The true scale of personal debt is hidden, with up to 600,000 people being missed off official insolvency figures, according to an East Anglian expert.

Chris Williams, eastern region council member for R3 and a partner at McTear Williams & Wood, said the 600,000 had not been included in national figures because they were repaying debts under a debt management plan (DMP).

His findings are based on the results of a YouGov debt tracker survey, carried out last month in consultation with R3, the trade body for insolvency professionals.

Mr Williams said: "A DMP is an informal alternative to an individual voluntary arrangement (IVA) or bankruptcy and works to clear an individual's personal debt without the formal implications of an official arrangement.

"It does not form part of the government's insolvency statistics, which means that the true proliferation of debt in this country is going unrecognised.

"Indeed, according to our research, the 600,000 debtors using DMPs is four times the number who said they were in an IVA and double the number who said they currently are, or have ever been, declared bankrupt."

R3, which has long called for the plans to be included in these figures, warned that debt management plans were being used as an "out of sight parking lot for debtors".

The Insolvency Service's figures show that 24,553 people went bankrupt or took out an IVA during the three months to the end of June, although these figures do not reflect the number of people who were already on IVAs or were previously declared bankrupt. Nick O'Reilly, president of R3, said: "A DMP can

be a good option for individuals

who have manageable levels of

debt, which can be paid off

without entering into a formal arrangement.

"The benefit of the DMP is that it does not have as severe an effect on the person's credit rating. However, there is cause for concern that these informal arrangements have the potential to turn into a life sentence."

Unlike an IVA or bankruptcy, a DMP does not have a set duration. Research carried out for R3 found that 19pc of people currently in one of the plans thought it would last for more than 10 years, while 29pc did not know how long it would last.

The research also found evidence that people's finances were becoming increasingly stretched.

One in five people now find keeping up with bills a constant struggle or have already fallen behind with them.

Around 63pc of households also said their financial circumstances had got worse during the past six months, with just 13pc seeing an improvement.

Four out of 10 people currently use their overdraft, while 34pc have outstanding credit card debt and 30pc have no debt.

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Pensioners and parents are building up debts as the cost of living rises, two reports published on Friday suggest.

A survey by National Savings and Investments (NS&I) said a third of parents had increased their overdrafts to fund their children this year.

A quarter had used their credit cards to pay for education, sport or trips.

In a separate survey, Age Concern said that one in 12 pensioners had built up debts due to the rising cost of day-to-day spending.

'Self-sufficient'

Only 6% of the 3,019 people surveyed by NS&I said that they expected their children to be self-sufficient by the age of 18, and 16% said they would be providing financial support to their children for the rest of their lives.

"It is only natural that British parents should want to put their children first, but this is having a significant impact on their wallets," said Tim Mack of NS&I.

"Parents and families need to plan their household finances carefully, trying not to dip into their overdrafts or go into debt, but instead thinking about which outgoings are essential."

Nearly a third of those asked said that they thought young people took their parents' financial support for granted.

'Pensioners missing out'

A separate report by Age Concern claimed that almost half of older people were cutting back on essentials such as food and heating because of rising living costs.

The charity says that five years after from the introduction of Pension Credit, nearly a third of people who were eligible for the benefit were not receiving it - with £2.8bn going unclaimed.

Pensioners find the application forms complicated and some believe there is a stigma attached to claiming the credit while others do not realise they are entitled to the money, the charity said.

Those missing out would be £1,477 a year better off on average if they took up what they were entitled to, Age Concern said.

It found that Pension Credit made a noticeable difference to those who claimed it and the charity is calling for a system of automated payments so nobody misses out.



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Arev Brands, which owns 49pc of the company, has already provided loans of £1.5m this year. The investor admitted on Thursday afternoon it was unable to come up with new funds, throwing the future of the London couturier into doubt.

In his heyday, Sir Hardy Amies made suits for 1966 World Cup-winning England football team and costumes for Stanley Kubrick's 1968 film 2001: A Space Odyssey. Sir Hardy died in 2003 but the business carried on at its Savile Row base, known as the House.

Hardy Amies has been expanding across Britain and in Japan, but reported a pre-tax loss of £1.6m last year, as its womenswear collections flopped.

In June, the company said it would keep opening menswear stores in cities including Belfast and Bristol but restrict womenswear to the flagship Savile Row store.

Sir Hardy set up his boutique in 1946 and first designed for the Queen in 1952. A 2006 exhibition of her dresses at Buckingham Palace, to mark the Queen's 80th birthday, showed numerous examples of his work, worn on state visits to Mexico, Canada and the United States.

Shares in Amies were suspended while the company assesses whether it can continue as a going concern. It is looking at options including going into administration.

Separately, home furnishings chain Rosebys went into administration today.

Rosebys, based in Rotherham, has 280 stores and 2,000 staff around the country. Adminstrators KPMG said the retailer will continue to trade while they look for a buyer.

The company was running at a loss and recently failed to secure new loans, Howard Smith of KPMG said.


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With time running out to save Alitalia from liquidation, Augusto Fantozzi, the special commissioner in charge of the stricken carrier, has told The Times that he is counting on Italian “flexibility” to help him to pull off a last-minute rescue. “This is a delicate moment for the country,” he said. “Alitalia is a national symbol.”

However, he said he hoped that either the trade unions would change their minds and accept an offer from an Italian consortium that they had rejected last week, or that alternative “serious and significant” offers would emerge.

The airline has debts in excess of €1 billion (£792 million), loses €2 million a day and has not made a profit since 1999. Enac, the Italian civil aviation authority, has set tomorrow as the deadline for Professor Fantozzi to present a realistic financial plan to keep it flying. If he fails to do so, it will suspend Alitalia's licence, with 20,000 jobs lost. Professor Fantozzi has set his own deadline of next Tuesday, saying that if he is unable to save Alitalia by then, he will suspend its licence himself and initiate liquidation proceedings. The two deadlines are not incompatible: Enac is likely to take several days to study the report Professor Fantozzi submits to it tomorrow.

The professor is unfazed: “Italy is a country in which the race is won or lost in the last hundred metres.”


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Buxbaum Jewelry Advisors to be led by industry veteran Gary Jorgensen AGOURA HILLS, Calif., Sept. 24

AGOURA HILLS, Calif., Sept. 24 /PRNewswire/ -- Responding to market needs,
Buxbaum Group, one of North America's most experienced liquidators and
appraisers of retail and wholesale goods, today announced the launch of a new
venture focused on helping struggling jewelers liquidate their operations and
to get maximum returns on excess inventory. The company is partnering in the
new venture with Metropolitan Equity Partners, a New York City-based Private
Equity firm that focuses on lower-middle market and growth-stage companies.

"Buxbaum Jewelry Advisors was formed in response to extreme stress in the
American jewelry business, which has been hit hard by the Internet jewelry
phenomenon as well as the economic slump," said Paul Buxbaum, CEO of the
Agoura Hills-based Buxbaum Group.

Marked by declining sales at venerable retail chains like Friedman's
Jewelers, Zales and, most recently, Whitehall Jewelers, the U.S. jewelry
business has seen a rash of bankruptcies and store closings in recent months,
noted Stevan Buxbaum, Executive Vice President. "We know this sector will
continue to contract," he said. "In fact, the Jewelers Board of Trade
estimates that probably 20% or more of independent jewelry stores will go out
of business over the next five years."

