ch D and JC Houghton & Co v Nothard Lowe & Wills Ltd [1928] AC 1 applied. The Hampshire Land principle would ordinarily only apply in circumstances in which the agent intended to harm the company or it was the target of the agent’s acts, McNicholas Construction Co Ltd v Customs and Excise Commissioners [2000] STC 553 QBD and Morris v Bank of India [2005] EWCA Civ 693, [2005] BCC 739 applied. It was not enough to engage the principle that an agent’s acts might result in harm to the company, Arab Bank Plc v Zurich Insurance Co [1999] 1 Lloyd’s Rep 262 QBD (Comm) doubted. In the circumstances the instant case was not one in which the Hampshire Land principle had any application. S as the sole directing mind and will of R procured R to enter into fraudulent transactions with banks. It was R that dealt with the banks and, as between R and the banks, the principles of attribution required S’s dishonesty to be imputed to R, which should therefore itself be liable for the frauds. R was neither the target nor the victim of its agent’s dishonesty. It was itself the fraudster, and it made no difference that its frauds were likely, when and if found out, to result in the incurring of liabilities by R.


(3) There was no support in the authorities for the proposition that if the very thing from which the defendant owed a duty to save the claimant harmless was, or included, the commission of a criminal offence, the public policy defence based on the ex turpi causa principle would be overridden so as to enable the bringing of the claim that relied on the claimant’s illegality, Reeves v Commissioner of Police of the Metropolis [1999] QB 169 CA (Civ Div) and Clunis v Camden and Islington HA [1998] QB 978 considered.


(4) R’s claim relied upon its own illegality. It therefore had to fail by application of the ex turpi causa principle, which was not trumped by the “very thing” argument.


Jonathan Sumption QC and Tom Adam (instructed by Barlow Lyde & Gilbert LLP) for the appellant. Michael Brindle QC, Mark Simpson and David Murray (instructed by Norton Rose LLP) for the respondent.


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Thousands of businesses struggling to cope with the credit crunch and general economic turmoil face a midsummer nightmare this week as key payment dates loom.

A triple whammy of rent, bank interest and VAT bills could sink weaker companies, particularly retailers.
'There are three sucker punches coming towards struggling businesses this quarter-end,' said Peter Sargent, vice-president of the insolvency practitioners' professional body R3.

Tuesday is one of the four 'quarter days' on which commercial rents fall due, and one week tomorrow, quarterly bank interest payments are due from businesses.

In many cases, firms will be working out quarterly VAT payments on the same day - and whether they can afford them.

'I know of certain cases where people are going to see their landlords this week and next week to get terms for extended payment,' said Keith Goodman of insolvency practitioner Leonard Curtis. 'This is going to be a difficult midsummer for some.'

Sargent said: 'If a firm has had a bad quarter - if it is in the retail or leisure sectors, for example - this could be the moment of truth.'

Despite buoyant figures last week for retail sales in May, major uncertainty hangs over retailers. Furniture group Land of Leather is raising fresh capital and rival ScS hopes to do the same.

The British Retail Consortium's next monthly sales monitor, due on July 15, may give a clearer indication of conditions on the High Street. 'We advise members to stay in with their bank manager and landlord,' said Stephen Alambritis, head of public affairs at the Federation of Small Businesses.

'Most landlords would be aware of the economic situation and be fairly understanding. But some could be looking for an opportunity to foreclose and sell the property.'

Company liquidations are rising in England and Wales. They stood at 3,210 in the first quarter of this year, a 4% increase on the first quarter of 2007.

Tuesday's midsummer quarter rent day and the quarterly bank interest due on June 30 affect all businesses, while quarterly VAT payments are due depending on when the firm registered for VAT. Firms then have 31 days to pay.


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A Liverpool company has been ordered to pay just £3 over an explosion in which one of its employees was killed and another three were seriously injured.

Sitting in the city’s Crown Court on 8 June, Judge Graham Morrow said he would have levied a fine in the region of £250,000 had Aintree-based North West Aerosols Ltd not gone into voluntary liquidation after the December 2005 incident.

The court heard that at 7.45am, as production was starting for the day, there was a release of liquid petroleum gas (LPG), which ignited and caused a fireball that engulfed the factory and half the adjacent road. Aerosol containers were exploding and scattering all over the premises and the road. Worker Christopher Knoop died from his injuries, and colleagues Gary Brine, Kevin Armstrong and Graham Ryder all sustained serious burns.

HSE inspector Keith Morris told SHP: “The company had changed over from LPG to a non-hazardous gas some weeks before the incident. However, contrary to good practice, the LPG pipes were left open-ended, without proper mechanical or automatic valves to prevent a release.

“On the morning of the incident a trainee was listed to get things started but he was unable to do so. He did the right thing and called the usual fitter and the maintenance manager, who then tried to start it. People were probably pressing switches and turning valves to try to get it going.

“Opening a single manual valve would lead to a release of LPG into the gashouse. It was reasonably foreseeable that, sooner or later, someone would inadvertently open the wrong valve, causing a release of LPG.”

North West Aerosols Ltd was not represented in court and a not-guilty plea was entered on its behalf. It was, however, found guilty of a breach of s2(1) of the HSWA 1974 for failing to ensure the safety of its employees. It was fined £2 plus £1 in costs, because of its liquidation status.