Buxbaum Jewelry Advisors will draw on decades of experience in both
jewelry liquidation and retail operations to organize, advertise and execute
sales for its clients. "Our firm has a long history in the jewelry business.
One branch of the family has operated jewelry stores since 1895, and we have
extensive experience in liquidating catalog jewelry showrooms, as well as
wholesale and retail jewelry," said Stevan Buxbaum. "In forming this venture,
we are recruiting a number of seasoned veterans in the jewelry liquidation
industry. Our clients will be able to avail themselves of some of the best,
hands-on, sales-operations talent in the country."

Day-to-day operations of the new venture will be led by jewelry industry
veteran Gary Jorgensen, who will serve as Vice President responsible for new
accounts and liquidation oversight. A certified gemologist, Jorgensen brings
over three decades of experience in both the retail and asset recovery sides
of the business. After closing his own store in 1987, Jorgensen began his
asset recovery career with jewelry liquidator Silverman Consultants. Following
12 years with the company, he served as a lead consultant to Buxbaum Group and
other major liquidators on various multi-store projects, before joining
Wilkerson and Associates in 2005. Over the course of his career, he has
directed orderly liquidations of hundreds of stores across North America,
including projects at such companies as Friedman's Jewelers and Sterling
Jewelry and Distributing, Inc.

"We have known and worked with Gary for many years, including several
assignments as our lead consultant on multi-store liquidations," said Paul
Buxbaum. "His knowledge of all facets of the jewelry industry and experience
in running liquidations that generate strong sales and net returns, will make
him a valuable member of our team. We are pleased to have Gary back with us on
a full-time basis."

Commenting on his firm's association with Buxbaum Group in the new
venture, Benjamin Yogel, Metropolitan Principal and Vice President of Buxbaum
Jewelry Advisors, stated: "We are excited to partner with one of the
preeminent leaders in the liquidation industry to provide needed assistance to
the jewelry industry in these very challenging times."


About Buxbaum Group

Buxbaum Group has built its reputation for over 30 years as one of the
largest liquidators and appraisers of retail and wholesale inventories across
North America. While continuing to operate in those areas, the company has
shifted its primary focus in recent years to turnaround investing and advisory
services.


About Metropolitan

Metropolitan Equity Partners is a trusted investment partner to leading
lower-middle market and growth-stage companies. The Principals at Metropolitan
have led investments in over 30 growth stage and middle-market companies over
the course of their careers in addition to holding multiple operating roles in
private companies in special situations. Metropolitan has made five
investments in 2008, each time backing a proven management team in a strong
industry.

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Car Care (Gosport) Ltd, formerly of East Street, Fareham, has been put into liquidation after eight years in business.

It was judged at a company meeting in the Holiday Inn, Fareham last month that the firm, which sold, and repaired cars, 'could not, by reason of its liabilities, continue its business.'

Most of the company's work was with insurance companies.

When one of them pulled out it left the company struggling.

It had been in business for almost nine years, and employed nine people.

Bob Thompson has been appointed liquidator with Rendell Thompson.

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A West Midlands house builder is facing administration after being hit by the downturn in the housing market.

Wolverhampton-based Bentley Homes said cash flow problems caused by the economic downturn had caused it to seek help.

The company said that all of its existing building projects would be suspended.

Birmingham-based accountants Baker Tilly have been called in to act as insolvency practitioners.

Bentley Homes was set up five years ago by brothers Ajmal and Akmal Ellahi.

'No choice'

The company employed more than 20 staff but only five remain.

Apartment development Castle Locks, in Oldbury, is the only project yet to be completed, company director Ajmal Ellahi said.

In a statement, the firm said it suspended development in March.

It added: "The directors have spent months taking professional advice from the company's lawyers and have been negotiating with their funders to restructure the business to enable the company to complete all the development projects.

"Unfortunately, a rescue package was not forthcoming and based on the advice received this left the directors no choice but to file a notice to appoint an insolvency practitioner."

A spokesman for Baker Tilly said appointing an insolvancy practitioner was the first step in a process which could result in administration.

The spokesman added it would look at restructuring the business first.



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Yell Group, the heavily indebted publisher of Yellow Pages, is suspending dividends until its £3.7 billion debt mountain has been reduced to more manageable levels.

The company, which owns directory enquiries and classified websites around the world, also said today that it was negotiating with its main banks for a relaxation in banking covenants and an agreement in principle had been received.

Yell said reaching a final agreement is expected to take several weeks. In July, Yell tried to reassure investors by dismissing fears that it was in danger of breaching these covenants.

The company said this morning it aimed to cut debts to less than four times earnings before interest, tax, depreciation and amortisation as fast it it could. Until then, dividend payments would be suspended.

Yell said trading and financial performance continued to be on track to meet market expectations, with strong cash generation, and that it was currently operating within its financial covenants.

The share price rose 3.5 per cent, or 3.25p, to 94.5p on the news.

“It is encouraging to see Yell addressing the balance sheet issue and arranging greater covenant flexibility,” Charles Peacock, a Landsbanki analyst, wrote in a note, estimating that cancelling the dividend would free about £70 million in cash per year.

The company, which borrowed heavily to finance acquisitions in the United States and Spain, reported a 6.2 per cent rise in third-quarter revenues in July and said at the time it had reduced its total debt burden by 2 per cent compared with three months earlier.

Yell was sold by BT for £2.1 billion in 2001 to private equity firms Apax and Hicks, Muse, Tate & Furst, which were attracted by its reliable cash flows. It returned to the stock market in 2003, priced at 285p a share, soaring to 643p in February 2007, when it was valued at close to £5 billion.

Concerns about the weakening economy, threats posed by rivals such as Google and its debts drove the shares down to 55p in July.



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Chancellor Alistair Darling has pledged action over weaknesses in the financial system ahead of his speech to the Labour Party conference in Manchester.

He promised to avoid "knee-jerk" reactions but instead take measured decisions for long-term stability.

His speech comes as experts say taxes will have to rise as borrowing soars.

Asked by the BBC if income tax would go up Mr Darling declined to answer "yes" or "no", instead saying "it is not the time to take money out of the economy".

When asked again, Mr Darling told the BBC that the time to pay back debt was when the economy was doing better.

He also said that at the moment, rather than increasing taxes, basic rate tax payers were paying less tax this month.

He rejected calls from union leaders and MPs on the left of the party for tax rises for the wealthy and also for a energy windfall tax.

"I don't want to destabilise the tax system," he said.

Referring to the government's recent energy efficiency initiative, he added: "We have got out of the energy companies rather more, I suspect, than we would have got out of a windfall tax."

Mr Darling encouraged banks to behave "responsibly" in the current crisis but would not commit to action to curb City bonuses, saying this was just one issue being looked at by financial regulators.

"We need to toughen up the system but we need to do it effectively and in a way that works," he said.

Mr Darling also gave strong support to Gordon Brown, saying the prime minister was a man of "conviction" and "remarkable resolution", adding that the cabinet was "remarkably unfactional".

The chancellor and Prime Minister Gordon Brown will fly from the conference to New York to seek international agreement on tighter regulation of the financial sector.

On Sunday, Mr Brown told the BBC he was considering a crackdown on "irresponsible" City bonuses which encouraged "excessive" risk-taking.

'Mistakes and misjudgements'

In his keynote speech, Mr Darling will commit to taking whatever steps necessary to tackle turmoil in the markets, but will also warn that solutions to the problems of globalisation will not be found by one government alone.

Mr Darling will say: "Just as one government alone cannot combat global terrorism, just as one government alone cannot deal with climate change, one government alone cannot deal with the impact of globalisation.

"In the next few weeks Gordon and I will be in the US and in Europe and speaking to finance ministers around the world to put in place measures to help prevent the mistakes and misjudgements which caused the crisis."

Meanwhile, unions are expected to use the conference to demand a windfall tax on energy firms to help impoverished households pay their gas and electricity bills.

The demands for a levy, which was rejected by Mr Brown earlier this month, are expected to be spearheaded by Unite general secretary Tony Woodley.

However, due to a rule change, unions and activists will not be able to force a vote on whether to make such a tax Labour Party policy.


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Both trade unions and opposition groups in Greece vowed on Thursday to continue fighting the decision of the conservative Greek government to liquidate the national air carrier, Olympic Airlines.

The groups announced that they would be staging demonstrations and sit-ins and pursuing legal avenues in a fight they are calling “a mother of all battles,” in order to stop the sell-off of the airline.

The transport spokesman for the opposition, Nikos Sifounakis, in calling the sell-off plan a crime against the people of the country, said: “It is a huge mistake … 6,500 employees stand to lose their jobs because the conditions of this scheme are so painful. We will give our support to all these protests.”

A restructuring of airline, which has operated at a loss almost from
the time it was bought by the Greek government from Aristotle Onassis in the 1970s, is being viewed as a key element in the effort of the centre-right government to modernize the country’s economy – and could help end years of strife with Brussels.

Olympic is the last airline in the EU that is wholly-owned by a government, and is thought to be losing approximately 500 million euros annually. Attempts over the years by a series of Greek governments to privatize the carrier have always run up against resistance by the 17 unions representing employees of the airline.

On Thursday night, the 490 pilots employed by Olympic vowed to strike. Over this past year, the pilots have read proclamations during flights that speak out against plans to privatize the airline.



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Social historians will record this week as one when unhappy shoppers began discussing the potential collapse of western capitalism in the same breath as butter prices. The credit crunch that began in the US came home to roost in the UK with Lloyds TSB’s government-sanctioned rescue bid for Halifax Bank of Scotland.

The realisation that Britain’s biggest mortgage lender had risked insolvency has shifted the public mood. Before, perplexity predominated. Now many ordinary people are angry with the bankers they regard as having blown national prosperity on the roll of a dice.

Anger erupted from Israel Rainford, a young black man, one of about 50 people interviewed by the FT over the past two days. Mr Rainford, who was visiting a Birmingham job centre, said: “It’s the fault of the bankers that we are where we are. They were stupid. They should have had more reserves.” For two years, he earned £24,000 a year as a painter on building sites. A fortnight ago, he was made redundant. “They said it was the recession.” Now he gets £47 a week Jobseeker’s Allowance. He pointed to a gleaming Mercedes gliding by: “Look at the money that is still around.”

Contrasts were equally stark for Orsi Faludi, an economic migrant trudging through wealthy Hampstead in north London. She lost her waitressing job in May. “If I don’t find work in two weeks I’ll lose my home,” she said.

The Waitrose supermarket in Harborne, a smart Birmingham suburb, was selling char-grilled vegetable pizzas alongside newspapers whose headlines lashed a US hedge fund manager as a “greedy pig”. In the car park, Kate Organ, 53, a freelance arts manager, described her mood as “wretched and disempowered”. She expected her income, currently £30,000 a year, to dwindle. She said: “When I was at university, the Workers’ Revolutionary party harangued me that capitalism would collapse. Now I know what they were on about.”

Outside a Lidl supermarket in Newcastle, George Smith, a local builder, decried the “London banks” that “sold Northern Rock down the river”, accusing them of leaking smears against what had once seemed an impregnable local bastion. “They let us sink so they could swim, but now they’ve been caught out, too,” he said. His wife Linda added: “Too many people at the top have been getting paid too much.”

A former Lehman Brothers banker, interviewed near Canary Wharf in east London, had different villains in mind: the US Treasury and Federal Reserve. In search of the sympathy that has been in scant supply for her industry this week, she said: “People think bankers face no problems, but it’s not like that.” Her equity investments had evaporated, she lamented.

Donna, an HBOS employee writing on an internet message board, accused alarmist journalists as well as traders of driving down bank stocks: “I will probably be out of a job now. Thank you, media and speculators, for ruining my life! How am I going to pay my mortgage?”

In Leicestershire, Penni Harrison, an entrepreneur, fears losing her home. She has £15,000 in debt from two failed businesses and “very little income”. Her troubles are a microcosm of the mess engulfing investment banks, but she said: “We were led to believe that the higher echelons of finance knew what they were doing.”

The mortgage drought has frozen the housing market, with buyers and sellers unable to complete transactions. Tracy Guy, 25, an administrator at Sotheby’s auction house in London, who had hoped to buy a home in the capital with her partner, said she now had “no chance” of securing a big enough mortgage.

She went to university in Newcastle and says: “We might even go back [there].”

In the north-east, however, housing woes were also on the mind of a local woman, Nancy Carrington. She put her flat up for sale six months ago. It has attracted only one offer of £120,000 – £10,000 less than she paid for it two years ago.

Mo Rai, a former mortgage broker from Walsall, who now earns £40,000 a year as an estate planner, shook his head, anxious to distance himself from the excesses of former colleagues. “I never lent more than three times salary – no matter how much a borrower pleaded,” he said. In Newcastle, Mick Dunlavy, a builder, blamed “these estate agents trying to get as much commission as they can”.

Few Britons equated credit woes with irresponsible borrowing, however. Simon Parke, 21, a student at Northumbria University, was an exception. He said: “People who take on credit cards and max them on a night out are stupid.”

But even for the debt-free, the fragile UK economy has exacerbated worries about higher living costs – putting thrift back in fashion and evoking memories of Austerity Britain. “I’m more conscious what I’m putting in the trolley,” said Sue Reay, a PR officer, whose weekly grocery bills have risen by a third to £80.

Yasmin Patel, a lecturer, has traded down from Warburtons bread to Tesco’s own brand. Across the country, people are delaying haircuts, resoling old shoes and making shorter journeys on foot instead of by car. The former Lehman banker confided that she could “no longer buy Gucci”.

Shoppers for whom Gucci was always a distant dream thronged the flea market in Halifax’s Woolshops shopping centre this week, buying cheap clothes.

With jobs at risk at the town’s biggest employer, belts are being tightened even more urgently than elsewhere. Eddie Woodhead, who has sold pushchairs and toys at the market since 1986, said business always picked up in a recession.

“In the early ’90s I bought three new cars,” he said. Speaking with the self-satisfaction of many older people whose sermons on penny pinching have been proved right, he said: “People have been spending what they haven’t got. We were taught to put something away.”

The nearby Piece Hall, a cloth market built in 1779, now contains shops and is often used as a film location. It is a striking symbol of how a building created for a dead industry can live on. The wedge-shaped headquarters of Halifax, the mortgage lender, emblematic today of risky financial strategies that damaged a healthy economy, is unlikely to be similarly cherished.



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STAFF who lost their jobs when holiday firm XL collapsed plan to sue their former bosses, the Western Mail can reveal today.

Around 150 staff at XL subsidiary Travel City Direct in Swansea’s Enterprise Zone which sold XL holiday packages lost their jobs when the firm announced it had gone into administration on Friday. They are among around 1,700 cabin crew, engineers, baggage handlers, sales staff and check-in staff across the UK to have lost their jobs.

Former Travel City worker Mike Jones, 27, of Port Talbot, says he is angry he has not received his wages this month. He says he finds it hard to believe the firm’s management was unaware of XL’s predicament in the run-up to its collapse.

There were warnings of “financial irregularities” about collapsed tour operator XL two years ago, it has emerged. Accountancy firm KPMG said in October 2006 that it was blocked from investigating alleged misrepresentations by company directors that could have resulted in “material errors” in financial statements.