Asked why the HSE had taken the case when there was no prospect of a large fine, or of recouping its costs, inspector Morris explained: “We pursued the company so we could make enquiries into its solvency, and our message to other companies is that just because you go into liquidation doesn’t mean we won’t still pursue you.”

Families Against Corporate Killers (FACK), which supported relatives of the victims, said the case highlights the urgent need for positive duties in law on directors. A spokesperson said that if such duties existed, “then the individual directors of this company could have been held to account in court. It is currently lawful for a company charged with breaking health and safety law, where this results in death and severe injury, to be put into liquidation and for the individual directors to walk away, escaping any charges at all.”

The pressure group’s view was echoed by IOSH, with president Ray Hurst saying: “We believe there is a need for explicit and enforceable directors’ duties, failure to comply with which would be an indictable offence. This could potentially lead to the disqualification of convicted directors, which we feel would be a more suitable punishment for offences like this.”

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LONDON, June 23 (Reuters) - Spanish soccer club RCD Mallorca is seeking a buyer after its parent Grupo Drac filed for insolvency, a source close to the situation told Reuters on Monday.

The sale price could be around 40 million euros ($62.1 million), the source said. The club declined to comment.

Grupo Drac, owned by Mallorca Chairman Vicente Grande, filed for insolvency last week. A subsidiary of the company owns 93 percent of the club.

Grupo Drac, which owns real estate assets, land and two hotels in Mallorca, has debt of between 600 and 700 million euros, with assets worth about 1.2 billion euros, the source said.

The company has about 400 million euros of debt with a group of banks, including Sa Nostra, a Mallorca-based savings bank, Banco Sabadell and Caja de Ahorros del Mediterraneao (CAM), the source said.

Grupo Drac also owes about 200 million euros to suppliers and builders, the source said.

Local entrepreneur Vicente Grande bought a first stake in the club in 2003, when he was appointed vice chairman. He raised his stake to 93 percent from 51 percent almost two years ago.


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A large Dublin engineering firm has gone into liquidation with multi-million euro debts and the loss of 140 jobs, as the downturn in the construction sector continues to bite.

A provisional liquidator has been appointed to Elenco Engineering, which has been trading since 1971 and has worked on major projects. The firm experienced a dramatic decline in business in recent months, leading to cash flow difficulties.

The company racked up losses of €1.3million on a number of recent projects, and has a deficiency of between €2.5 million and €3 million.

The directors of Elenco last week petitioned the High Court to put the company into liquidation.

Declan Taite, a partner with accountancy firm FGS, has been appointed provisional liquidator. The full petition will be heard early next month.

In a statement, FGS said Taite would ‘‘immediately commence a review of the company’s books and records, and will engage with all creditors and stakeholders to determine the affairs of the company and assess its future viability’’.

The majority of the company’s 140 staff have already been laid off, although a number of core staff have been retained to help the provisional liquidator assess the company’s position. Elenco was working on 40 construction and building sites around the country.

In recent years, the company has worked on projects including Killeen Castle resort in Co Meath, St James’s Hospital in Dublin and the Gate Theatre.

In a petition to the court, the directors of Elenco said the firm had suffered from the recent downturn in the economy, and had also experienced difficulty collecting payments.

New government tendering regulations had also led to a decrease in the company’s work. The company cited cutbacks in government spending on capital projects such as schools, which had previously been a source of income for Elenco.


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The credit crunch and consequent slowdown in the economy is tightening its grip on British businesses, according to new research, with many more companies expected to become insolvent over the next two years than predicted just six months ago.

The accountants BDO Stoy Hayward estimate that business failures will rise by 18% over the next two years, compared with its forecast in December that failures by the end of 2009 would be up by 11.4%.

"This is a sure sign that the impact of the credit crunch is going to have a bigger lag than expected on UK business," said Shay Bannon, business restructuring partner at BDO Stoy Hayward. "Six months ago there was hope that businesses would feel some respite if the Bank of England slashed interest rates. But spiralling inflation figures now mean that this is unlikely in the short term."

The BDO Industry Watch report follows gloomy statistics from the Insolvency Service last month, which showed that the number of firms in administration had soared by more than 54% over the first three months of the year. Company liquidations overall were up 2% on the previous three months and rose by 4% compared with the same period a year ago.

The figures also showed a rising number of individuals declared insolvent in England and Wales. Personal bankruptcies rose 0.1% from the previous quarter, to 15,651. The number of individual voluntary arrangements, meanwhile, grew by 4.3%, although that number was down 22% on the same three months last year.

BDO Stoy Hayward reckons business failures will rise to 17,874 this year from 16,168 in 2007 and jump to over 19,000 in 2009, the highest level since the dotcom bubble burst earlier in the decade.

"With the number of business failures expected to decrease in 2010, there is light at the end of the tunnel. But until then companies need to batten down the hatches," said Bannon.

Technology companies are likely to be among those most able to cope with the tough economic climate as they benefit from increased business from companies seeking to cut costs.

Earlier this month, Fabrice Desnos, the UK boss of Euler Hermes - part of the credit insurer Allianz - warned that the retail sector could soon see a wave of companies going into administration. He said retailers were finding it harder to pay their suppliers and faced the toughest economic climate since the early 1990s.

About this articleClose This article appeared in the Guardian on Monday June 16 2008 on p23 of the Financial section. It was last updated at 08:51 on June 16 2008.

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A successor building company to those wound up on grounds of public interest earlier this year (see Note 4) has been ordered into liquidation in the High Court in the public interest following an investigation by Companies Investigation Branch (CIB) of the Insolvency Service.

As was the case with the above-mentioned liquidated companies, construction work was started by the company but then deliberately abandoned.

The grounds for the winding up were that the company conducted its business with a want of commercial probity, had operated without insurance, had failed to co-operate with the enquiry, had inadequate accounting records and had failed to register for Value Added Tax.

In one contract that the company failed to disclose to the investigation it was nevertheless discovered that after receiving payment of £27,000, the company failed to perform the work properly leaving behind a trail of destruction.

High Court Registrar Mr Nichols agreed with the investigator's findings. The Registrar said this was a case of insufficient records to explain the true financial position of the company and non-co-operation with the enquiry which, taking into account the failure to perform contracts and the considerable amount of evidence showing the commercial standards of the company fell below the standards of behaviour reasonably expected, ordered the company into liquidation.

Midland Construction Limited was incorporated on 7 February 2006. The registered office of the company until 24 January 2008 was at 25 Bodnam Road, Springbank, Cheltenham, Gloucestershire, GL51 OWE and thereafter at Suite 307, Eagle Tower, Montpelier Drive, Cheltenham, Gloucestershire, GL50 1TA. The company's initial sole director was Mr Pablo Antonio Hortiguela who resigned on 20 September 2007 whereupon Mr James Cornelius Killick was appointed director. The company secretary is HCS Secretarial Limited of 44 Upper Belgrave Road, Clifton, Bristol, BS8 2XN.

The company was ordered into liquidation on 11 June 2008.

Mr Killick has previously been connected with the operation of Crestmere Construction Limited and Construction Management Development Limited, two building companies which, amongst others, were wound up on public interest grounds on 20 February 2008.

The company was the successor construction company.


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Two related companies that provided freight forwarding services, arranging shipping primarily to Zimbabwe, have been wound up in the public interest following an investigation by Companies Investigation Branch (CIB) of the Insolvency Service.

The companies were based in Northampton and the investigation revealed that neither company has any assets and owe ship owners nearly £150,000. No proper accounts were kept and the companies' business was abandoned by the directors in February 2007 owing other known creditors around £7,000. Because of the chaotic management of the business the full extent of the liabilities is unknown.

GlobalTrade1Stop Limited was the successor company to Protea (Europe) Limited. A website intended to bring buyers and sellers of commodities together was unsuccessful and its affairs soon became inextricably linked with the freight forwarding business carried on by Protea from the same premises.

Latterly a fish importation business was operated instead by the company, again unsuccessfully, that falsely claimed to have a processing plant in Sri Lanka, its own fishing vessels in Sri Lanka and to have operated for 10 years and have an EU license.

According to Mrs Maria Appuhamy (the wife of Protea's sole director Mr Wendhamuni Appuhamy) who acted in the management of both companies throughout, customers had collected their goods from warehouses in Zimbabwe, but afterwards could not be traced and the companies consequently were unable to collect some £200,000 owed.

In ordering the companies into liquidation Mr Registrar Nicholls agreed with the investigator's findings, namely that both companies were inextricably linked and had been operated with a lack of commercial probity. Also there were inadequate financial

and other records, a lack of proper control, and in the case of Globaltrade1Stop Limited, hopelessly insolvent. He commented that the evidence obtained was considerable and that "cargo included goods Protea had been paid for. In other words GlobalTrade1Stop had been used when credit had been exhausted and expired".

PROTEA (EUROPE) LIMITED was incorporated on 9 May 2005. The registered office of the company since 10 January 2007 has been 27 Lyveden Road, Brackmills Industrial Estate, Northampton, NN4 7ED. The company's sole recorded director throughout has been Mr Wendhamuni Appuhamy. The secretary throughout has been Aldbury Secretaries Limited.

GLOBALTRADE1STOP LIMITED was incorporated on 4 October 2005. The registered office of the company since 29 November 2006 has been c/o Aldbury Associates, Mobbs Miller House, and Ardington Road, Northampton, NN1 5LP. The sole recorded director of the company since 1 November 2006 has been Mr Jasenthu Lal Liyange. The secretary since 20 November 2006 has been Aldbury Secretaries Limited.

The companies were ordered into liquidation on 7 May 2008.


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Howard Phillips, the chief executive of McCarthy & Stone, has called in bankers NM Rothschild to restructure its £800m debt as the credit crisis wreaks havoc in the housebuilding sector.


Mr Phillips has hired Rothschild because of worries over its debt repayments. The board and representatives of leading shareholders, including embattled bank HBOS and Scottish philanthropist Sir Tom Hunter, held an emergency meeting with Rothschild on Wednesday to discuss how to avoid breaching debt covenants.

McCarthy, a retirement homes business, was taken private in a £1.2bn deal in 2006 but has since been plagued by difficulties. Many of its main customers, the newly retired, have been unable to sell their homes to move into a McCarthy property. It confirmed last month that it would cut 110 jobs from its 1,000-strong workforce.