Mr Jones says he and other former Travel City staff now plan to take legal action to recover wages from Travel City Direct.

Employment expert Rosa Fernandez said former Travel City Direct staff would be backed by the law in seeking wages and redundancy money.

The partner and head of employment law at Swansea-based JCP Solicitors explained: “Under the Insolvency Act 1986, in the event of a company becoming insolvent, employees’ rights to payment of certain sums due to them from their employer in respect of the four-month period immediately preceding the insolvency of the employer (for example wages or salary and accrued holiday pay) take precedence over payment of debts to other creditors.

“These payments are referred to as ‘preferential debts’, which means that they are debts which will be paid by the employer company to employees prior to other creditors’ claims.

“Whilst there is no cap on the amount of payment which can be recovered for accrued holiday pay, the maximum total sum which may be treated as a preferential debt for, for example, wages or salary is £800.”

Under the Employment Rights Act 1996, the Government also offers a limited guarantee to pay certain sums due to employees from their employers, for example statutory redundancy payments and to make up unpaid employer pension contributions, out of the National Insurance Fund, with certain conditions attached. The news comes as the cost of the crisis mounted. Most of the estimated 90,000 tourists hit by the collapse were covered by the Air Travel Organisers’ Licensing (Atol) scheme run by the Civil Aviation Authority (CAA).

But the CAA said yesterday that XL’s Atol bond of around £42m was unlikely to be enough to cover the cost of repatriation and refunding.

Consequently, the CAA is going to have to dip into its back-up fund – the Air Travel Trust fund.

The CAA said yesterday around 55,000 tourists were covered by XL’s Atol and a further 25,000 who travelled with XL Airways were covered by other holiday companies’ Atols.

Virgin Atlantic boss Sir Richard Branson has called for an urgent review of the rules with a view to allowing the air fleet of stricken firms to continue to fly under the CAA’s watch.

He said: “It does not make sense for aircraft to be lying idle at UK airports when they should be used to bring back stranded passengers of that airline.

“There is enormous pressure at the moment within the aviation industry to help with the rescue mission, which we are happy to do, but it should not be like this in the future.”

Meanwhile talks were continuing to try to sort out a rescue package for Italian airline Alitalia. Last week British Airways chief executive Willie Walsh predicted that another 30 airlines would disappear over the coming months, doubling the number that have already gone bust this year.



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Lehman Brothers is thought to be teetering on the edge of bankruptcy following billions of dollars in write downs this year.

Reports in a number of newspapers this weekend suggest Barclays, Bank of America and Goldman Sachs are considering splitting up the assets of the beleaguered bank to stave off a full blown collapse.
The Wall Street Journal says that Bank of America is set to take the bulk of the bank including its mortgage assets while Barclays would take its fixed income and asset management businesses leaving Goldman Sachs with the rest of Lehman's holdings.

But Barclays is thought to have pulled out on Sunday following three days of emergency negotiations with the American government and officials from Citibank, Bank of America, JP Morgan Chase and Goldman Sachs.

There has also been speculation that a "bad bank" will be set up to manage the high risk mortgage assets and sell them off at discount prices.

Last week the American lender with UK mortgage holdings revealed a $3.9bn Q3 loss in its preliminary results.

It also unveiled an executive restructure and the sale of $4bn in mortgage assets to BlackRock Financial in an attempt to derisk the business.

Speculation is rife that the Federal Reserve could step in to prevent the bank from filing for insolvency and destabilising the banking system as a whole but Henry Paulson, secretary of the US Treasury, has stated publicly that the US government will not be rescuing the 158 year old bank.

Reports also suggest the uncertainty surrounding Lehman, the fourth largest bank on Wall Street, will shake up international credit markets this week and deepen the existing credit crunch.



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About 100 jobs are to go across Scotland as a management company which runs pubs has gone into liquidation.

Grangemouth-based firm CMC Management was granted voluntary liquidation by Falkirk Sheriff Court and announced the closure of 15 pubs.

The company blamed the closures on the credit crunch which has led to a significant downturn in trade.

The pubs affected are across the country, ranging from Nairn to Glasgow and Dumfries.

Maureen Leslie, of MLM Insolvency, who have been appointed to oversee the liquidation of the company, said: "It is our understanding that a general downturn in business after the smoking ban was introduced and the significant reduction in trade due to the credit crunch are the two main factors behind the business failing."

The 15 pubs which have been closed are:

• Buccaneer, Kirkcaldy

• Cathkin Inn, Rutherglen

• Cavern, Ayrshire

• Condorrat, Cumbernauld

• Gray Horse, Edinburgh

• Elizabeth Lodge, Glasgow

• Four Elements, Renfrewshire

• International, Glasgow

• Jolly Harvester, Dumfries

• Masonic Arms, Bonnybridge

• Meadows, Glasgow

• Monklands, Coatbridge

• Penny Farthing, Glasgow

• Stirling Arms, Dunblane

• Victoria Hotel, Nairn.



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The package holiday firm XL is expected to declare itself bankrupt today, in a move which looks likely to send shockwaves through the British travel industry.


The firm, Britain's third-biggest tour operator, was trying to secure itself a multi-million pound rescue package last night, but the chances of it surviving looked slim. If the company does go under, thousands of holidaymakers could be left stranded overseas.

XL flies to 50 destinations, mainly in the Mediterranean and Caribbean, and has a fleet of 21 aircraft, all of which will be grounded immediately if the company declares itself bankrupt.

According to reports, XL has already contacted a number of rival airlines in the hope that they will agree to fly any stranded tourists back to Britain. Travellers who booked their holiday as a package deal would qualify for insurance cover, and should be refunded any money they spend on extra nights in their hotels. Those who used XL to book flights would be left out of pocket.

The rush for flights back to the UK with other carriers is also expected to be huge, so severe delays would be likely.



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Market watchers are trying to unravel how a six-year old story suddenly rose to prominence, hammering the share price of United Airlines earlier this week.

A 2002 story of a bankruptcy filling by UAL was pushed into the most viewed business story category on the South Florida Sun Sentinel's Web site on Sunday morning. The newspaper's owner, Tribune, said the story (which omitted an obvious date stamp) was not republished. In fact it originally came from the Chicago Tribune, a sister publication to the Sun Sentinel

Google automated software noticed the link and the story appeared in Google News. A Florida investment firm picked up on this and wrote a one line summary for Bloomberg that stated a paper had reported that United Airlines has filed for bankruptcy protection, sparking a run on United's shares.

It's unclear how much traffic the antiquated story received on the Sun Sentinel website before its sudden resurrection, zombie-like, to menace UAL shares. Tribune spokesman Gary Weitman declined to quote traffic figures but told AP that "as you'd expect, the business page of the Sun Sentinel Web site doesn't get a lot of traffic in the middle of the night."

Weitman added that hits on the story had spiked on Sunday and Monday morning. Coincidentally United filed for bankruptcy protection on a Monday in December 2002.

That factor goes some way to explaining why neither Income Securities Advisors, which posted the summary, nor Bloomberg, picked up on the mistake. The share prices now and six years ago were very different but in the rush to push out breaking information it's understandable how this factor, obvious in hindsight, was overlooked at the time.

The erroneous reports were corrected minutes after they appeared but not before United Airlines' stock price sank more than 75 per cent, slipping down to the $3 level before trading was suspended.

All this might have made someone who knew that the share prices were about to nose-dive a lot of money by selling short. The chain of events here is quite complex, and hinges on both the intricacies of how Google's automated software works and human error ,alongside other factors that might be hard to reproduce.