However, the shareholders believe that its fortunes will improve once the property market recovers. McCarthy is the dominant player in the retirement housing sector, so its fundamental business plan is thought to be sound.

Rothschild is looking at ways in which McCarthy can restructure its debt, including delaying its key repayment dates, which run from 2012 to 2014. "All options are open to debate. McCarthy & Stone has had to look at the capital structure in light of market problems," said a source close to the company.

HBOS, which owns 20 per cent of the group, is heavily exposed to housebuilders through its stakes in companies including Miller and Crest Nicholson. The latter was bought in a joint venture with West Coast Capital, the investment group run by Sir Tom.

A source suggested that several of these businesses are in the process of restructuring their debt. Shares in HBOS, which is to issue a trading update later this week, have fallen below their discounted £4bn rights issue offer price.

A source close to McCarthy added that shareholders would ultimately "make a lot of money" out of their investments.

Barratt, whose shares fell by nearly 40 per cent last week, is also thought to be close to breaching its banking covenants. It too is in negotiations with its bankers about restructuring.

Although Barratt's chief executive, Mark Clare, said the company would meet its profit targets this year, the shocking fall in its share price means that it could face a debt-for-equity swap. Barratt has now fallen out of the FTSE 100 and could soon drop out of the FTSE 250.

Barratt borrowed heavily to buy rival Wilson Bowden last year, and former management is known to believe that this has led to the company's slide.

HBOS is thought to have been attacked by so-called "short-sellers", who look to force down share prices to make money. The Financial Services Authority is investigating the matter.



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THE Round Theatre Limited, which operated The Round Theatre, in Newcastle, went into insolvent liquidation this week.

A meeting of creditors, held at the theatre, was advised that the company had assets of £36,370 and liabilities of £74,699, creating a deficiency of £38,329.

The liabilities include £8,046 due to the 11 full and part-time employees, who have claims for arrears of pay, holiday pay and notice pay.

The DTI Redundancy Payments Services will settle most of their entitlements and will become a creditor in the liquidation in their place.

The Round Theatre Limited occupied, as a tenant, The Round Theatre, in Lime Street, Ouseburn. The company was launched in October last year as an entertainment venue for children and young people.

It ceased trading on May 23 this year, and the staff were made redundant.



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The CFTC is looking at changing commodity rules to force big funds to disgorge multi thousand contracts positions.

The CFTC stated the commodity markets are not geared to have big funds sitting on long term positions of thousands of commodity contracts for long periods for foods and so on.

We could be looking at a forced liquidation – similar to the silver liquidation that happened in the big metal run up and silver corner by the Hunt brothers. That episode resulted in huge losses for the Hunts – who were forced out at huge losses after they tried to corner the silver market.

The entire world is up in arms about the energy and food shortages. It does not matter that the shortages are the real culprits. The fact is, pretty much all the nations are getting ready to force speculators out of these markets. The speculators are buying thousands of contracts in futures markets, even years ahead in grains, and sitting on them.

The fact is that, in a world food crisis, this is going to force poor people to pay – tribute – to big investors to eat. The world governments are not going to allow that to happen if they can stop it.
Already, India and others, and the US CFTC are looking at ways to force speculators to disgorge their tens of thousands of contracts in critical commodities.

I would bet that the fund universe is going to lose this battle. Many nations are getting behind this effort… here is an article talking about the disgorge effort: “by Peter Shinn

The government could step in if commodity prices keep shooting higher. And some see some sort of government intervention in the marketplace as a virtual certainty. But for the leader of one agricultural group, that kind of discussion brings to mind the ag trade policy missteps of the late 1970s.

Imagine $200 a barrel oil, $9 a bushel corn and $20 a bushel soybeans. Then consider the prospect of less available wheat than now thought as the cattle industry begins feeding much more of that commodity. That's the near future as envisioned by two separate commodity analysts and brokers, especially in light of Tuesday's USDA Crop Production report and World Agricultural Supply and Demand Estimates, which lowered this year's U.S. corn production by 360 million bushels to 11.7 billion and projected increased global demand for soybean meal and vegetable oil.

And if that future does come to pass, both of the analysts foresee U.S. government intervention as likely. Doug McClellan is President of Plains Commodities in Omaha. He told Brownfield he's heard talk of a complete elimination of government support for corn-based ethanol and a potential effort to drive excessive speculation from ag commodity futures markets.

"One way to do it is let's just go in and cut the ethanol program completely," McClellan said. "Let's go in and take the hedge funds and the index funds and say, 'No, you can't have 5,000 or 10,000 contracts per account or whatever it is. We're going to cut that speculative power back. You can only trade 2,500 contracts and force a liquidation to get that speculation back in line,'" he added. "Those are some of the scenarios going around."…” http://www.brownfieldnetwork.com/

But, in light of this very painful commodity boom, the USD happens to be rallying at the moment. Of course, one reason is that the US Fed (Bernanke) is talking about fighting inflation. In fact, much of the world is talking that. That also is happening at the right time to combat this commodity investment ‘boom' that is probably going to be curtailed by world regulators.