Nonetheless security watchers have flagged the scenario up as a possible path in the evolution of pump and dump stock scams. Instead of using spam email to dupe potential marks into sinking money into worthless shares on the basis of fictitious good news, the approach would rely on resurrecting older items of bad news about companies, stripped of their context.

Potential fraudsters might target an obscure story with hits via a globally distributed botnet of compromised machines and let the story drift up page rankings, hopefully leading it to be picked up more widely and having an effect on the markets.

Danny McPherson, a security researcher at security tools firm Arbor Networks, said that manipulating content presented by media outlets to cause knock-on financial effects would be far from difficult.

"Given the near immediate reaction to 'leaks' in today’s Internet age, much less misinformation, and certainly [not] 'old information', one might surmise that an attacker could easily compromise a few targeted assets - not at a financial, or government, or exchange, but at a media outlet, and cause significant cascading financial impact. You could certainly buy stock and sell it short with such a ploy, or simply buy low and sell high... and with trading volumes we’ve seen here, a couple million dollars might easily fly under the radar," he writes.

"For anyone even remotely security minded, reading stories like this brings so many attack vectors to mind," he adds.


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Failing NHS hospitals are to be saved from bankruptcy under plans set out by the government yesterday to protect patients from the consequences of financial meltdown.

A "failure regime" for the NHS in England was published for consultation by the Department of Health after years of wrangling in Whitehall about the implications for independent foundation hospitals, which were supposed to be free to sink or swim in a competitive NHS market.

Ben Bradshaw, the health minister, said in June that failing hospitals might be put under private-sector management in a last-ditch attempt to improve services to patients.

But the department acknowledged yesterday that some trusts may not be capable of rescue. It said: "An additional process will be required, very occasionally, where an organisation is no longer failing, but where it has become impossible to turn around and it has actually failed." This might occur if healthcare regulators withdrew a hospital's licence to treat patients on safety grounds, or if a trust reached the verge of bankruptcy because it could not compete in an area of surplus healthcare capacity.

Under the proposals, David Nicholson, the NHS chief executive, would gain authority to declare an NHS hospital to be "unsustainable". He would appoint a "special administrator" to take over the trust and work out how to maintain essential services. The administrator would have a duty to put the interests of patients before the claims of creditors.

Foundation hospitals, which have independence from Whitehall control and ownership of the assets they inherited from the NHS, were concerned that the failure regime might give Nicholson power to renationalise their assets.

Ministers have ruled that William Moyes, chairman of Monitor, the foundations' regulator, should have the authority to decide when a trust is in such dire straits that it should be stripped of its independent status. Only then could Nicholson send in a special administrator.

Ministers want the failure regime to be introduced in April. They intend to publish a list of hospitals falling below minimum standards in the autumn.

Nicholson said: "The majority of hospitals and trusts are performing well, providing high quality services to patients and managing resources effectively. However, in the rare cases where a challenged trust fails to turn itself around, it is important that there are clear processes set out to ensure that services for patients continue to be provided."

Andrew Lansley, the shadow health secretary, said: "Assets required for the maintenance of NHS services should continue to be available under any insolvency regime ... But that doesn't mean the government should take all the risk. Under these proposals the Treasury would begin to exert a new level of control over foundation trusts."


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Peele Print (North) has been placed into creditors' voluntary liquidation after the company "continued to lose money" and suffer from a lack of business.

Simon Lundy and Andrew Haslam, of Begbies Traynor's Newcastle branch, were appointed joint liquidators at the print broker on 4 September.

The liquidation is the second the company has undergone in the past year. Peele Print (North East) went under on 19 December last year with both the assets and goodwill purchased by Peele Print (North).

The deal saw the company move from its Swan Industrial Estate site to a residential address in Gateshead in a bid to cut overhead costs.

A sustained period of low turnover levels and a lack of working capital ultimately paved the way for the company's demise.

Simon Lundy, joint administrator at Begbies Traynor, said: "The company wasn't getting enough work in. This coupled with it continuing to lose money meant the business could not be maintained."

The closure leaves two staff redundant.



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People are seeking debt advice because they cannot get a mortgage despite the government's rescue package, the UK Insolvency Helpline has revealed.

The government last week unveiled a £200 million mortgage rescue package to support struggling homeowners.

However those that fall into negative equity, when the total outstanding loan exceeds the value of a property, will be exempt from the new measures.

This could leave many homeowners still unable to find mortgage finance and at risk of losing their homes.

Ian Boden-Smyth, PR spokesperson for the UK Insolvency Helpline, noted that the main problem is that the government are "not the ones lending the money".

He said: "The government are maybe doing too little, too late.

"We are still getting an enormous amount of mortgage applications and an enormous amount of people in debt, who just can't get mortgages."

A spokesperson for the department of Communities and Local Government explained in an article for the Times that the rescue package was not the only option for homeowners facing severe debt or even bankruptcy.

He added that others include "free legal representation at county courts, more free debt and advice, and on-going work with lenders to help ensure repossession is only ever a last resort".


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Remaining directors Juliet McKoen and Julie Hammerton called in Mazars LLP of Leeds to put the company into voluntary liquidation. A creditors’ meeting was held at the Abbey House Hotel in Barrow last Tuesday, where it was revealed that Ms McKoen is claiming £28,149 and Ms Hammerton is claiming £5,830.

The company had been run by Kerry Kolbe and Loren Slater, who are no longer directors.

Ms Kolbe is claiming £6,334 and Ms Slater is claiming £3,945.

Ms McKoen said: “I feel desperately sorry that the vision Julie and myself had – which was to stimulate commercial and artistic film and video culture in the South Lakes – has ended up this way.

“It was a personal dream of mine when I started to sit on the Northern Production Fund. There were very few applications coming from Cumbria and that’s why we set up the company and I believe that the company has done a lot of work. I feel desperately sorry for the creditors.”

A statement released by Juliet McKoen and Julie Hammerton said they “deeply regretted” the liquidation.

It said: “This follows a prolonged period during which they have been unable to gain access to company information, companyfinancial reports and the company premises in Lawson Street.”

The statement said the directors consulted Mazars when they established that Shoreline was facing insolvency and added: “Mazars will investigate all directors’ conduct, including former directors Kerry Kolbe and Loren Slater, to establish why and how the company became insolvent and whether there was misfeasance [misuse of legal power] involved.

“They will realise Shoreline’s assets and will consider whether Shoreline Films has any claims against the three companies currently trading at Lawson Street – Creative Studios Cumbria, Signal Films and Signal Films and Media, in order to pay company debts of £73,000 as fully as possible.”

Ms Kolbe and Ms Slater are sending a letter to creditors, via their solicitor, which said: “We have tried our utmost to persuade Juliet and Julie to allow us to pay the creditors, but since our removal from the company we have had no real means of forcing the issue. Ultimately, we had to accept the situation and move on. When we left the company there was enough money to pay all creditors, but as the cost of the voluntary liquidation now needs to be taken into account this may no longer be the case. In addition, there may be other cashflow issues arising from the premature cancellation of projects.

“Furthermore we’ve been made aware that the current directors have submitted a claim of their own to the liquidators amounting to something over £34,000.

“However, we understand that the liquidators will now be responsible for maximising the return for the company’s creditors, the list of whom we provided to them some time ago. We’ve been told that whilst initially the liquidators will factor any other creditors’ claims they receive into their calculations, they will then go on to investigate how all of the claims have been incurred and how they are evidenced, and will then make a decision on each claim on a case by case basis. We are extremely regretful that despite all our efforts this situation has not been resolved.”