The USD rallied heavily this week on the perception that the Fed is really going to try and do something about inflation in the US. All the markets needed was an excuse to rally the USD because there is already so much pressure in the EU zone to stem the Euro's rise. Gold took quite a hit this week as a result. I would not be surprised that the world commodity investment mania is behind the USD rallying because a higher USD is a way to combat that.



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A note sent by Malcolm Kilminster through insolvency practitioner B N Jackson Norton on June 6, and seen by Money Marketing, invites creditors to their offices at 143 Orchard Street Bristol at 11.30 on July 16.
The meeting will hear a statement of the company’s affairs for the purpose of nominating a liquidator and of appointing a liquidation committee.

The move for liquidation is likely to prove controversial among KFM creditors and shareholders many of whom claim they are owed large sums of trail commission.

Minority shareholders attacked KFM in January over a deal in which the network's advisers were offered the chance to transfer to financial planning network Alpha to Omega. The majority of the KFM’s 30 advisers made the move.

Under the terms of the deal, Malcolm Kilminster’s own practice became an appointed rep of A2O.

As part of this deal residual income, including trail commission, from KFM would pass to Malcolm’s own practice if KFM ceased trading.

Documents from a KFM EGM earlier this year show the network was facing two potential litigations totalling around £300,000. If liquidation does occur, responsibility for these claims could fall upon the Financial Services Compensation Scheme if they are successful.

At the time a spokesman for Malcolm Kilminster said that Kilminster Financial Management would continue to trade and to benefit from the trail commission due to the company.

The spokesman also said that there was ongoing litigation between KFM’s minority shareholders and the firm.

Malcolm Kilminster was understood at the time to have received £265,000 up front for selling the “goodwill” in his own practice with a further £50,000 in six months, and another £50,000 in twelve months.

Kilminster was unavailable for comment when Money Marketing rang his office this morning. A member of staff said he is on a five week holiday in America which began this week.



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LONDON (Thomson Financial) - Prelude Trust Plc. said it has been placed into liquidation, and that Gareth Morris and Richard White of Grant Thornton UK LLP have been appointed as joint liquidators.

At the company's second general meeting on Thursday, resolutions that Prelude be wound up voluntarily and the liquidators be authorised to exercise their powers were approved by shareholders.


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MAJOR piece of Stockton’s iconic new £15m footbridge was to be lifted into place today.

Spanning the River Tees, the humpbacked pedestrian bridge will link Tees Valley Regeneration's North Shore development with Teesdale and Durham University's Queen's Campus.

The small arch, which will span 60 metres and stand 16 metres high was to be lifted into place by crane and welded to the floating legs currently visible on the structure.

Tees Valley Regeneration chief executive Joe Docherty said: “This is a very exciting milestone for the footbridge and one we shall be watching with our cameras ready. A great deal of foundation work has been progressing steadily since we announced the start of the build, but this is something very visual and it is incredibly satisfying to see the footbridge taking shape.”



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MAXjet has maintained the ability to resume charter operations and was auctioned by the US Bankruptcy Court in March, a bid won by Kevin Clark, CEO of NCA Sports Group Inc, a one-stop travel service for US university and professional sports programmes and their fans.

Clark will invest at least $1.63m (£830k) to cover costs connected to the sale of assets and as consideration for the majority of the assets of MAXjet. Following the closing, MAXjet’s remaining assets will include two aircraft engines which are currently being marketed and other sundry assets which are in process of being realised.

MAXjet will realise no profits from the sale of assets or operations, the proceeds of which will be applied to administrative costs of the bankruptcy case and the debts of MAXjet Airways, Inc. No proceeds are expected to be available for distribution to shareholders.

“I am looking forward to adding MAXjet to the NCA Sports Group family,” said Clark at the time of the bid.

“In its two plus years of operation, MAXjet offered travellers from 67 countries around the globe award-winning service. We believe it’s time for a smart luxury charter service that combines comfort, value and flexibility.”

The sale was due to proceed on April 23 had all US government approvals been in place and other conditions to closing met. Not all were, so it is now expected that the transaction will close by the end of June.



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The UK Insolvency Helpline has reported a significant increase in the number of people applying for Individual Voluntary Agreements (IVA).

Over the last ten years many people seeking an IVA have been rejected as rising house prices meant they had too much equity in their properties.

This forced many to seek other forms of help, through re-mortgages and unregulated debt plans.

Statistics show 607 people applied for an IVA, with 301 being accepted while in April this year 623 of 667 were accepted.

Richard Sorsky, National Money Advice co-ordinator, described the rejections as being like a cancer patient being refused chemotherapy on the grounds they were not ill enough.

"Over the past two to three years we had to offer alternative solutions to applicants who would have been perfect candidates for IVAs if only their homes were valued at a lower figure," he said.

The UK Debt Help and Insolvency Helpline offers financial advice to individuals and businesses with monetary problems.


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Debt consultant Fairpoint lost over half its value Tuesday on news it has scrapped the interim dividend and warned that worse than expected full year figures will miss consensus forecasts.

“In the first five months of the trading period a combination of internal and external factors have combined to impact significantly our expectations for full year contribution per lead,” said the firm.

Fairpoint, which predicts EBITDA for the year to 31 December 2008 will be around £4.3m, said the last year has been challenging on two fronts, with reduced fee levels following the agreement reached with creditors in October 2007 and creditor preference for Debt Management Plans.