Charles Morris, boss of the Roxy Cinema in Ulverston, is owed £831 after showing a series of art films between last August and March this year. He said: “I am particularly aggrieved because I was told they had a grant specifically for that purpose. We went into an agreement and have been left high and dry.”

It came to light in June that Shoreline hadn’t paid any bills since February, when directors Kerry Kolbe and Loren Slater told creditors that funds were available but they were being blocked from making payments. In May, Ms Kolbe and Ms Slater wrote to creditors saying they had been told to make the staff of four, including themselves, redundant and incur no further costs.

Shoreline Films was established by Ms McKoen and Ms Hammerton when they were producing the BAFTA-winning short film Mavis and the Mermaid in 1997, and fully incorporated as a not-for-profit Company Limited by Guarantee in 2002.

Described as a “social enterprise” and partly grant-funded, the company combined the production of its own films and documentaries, with industry training schemes and workshops.



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United Airlines plunged yesterday after a false report that the carrier had returned to bankruptcy court surfaced on the internet.

A six-year-old Chicago Tribune story on United's 2002 bankruptcy filing, spotted on a Google search yesterday morning by an investment newsletter, triggered a massive sell-off of the carrier's shares until trading was halted. The stock reached a low of $3, then rebounded once trading resumed to close at $10.92. Shares had ended the day at $12.30 on Friday.

Investors clearly took the article as news that the Chicago-based airline had once again sought protection from creditors, a scenario that had grown less remote in the past year as jet fuel prices skyrocketed.

United had refuted a report by late morning in New York, but not before the stock lost more than 75 per cent of its value. The shares appeared to trade at 1 cent, the default price assigned following its halt.

Attorneys for the airline and the newspaper group have continued to grapple over how and why the story reappeared now, on the website of another Tribune-owned newspaper, the South Florida Sun-Sentinel, people familiar with the matter said. The episode has also caught the attention of securities officials.

United said the reports were "completely untrue and were caused by the irresponsible posting of a six-year-old Chicago Tribune article".

United's shares began to sink minutes after a distressed-debt newsletter published a summary of the Tribune article on the Bloomberg wire and a link to the Sun-Sentinel website.

Richard Lehmann, president of Income Securities Advisors, the newsletter's publisher, said his company found the Sun-Sentinel piece through a general search on Google's news page.

Google said a link to the story appeared on Sunday on a Sun-Sentinel web page listing the business section's most viewed stories, but without any dateline referring to 2002. Tribune said the story was stored in the Sun-Sentinel's archives, and never reappeared on its site over the weekend or yesterday.

Renewed concerns of United's financial strength had hit the company's shares earlier this year and helped disrupt merger discussions with Continental Airlines, making a return to bankruptcy all the more believable.

United, which emerged from bankruptcy in February 2006, demanded a retraction and said it would launch an investigation.


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INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)
A voluntary arrangement for an individual is a procedure whereby the person comes to an arrangement with his creditors in how their debt will be discharged. Such a scheme requires the approval of the court and is under the control of a supervisor.


INSOLVENT
The state of not being able to pay one's debts as they fall due or having an excess of liabilities over assets.


INSOLVENCY ACT 1986 (IA 1986)
Primary legislation governing insolvency law and practice. Nevertheless, many other statues and statutory instruments are also relevant.


INSOLVENT LIQUIDATION
A company goes into insolvent liquidation if it goes into liquidation at a time when assets are insufficient for the payment of its debts and other liabilities and the expenses of liquidation.


INSOLVENCY PRACTITIONER (IP)
Person authorised by one of the chartered accountancy bodies, the Law Societies, The Insolvency Practitioners Association or the Department of Trade. The only person who may act as office holder in an insolvency proceeding.


INSOLVENCY RULES
The Insolvency Rules 1986, as amended, provide the detailed working procedures for the provisions of the Insolvency Act 1986.


INSOLVENCY RULES (IA 1986)
The Insolvency Rules 1986 (as amended) these Rules apply where the Act applies. Where the old Act continue to apply so do the Bankruptcy Rules 1952 and the Companies (Winding Up) Rules 1949. There are separate rules dealing with insolvent partnerships, insolvent deceased's estates and deeds of arrangement.


INTERIM ORDER
An individual who intends to propose a voluntary arrangement to his creditors may apply to the court for an interim order which, if granted, precludes bankruptcy and other legal proceedings whilst the order is in force.


INVESTORS' COMPENSATION SCHEME
A statutory scheme operated by the SIB (Securities and Investments Board) to give individual investors up to £48,000 protection if an authorised investment business collapses.

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The number of people becoming insolvent in Scotland has hit an all-time high, according to analysis of new figures.

Insolvency Service statistics showed there were 4,735 personal insolvencies in the second quarter of 2008, up 35.4% on the same period last year.

Accounting firm PKF said the second quarter of 2008 had seen the highest ever quarterly figures for personal insolvency in Scotland.

New bankruptcy legislation came into force in April.

The change brought Scotland into line with the rest of the UK and means the period a person has to spend as a bankrupt has been reduced from three years to 12 months.

Other legislation, which also came into force at the same time, gave a wider group of people access to the bankruptcy process.

Instead of having to wait for court action against them, certain debtors can start the process themselves.

Matt Henderson, business recovery and insolvency partner with accountants Johnston Carmichael, said he expected the number of Scots going through the bankruptcy process to reach "record levels" in 2008.

He added: "I really do wonder if the pendulum has been allowed to swing too far to the benefit of debtors.

"For some people the access to relief from their debts is just too easy."

Mr Henderson said the credit crunch had worsened the position for people in financial difficulty.

"These latest statistics could well get much worse due to the effect of increased household energy costs and higher borrowing costs", he said.

Business liquidations

Meanwhile, figures also showed that the number of Scottish businesses falling into liquidation rose by almost 30% in the second quarter of 2008.

In Scotland, the number of businesses going into liquidation topped 132 between April to June, compared to 102 between January and March this year.

According to Blair Nimmo, head of restructuring for KPMG in Scotland, "there can be little doubt that the credit crunch is now really beginning to bite".

The worst failure rates in Scottish business came from the property, construction and real estate markets, which saw 60 businesses go under, while hospitality saw 12 and retail saw 11.



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The mother of a businessman thought to have killed his wife and daughter before torching his mansion and killing himself has spoken of her shock.

Enid Foster said she believed her son Christopher, 50, could not face telling his family they could lose their £1.2m home in Maesbrook, Shropshire.

His company had gone into liquidation and he owed at least £800,000 in tax.

Mrs Foster said she could not condone the actions of her son and said he had not told anyone of his money worries.

The bodies of Mr Foster and his 49-year-old wife Jillian were found in the wreckage of Osbaston House following the fire, which began in the early hours of 26 August.

'Can't condone'

A third body recovered is thought to be that of their 15-year-old daughter Kirstie.

Mr Foster, who made his fortune developing insulation technology for oil rigs, had seen his company, Ulva Ltd, go into liquidation.

As well as its huge tax bill, the firm also faced legal action from one of its suppliers for thousands of pounds.

Mrs Foster, who lives in south Shropshire, said: "I can't condone what he's done, but I've lost a dearly-loved son, daughter-in-law and beautiful granddaughter.

"He talked to nobody, we knew nothing about his financial situation and it's come as a tremendous shock.

"So many of his friends have told me that, had they known, they would have helped him however they could.

"They were a very close, loving family unit and I don't think he could face telling them they were going to lose everything, but I am in no way condoning what he's done.

"It's very hard. Life will never be the same without them. We're finding it very difficult to come to terms with."

Brother devastated

She said her granddaughter, who loved horses, had finished first in a horse riding competition at the Berriew Show, in Powys, the week before her death.