The company’s share of the Individual Voluntary Agreements (IVA) market has been maintained at 25% in the first quarter, but IVA volumes have fallen 22% year on year.

The closure of the group’s Nottingham call centre and insolvency operations will save £1.4m a year from July, but incur £1.2m of non-recurring exceptional costs.

Meanwhile, the migration into one site at Adlington has hit operational key performance indicators, leading to lower conversion rates.

On a brighter note, the firm said it has tested new product initiatives in the first part of the year with “promising results” that it reckons will bring material benefit in the second half.

Its funding position remains “robust”, with £16m of debt facility available and indications of ongoing support from Royal Bank of Scotland.

Renold chairman Matthew Peacock will become chairman of Fairpoint when Mike Blackburn retires in September.

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When companies go bust, is there anything that HR departments can do to ease the pain?

My first job was making books at a factory in Frome. Twenty years on, the BBC reports that the very firm, Butler and Tanner, is "history" and that nearly 287 staff are owed £400,000. It reports employees saying they had not realised how bad things were and that "hopefully" in a month they would "know what is happening".

In addition to all the usual problems faced by those who lose their jobs, employees in an insovency situation do not know if they will ever be paid money they're owed.

Making a difference

HR can normally make a difference to redundancies - by ensuring that an appropriate process is agreed and is implemented properly, thereby reducing risk for the employer and making things easier for staff. However, when a business goes bust things are different.

Sometimes finances can deteriorate so quickly that the HR team will not know of the problems until an insolvency practitioner has been appointed and they have lost their own jobs.

The insolvency practitioner's job is to recover money for creditors. They will be concerned about employees only if this benefits creditors generally. They may look after employees so that something remains attractive for sale, and sometimes steps will be taken to reduce the risk of claims. But more often than not, employees will be summarily dismissed, given some forms to complete and left to it.

The employees will be preferential creditors, which essentially means that some of what they are owed (capped holiday pay, back wages, statutory redundancy pay) will be paid before debts owed to others. Whether this gives any comfort depends on how much money there is - and the insolvency practitioner should not pay staff until it has all the figures.

No quick fixes

In the meantime, employees should apply for payment of the limited debts that are underwritten by the National Insurance Fund. And employees able to make tribunal claims in relation to unpaid wages, holiday pay, unfair dismissal, redundancy pay, failure to consult, etc, should do so promptly.

The outcome of most tribunal claims will be fairly certain, as there should be documentation (good HR records will be appreciated) and the insolvency practitioner may not spend money contesting them.

Claims relating to collective consultation will be less certain, however.

Liquidators may be lulled into a false sense of security by the recent High Court decision in Day v Haine, where it was held that collective dismissal consultation claims could not be successful against a Company in liquidation if the tribunal exercised its discretion to make a protective award after the liquidation began. That decision has been sent to the Court of Appeal and the High Court's decision is likely to be overturned.

Beyond hope

In a catastrophic business context, there is little that HR can do to help as they will probably be dismissed too, and the role of any HR manager who remains temporarily will probably be limited to paperwork.

However, insolvent businesses do not always go into immediate liquidation. There may be a period of administration and part of the business may be sold. Jobs may be saved, and the special insolvency rules in the Transfer of Undertakings (Protection of Employment) Regulations 2006 may apply. The HR team may be asked to help the transition, and there will then be scope both for reducing risk for old and new employers and for helping employees.

HR can usually make a difference where the business is sick, but not where the illness is terminal. Insolvency law is necessarily tough, but where employees are concerned it could be made a lot clearer. Those employees should not have to deal with uncertainty and the creditors should not have to pay for clarity in court.



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Gala Fairydean have expressed an interest in replacing Gretna in the Scottish Football League.

Annan Athletic, Cove Rangers, Preston Athletic and Spartans have already made public their intention to apply.

Now Gala, who play in the East of Scotland League, have notified the SFL of their interest.

Match secretary John Clayton told BBC Sport: "I thought we were not going to apply, but our chairman has put in a notice of interest."

Gala failed with applications in 1966, 1994, 2000 and 2002, when Gretna were successful after Airdrieonians went into liquidation.

"Whether we follow it up with a full application, I don't know, but it would be a shame if we were to miss the boat," said Clayton.

"We certainly don't want to rule ourselves out at this stage."

Gala, whose most famous product is former Celtic and Everton midfielder John Collins, have had a lean period in the East league in recent seasons and finished fifth in Division One this term.

Spartans, who are the bookmakers' favourites to replace Gretna, finished third in the Premier Division, with fellow applicants Preston in fifth and Annan in seventh.

Cove won the Highland League this season.

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Hunters Property, which announced four new jobs would be created earlier this year when it started running specialist auctions in Fakenham, has gone into liquidation.

The estate agency was established in 2004 in Wells with managing director Tom Royall and took over the Fakenham office of Patrick Plumpton chartered surveyors and auctioneers in May 2006.

But the sudden closure of its offices in Staithe Street, Wells, and on Fakenham Market Place appears to have come out of the blue, with staff made redundant and the sales and lettings transferred to other businesses.

Pure Lettings in Norwich has taken over the lettings side and its manager, Lorraine Ismail, told the EDP that Hunters closed last Friday with the transfer of business finalised this week.

“If people ring the Hunters number they will be given our details,” she said. “We are in the process of writing to all our landlords and tenants informing them of the situation.” She added that there were plans to open an office in Fakenham soon.

Most of Hunters sales properties will now be on the books with Tops/Fine & Country in Burnham Deepdale.

A public notice in the EDP yesterday announced a meeting of creditors at the Norfolk Club, Upper King Street, Norwich, on June 12, with claims to be put to agents Smith Aston, of Norwich, two days before.

Mr Royall was unavailable for comment last night.

It comes as new figures from the Centre for Economics and Business Research (Cebr) suggest 15,000 estate agents will lose their jobs this year due to the downturn in the housing market.

The group said the economic downturn would cause job losses in virtually all areas of the business services sector during the coming two years, leading to more than 40,000 job cuts.

This would be the first reduction in employment in the sector since 2001.

Jorg Radeke, one of the authors of the report, said: “Although unlikely to be the victims of the credit crunch that will garner the most sympathy, estate agents and others involved in managing real estate are likely to find the next 12 months particularly tough and there will be extensive job cuts.

“The only silver lining for this part of the business services sector is that 'what comes down must go up' and as real estate is among the first to face the economic downturn it will also be among the first to benefit from a future economic upturn.”

But while estate agents will be hit first, Cebr expects consultants, research and development firms and even accountants to suffer job losses by the end of next year

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A WATERLOO security company has been wound-up after an investigation by the Companies Investigation Branch of the Insolvency Service.

St Michael's Security Services Ltd, of South Road, which provided manned guarding, door-supervision and other private security services to construction sites, retail outlets and leisure premises, was wound up in the High Court, along with CTN Security Services Ltd of Longmoor Lane, Aintree.

CIB's investigation found that the firms had persistently breached the Private Security Industry Act 2001 by using unlicensed personnel, that they had jointly failed to account for a sum in excess of £600,000 owed to the Crown and were insolvent, that there was a lack of transparency as to their ownership and control and that they had failed to keep adequate accounting records, with the result that hundreds of thousands of pounds withdrawn in cash could not be accounted for.

Additionally, CIB's investigation, which was hampered by a severe lack of co-operation from the directors and others controlling their affairs, also established that the companies had made payments totalling more than £150,000 to another business in the private security industry and that these could not be verified or explained.

A third related company, in a similar line of business, which was also investigated by CIB, was previously wound up on April 16 on the petition of HMRC.

CTN Retail Security Services Ltd was wound up in respect of a debt of more than £130,000 owed to the Crown and was found by CIB to exhibit similar matters of concern to its two siblings.


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LEADER of Nuneaton and Bedworth Borough Council, Marcus Jones, has reassured people the council's interests in Nuneaton Borough FC are safe following news the club faces liquidation.

Cllr Jones said: "I can assure the people of Nuneaton and Bedworth that the outstanding debt owed by the club to the council is secured by a legal charge against the ground at Liberty Way and that the council's position is not affected by the club's liquidation as the debt runs with the land and not the club.

"I sincerely hope the club can rebuild and go forward."


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Here in the UK, there are around 48 million adults who, between them, have 75 million credit cards and charge cards. However, one adult in three has no credit card, so there are only about 30.6 million credit-card users in Britain. Thus, a typical cardholder has an average of 2½ credit cards.

What's more, according to the latest figures from the Bank of England, we owe £55 billion on our ‘flexible friends'. Around three-quarters (75%) of this debt is interest-bearing, with the average yearly interest rate being 16.5% APR. Therefore, credit-hungry cardholders are paying nearly £7 billion a year in interest. Ouch!

The menace of minimum monthly repayments (MMRs)
How long does it take to repay an outstanding balance on a credit card? The settlement period depends on two things: the interest rate charged and the level of repayments made. The higher the interest rate, the longer a debt will take to repay. Likewise, the lower the repayments, the longer a debt lingers.

In the early Nineties, all credit cards had a minimum monthly repayment of at least a tenth (10%) of the outstanding balance. In other words, with a debt of £2,000, a card issuer will expect you to repay at least £200 a month. However, greedy lenders realised that lower minimum monthly repayments would hugely boost their profits. Hence, since the mid-Nineties, MMRs have tumbled.

Today, with precious few exceptions, all credit cards require a minimum monthly repayment of between 2% and 3% of the amount owed. Alas, thanks to such low MMRs, a modest debt of, say, £2,000 can take decades to repay...

MMRs: the bad, the ugly and the downright dangerous
The Fool often classifies financial products into three categories: the good, the bad and the ugly. However, when it comes to MMRs, there are no ‘good' cards. Nevertheless, I've sorted 56 different credit-card brands into three groups, using data from the June issue of Moneyfacts magazine:



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Banks are planning to take charge of troubled property developments to which they have lent millions of pounds - but they will not tell their shareholders.

Special purpose vehicles - similar to the off-balancesheet companies that helped aggravate the credit crunch - are being planned as emergency shelters for developments that become insolvent in the worsening economic downturn.
This is an alternative to formal proceedings in which an administrator would be appointed and is thought to have a better chance of rescuing the project concerned.

But the banks' shareholders would in many cases be kept in the dark about their exposure to insolvent property schemes. The SPVs would be listed in the accounts simply as investments.