Three horses and four dogs were also found shot dead in different parts of the property.

Jillian Foster's brother Roger Doley, of Perton, near Wolverhampton, said he was devastated by the deaths of his sister and niece.

He said: "Jill was just a nice girl. She always had a nice smile and always made you welcome.

"I'm so heartbroken; I can't believe she's gone forever. Kirstie was so interested in the horses that it became part of Jill's life too.

"She treated all the animals like pets; even the chickens had names.

"Jill just loved life."

He added: "I remember the last time I saw Kirstie, she started giving me grief about being an old codger.

"But it was all in good humour. You would hear her shouting the horses' names as she went up the drive to feed them.

"There's so much to remember. It's just sad that I'm never going to see them ever again."



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250 workers in Waterford face an uncertain future as leading employer Cappoquin Chickens has gone into liquidation, putting all jobs at the company in jeopardy as a result. Fears have been ongoing for the company for some time but recent developments intensified the anxieties of employees, farmers and growers when Cappoquin Chickens went into examinership in late May. The rising costs of business including feed for chickens and cheaper meat imports are just two of the reasons attributed to the situation the company now finds itself in.

Public representatives across the political and social spectrum of Waterford have expressed the level of devastation that liquidation of the poultry company could do to the West Waterford economy.

David Lane of Siptu, speaking to Waterford Today from the Cappoquin location on Monday, said that the union became aware that the company would be going into liquidation on Friday evening and that he and other Siptu representatives met with the Liquidator on Monday morning last. Mr. Lane said that the union has 150 members working at the plant but that there was an overall workforce of 250 people.

Mr. Lane was among many who say that any closure of the Cappoquin Chickens will have a devastating effect on West Waterford and East Cork and that any potential buyers for Cappoquin Chickens would have to make themselves known ‘very quickly' in order to save the jobs there.

However, Waterford IFA Chairman, Michael Keane also said that the crisis facing Cappoquin Chickens would have a knock on effect for all concerned, particularly for chicken farmers and farmers who also produce feed for the company. He called on national politicians to ‘get stuck in' on the crisis as farmers and staff staged a rally outside the plant on Monday. When asked who the rally will be aimed at, Mr. Keane said that it was aimed at the liquidator and government politicians.

The Waterford IFA Chairman also said that it was a question on whether the government truly wanted ‘an indigenous chicken industry' in Ireland.

Meanwhile, Siptu's David Lane said that the government had ‘stood back and done effectively nothing' while the crisis continued.

The farming community chicken growers held a rally at Cappoquin on Monday afternoon (4pm) while releasing a statement syaing that ‘dubious' imports were undermining the poultry sector in the country. The same statement, on behalf of the IFA office in Kilkenny stated that in countries such as Brazil and Thailand, the quality assurances on exports are not as stringent as in Ireland, thus making those imports damaging to domestic producers.

The political parties in opposition have been quick off the mark to criticise the current government in the wake of the closure. Sinn Fein City Councillor, David Cullinane and Fine Gael Senator, Paudie Coffey both made written statements which were highly critical of government performance but also signalling that the government had a responsibility to assist the staff whose jobs are at risk.

For reaction, the office of the Minister for Enterprise, Trade and Employment, Mary Coghlan was contacted for comment but had not responded at the time of going to print.



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Commodities markets were volatile with traders warning that the ongoing sell-off could cause further casualties among investors, just a day after the closure of a leading commodities hedge fund.

The Reuters-Jefferies CRB index, a global benchmark for commodities prices, fell to a seven-month low after fresh losses in the energy and agricultural markets.

In another sign of the commodities rout, the Baltic Dry index, which measures the cost of shipping dry bulk commodities such as iron ore and grains, dropped 4.95 per cent to 6,146, the lowest level since February.

Ospraie Management announced that its flagship fund would be dissolved after posting heavy losses in August, which were largely due to the falling value of its energy and mining holdings.

John Reade, at UBS, said Ospraie was unlikely to be a one-off victim of falling raw materials prices.

“We had heard that a number of investors had been badly hurt by the moves in commodities in July and August. This [Ospraie] appears to be the first confirmation of that, although we do not think that the poor performance was confined to this one company,” he said.

Raw materials prices have declined across the board since oil touched an all-time high of $147.27 a barrel in July, amid traders’ fears that a global economic slowdown is damping demand.

Crude oil prices continued to fall. Nymex October West Texas Intermediate dropped 36 cents to $109.35 a barrel, having hit an intraday low of $105.46 on Tuesday after Hurricane Gustav caused less damage than expected to oil platforms on the US Gulf of Mexico. ICE October Brent was 28 cents down at $108.06.

Naumam Barakat, of Macquarie in New York, said: “At this stage there is very little interest in buying oil before $100 and I think rallies above $110 will continue to be sold.”

Falling oil prices helped to boost the US dollar and pulled down precious metals.

Gold lost 1 per cent to $796.45 a troy ounce in early trade before closing 0.2 per cent lower at $803.20. Silver lost 0.7 per cent to $13.03.

On the London Metals Exchange, most base metals rebounded slightly from losses earlier in the week but remained on a downward trend. Lead gained 1.57 per cent to $1,945 a tonne but remained 3 per cent lower on the month.

Copper rose 0.9 per cent to $7,345, its first gain in a week. Investors were showing renewed confidence in copper as it had managed to stay just above a resistance level of $7,125 during a difficult week, said Alex Heath, at RBC Capital Markets.

But he warned that, on the whole, investors were waiting for base metals to fall even further before buying. “We will get a day or two of rallies but emotion continues to be very negative.”

Aluminium fell almost 1 per cent to $2,675 a tonne.

In spite of the recent fall in base metals prices, activity at the LME is booming. Icap, the London-based broker, said that it had hired Robert Rees and Steve Bingley, former joint global heads of base metals at Bear Stearns, to head the firm’s new base metals broking business.

In agriculture, CBOT September soyabeans dropped 4.3 per cent to $12.45¼ a bushel, as the US government said 57 per cent of its soya crop was rated good to excellent, down from 61 per cent a week ago. CBOT September corn fell 2.44 per cent to $5.39½ a bushel.


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Britain has one of the worst personal debt problems in Europe. Before the economic downturn, we as a nation have been on a spending spree, unparalleled in modern times. Those were the concerns expressed in my report, Breakthrough Britain, over a year ago. It is getting worse.


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The Bank of England is expected to ignore pleas for a cut in rates this week, despite warnings that the number of companies set to go under in Britain this year could reach 17,000.


The cost of borrowing should remain at 5 per cent even though figures – collated from official statistics for the first six months of 2008 – show that failures among companies could rise by a staggering third over last year's total of 12,507.

There's worse to come, insolvency experts warn. Figures for the 1990s show that company failures do not seriously escalate until the second and third year of a recession. Britain has yet to officially lurch into recession, defined as two quarters of negative economic growth.

Ian Jones, a partner in the Manchester-based insolvency practice JLD, said: "The number of failing businesses we have been asked to deal with has tripled from July last year to this. Few business owners throw in the towel straight away but companies reach a point where they simply can't carry on. Our recent three-fold increase could easily go to four- or five-fold."

InsolvencyInfo, which analyses administrations and receiverships, said that insolvent liquidations would hit 17,000 this year, should the trend of the first six months continue.

Insolvency practitioners have privately accused some of Britain's biggest firms of using strong-arm tactics on their smaller suppliers and ditching long-term suppliers to gain the slenderest increase in their own profit margins.

Receiverships in the UK soared from 77 in the second quarter of 2007 to 177 in the same three months this year. But total failures are masked by the numerous companies opting for administration: the figure stands at 938 in the quarter to end June, up 62 per cent over the same three months a year ago.

Despite the growing list of business failures, economists warn that the Bank will keep rates on hold when it meets later this week. Michael Taylor, senior economist at Lombard Street Research, said: "I don't think there should be a cut in rates in the near term. Inflation is heading towards 5 per cent, far ahead of target and rising. Ultimately, the Bank of England's job is to control inflation."

Graeme Leach, chief economist at the Institute of Directors, said: "The most they could possibly do is make a quarter-point cut and that is not going to make any difference to growth."


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Start-up printer Four Four Two has gone into voluntary liquidation after being hit for more than £50,000 from a bad debt earlier this year.

Insolvency practitioner Ideal Corporate Solutions was appointed last Tuesday (26 August).

Gillingham, Dorset-based Four Four Two's 12 staff were informed of their redundancy the Friday prior to the liquidation.

According to Ideal Corporate Solutions' Kevin Lucas, a meeting of creditors is initially scheduled for next Thursday (1 September) in Southampton.

However, he added that the meeting may have to be moved as there were issues getting hold of the company's records from the accountants.

He said: "We have no plans to sell the assets of the company, because at this point there doesn't appear to be any value to be sold. We will be looking to realise whatever value there is at the company."

According to director Gareth Jones, the new start-up, which is just over a year old, was on target to record a turnover of just over £1m in its first year.

He said: "We were victims of our own success, we got too big too quickly. We took a big hit in June, then when we faced a quiet August we didn't have the cashflow to support it. I personally am gutted."

Jones added that he did not plan to start the company up again.

Christchurch, Dorset-based printer 4 Four 2, from whom Jones bought the assets that became Four Four Two, is unaffected.



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One year into the credit crunch, and buy-to-let repossessions have almost doubled. The latest figures from the Council of Mortgage Lenders (CML) show that approximately 1,800 buy-to-let properties were taken into possession by mortgage lenders in the first six months of this year, up from around 930 in the first half of 2007.

Buy-to-let repossessions, which used to run at a lower rate than in the wider mortgage market, are now at the same level, at 0.16pc of all loans.

More worryingly, repossessed buy-to-let properties are proving far harder for lenders to sell on than previously owner-occupied homes.

The number of all repossessed properties still owned by lenders has almost doubled in the past year, but the number of those which are former buy-to-lets has more than tripled.

While the absolute numbers of buy-to-let properties being repossessed remains low, a sharp rise in the proportion of buy-to-let mortgages which are more than three months in arrears suggests repossessions will increase further.

In the first half of 2007, 0.63pc of all buy-to-let loans were more than three months in arrears, but by the first half of this year that figure had almost doubled to 1.1pc.

However, falling into arrears - and even the receipt of a repossession order - need not be the end of the road for the buy-to-let investor. It can take several months for proceedings to be completed, during which time you can - and should - sell the property if possible.

"Repossessed homes generally sell for significantly less than their market value," says Philip Martin of Mortgage Rescue Network, which comprises a group of sale-and-rent-back investors who also offer repossession advice. "Selling of your own volition is infinitely preferable. In many cases another landlord can be found to purchase the property."

You can also fight repossession at the hearing. Under some circumstances a judge will suspend repossession, although this is more common for owner-occupiers than it is for investors.

"There is usually a lot less mitigation with buy-to-let cases, which are viewed as commercial risks," says Mr Martin. A judge may consider suspension in some circumstances, however. "Mitigation could be demonstrated either by the hardship that would be caused to vulnerable tenants in occupation, or alternatively by demonstrating that a shortfall caused by the forced sale would have a significant detrimental effect on the landlord's personal circumstances, such as bankruptcy or the forced sale of his own home," Mr Martin explains.

A good reason for falling into arrears, such as illness or job loss, or an unexpected void period which has since been resolved, might also be taken into account. If you can provide a one-year assured tenancy and proof of demand from a local letting agent, indicating that your property is "sustainable", this would also help.

"If you can demonstrate that mortgage payments can be made from this point forwards and that a small but regular contribution can be put towards the arrears, this should be sufficient to suspend the possession order," Mr Martin says.

If you're unable to successfully fight repossession, the lender will try to sell the property.

"The time taken to sell depends on geographic location and condition - the average at present is 135 days," says Neil Warman of mortgage servicing company Homeloan Management. "Some lenders have started to make greater use of auctions, not only if there is little interest in the property after it has initially been marketed, but also to stimulate competition."

Until the property is sold, the original owner is responsible for any ongoing costs relating to the property, including legal fees and valuations. If the property is taken into possession and is sold for less than the amount of the outstanding loan, you are also responsible for any shortfall. In some cases, lenders will simply write this off as a loss, in others, they may pursue the owner for the debt.

Lenders insist that they are no more likely to pursue an investor than they are an owner-occupier: decisions are taken on a case-by-case basis. "However, while there is no emphasis placed on pursuing investors rather than owner-occupiers, there is more likelihood of a potential recovery with an investor as there may be more assets to consider," says Mr Warman.

In England and Wales, lenders have 12 years to recover any shortfall, although they must notify you within six years of their intent to recoup the money. In Scotland they have just five years to recover the debt. Interest may be charged on the outstanding amount, but if the investor advises the lender that they are in severe financial difficulty then the interest may be frozen.

While it is rare for homeowners to be forced into bankruptcy following a repossession, it does happen - and is more common where buy-to-let investors have mortgages on several properties from the same lender.

"It is much more difficult to prevent repossession when a lender has lent on numerous properties within a portfolio," Mr Martin says. "In many cases lenders prefer to follow the bankruptcy route."

Anecdotal evidence from Baker Tilly, the accountancy firm, suggests the number of portfolio landlords being forced into bankruptcy is on the increase.

"We are getting more inquiries from buy-to-let landlords," says Geoff Carton-Kelly, head of restructuring and recovery at Baker Tilly. "It tends to be those landlords who came late to the market and who took advantage of spectacularly good loan-to-value ratios," he says. "In order to keep their portfolios working they need to keep remortgaging and trading up, but that game has come to an end because there is no longer the mortgage finance available."

Buy-to-let investors who are facing insolvency will need to make the somewhat unpalatable choice between bankruptcy and an individual voluntary arrangement (IVA).

"Whether you opt for bankruptcy or an IVA depends on a number of factors, not just the size of your debt," Mr Carton-Kelly says. "If you have no other assets - in other words, you have nothing else to lose - then bankruptcy may not be such a bad option. The bankruptcy regime is not as tough these days as it used to be."

However, while that may be true, going bankrupt is still no picnic. Your entire estate will be transferred to a trustee who will sell it in order to pay off your creditors, and you may lose a part of your salary for the term of the bankruptcy, which is usually one year. Any assets you acquire during that time - for example if you inherit some money or receive an insurance payout - could also be seized.

In most cases bankrupts are now discharged with a clean slate after one year, although information remains on your credit file for six years, during which time you will struggle to get credit, you will not be allowed to manage or start a business, and some professions, including accountancy and financial services, will be closed to you.

"If you do have a job and other assets, including your own home, then an IVA will usually be a better bet," Mr Carton-Kelly says.

An IVA is a formal agreement between you and your creditors, drawn up by a licensed insolvency practitioner. Under the terms of an IVA you agree to pay off a portion of your debt over five years. Depending on your circumstances, the portion you pay may be as low as 35pc of the total debt. Unlike bankruptcy, an IVA has the advantage that the creditors cannot pursue other assets, such as your family home.



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