Financial Mail has learnt that some of the SPVs would not show up at all. The bank concerned would officially hold only a minority of the equity, thus keeping the entity off its balance sheet.

Later, once the property market had recovered, the bank would exercise warrants allowing it to take control.

This is fully within accounting rules, but it is bound to be controversial.

Not only will shareholders be unaware of their exposure to deeply troubled property schemes, but the banks are likely to be lending more money to the SPV to try to safeguard their original loans.

Lee Manning, partner at accountant Deloitte, said: 'It is a form of double or quits. Each one is different. You can get it right, but sometimes it does not work out. There are as many successes as failures.'

One senior insolvency professional said: 'That has always gone on to some extent. Banks learnt their lesson from the late Eighties and early Nineties.'

A partner in the City office of a major law firm said: 'It is a way of not having an insolvency on their hands. This will not be easy to find in the accounts.'

SPVs have been controversial since last year when it emerged that many banks had used them to transfer risky loans off their balance sheets.


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Silverjet became the latest airline to declare bankruptcy, resulting in an immediate grounding of its entire fleet, due in large part to the burden of record-high fuel prices. Silverjet built its reputation as a business-class only airline, which was able to provide passengers with a premium level of service at much lower prices than those offered by its competitors. For example, the carrier’s airfares were generally one third the price that British Airways charged for seats in its Club World (business class) cabins. Silverjet operated a hub at London’s Luton Airport and it focused on medium and long-haul travel. The carrier’s final flight took off earlier today, and was headed to Dubai.

Passengers who wished to book tickets with Silverjet online, or those who had already arranged their reservations were shocked to find that the carrier’s website (http://www.flysilverjet.com/) had been removed and replaced with a message from Lawrence Hunt, the airline’s CEO, who noted that the company would “no longer able to honour flight reservations.” Those who have already booked tickets are being told that their only option is to contact their credit card company or travel agent in order to receive a refund.

High oil prices have forced seven other airlines out of business in recent weeks, including some major brand names, like MAXJet and Eos, both of which also focused on premium class travel between the United Kingdom and popular destination in the US. Silverjet also found itself with no other alternatives except insolvency, because a major investment that it had hoped to receive failed to materialize.



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The Labour party is five weeks away from becoming insolvent, according to figures released by the Electoral Commission.

Senior figures in the party, including prime minister Gordon Brown, could become personally liable for its debts unless it finds a way to pay off £7.45 million in loans.

Other figures on the National Executive Committee (NEC) could also be liable, including Harriet Harman, deputy leader; her husband, Jack Dromey, the party treasurer; Dawn Primarolo, public health minister; and former minister Keith Vaz.

The loans stem mainly from the controversial reign of Lord Levy as party fundraiser. The man who was later embroiled in the cash-for-honours scandal secured loans from banks and wealthy donors who are now demanding to be paid back.

Labour has five weeks to pay off £7.45 million of the loans, and until Christmas to pay off a further £6.2 million. Once interest is taken into account the total figure would be around £24 million.

The loans set for repayment on June 30th and July 1st include £2.61 million from the Co-operative bank, £1.54 million from Unity Trust bank and £2.3 million from Sir David Gerrard, a property developer. The Co-operative asked unions to offer loans to Labour so it could repay the debt, but some are understood to have refused.

Indeed, three of the UK's biggest unions – Unison, the Communication Workers Union and the GMB - are tabling motions for their annual general conference in the autumn calling on members to disaffiliate from Labour.

The possibility of personal financial liability is being sounded as the reason David Pitt-Watson rejected the offer of general secretary recently.

Labour's hopes now seem to lie in trying to extend the loan period.


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These are troubled economic times. For the country. For the individual.

And, it would appear, for the Labour Party.

Much has been written about their financial woes. According to Electoral Commission figures, they are in hock to the tune of £17.8 million.

Small potatoes when compared to the national debt, but sizeable enough to give senior Labour figures something of a headache.

Not least because they will be asked to stump up the cash if the party defaults on the loans.

It's not widely advertised, but Labour's constitution is framed in such a way that members of the party's executive committee, including the Prime Minister, are personally liable for Labour's debts.

Something for them to mull over when planning their traditional summer trip to Tuscany.

Which, presumably, is what David Pitt-Watson did. The equity fund chairman was widely touted as the party's next general secretary, drafted in to replace the disgraced Peter Watt.

Despite being given Gordon Brown's blessing, Mr Pitt-Watson, a man of some wealth, turned the job down.

No matter how deep your pockets, the prospect of shelling out eighteen million quid would give anyone cause to think twice.

Still, the prospect of Mr Brown dipping into his retirement fund is pretty remote, not least because of the property portfolio the party holds at a local level.

And donors would be found to plug any shortfall in the short term.

Labour say that some in the Press Gallery have mistaken the review date of these loans for the repayment date, and, whilst none would say the coffers are overflowing, there is no financial meltdown imminent.

"We're living within our means", one insider told me.

With no general election looming, that would appear to be the case.

But as we approach polling day, Labour's headache may become a migraine.

After all, without a turnaround in their popularity it will be very difficult indeed to encourage donations.

If no way is found to limit their liability, Labour bosses may find their trip to Tuscany cancelled - and perhaps replaced by a permanent vacation to the Costa Del Sol.


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