The UK is in a wrangle with the EU over measures to seize aircraft when airlines become insolvent.

A Cape Town convention agreed in 2001 specifies the moves to seize aircraft, but ratification of the move has become bogged down in rows over competence over insolvency rules.

The UK, France, Italy and Germany signed the convention, but the EU initially backed off.

The Commission maintains member states should not make declarations on remedies on insolvency, while the UK and other member states want to be free to do so.

A draft declaration confirming member states retain competence over the substantive rules for insolvency was agreed to enable the Commission to ratify the convention, but the issue has not yet been resolved, according to a report from the Commons EU committee.

Their report said the convention on the extent to which the security of asset finance for aircraft or other high value assets is recognised in national laws is required to reduce risks to the financier and cut the cost of asset-based financing.


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Several major property developers have made preparations enabling them to apply to the High Court for examinership protection at short notice if their banks seek to appoint receivers to their businesses.

One insolvency expert said that several developers had hired accountants to put together independently-audited accounts of their businesses, which are required when an examinership is being sought.

‘‘It is happening all over the place,” he said. ‘‘The banks tend to appoint receivers on a Friday and that doesn’t give the developers much time to put together the required independent accounts over the weekend if they want to try for an examinership.”

The examinership process affords a company protection from its creditors for at least 70 days, with the possibility of a further 30 days’ extension. Creditors cannot petition to have the company wound up during that period which allows for unsecured creditors to have their debts written down.

Receiverships are seen as much more favourable to the banks, because the receiver will immediately go into a company and try to sell off its assets.

It is understood that a number of developers with debts of between €40 million and €80 million have already had independent accounts prepared, in case they decide to seek examinership.

Insolvency experts said the number of examinerships was growing and more would emerge in the months ahead.

‘‘It is up to the courts to decide whether to grant an examinership and it is only useful if you think there is something there to salvage,” said one practitioner.

Banks may not be aware that some of their clients have already done the groundwork for an examinership petition in circumstances where the bank moves to appoint a receiver.


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As recession bites hard, a more despondent, down-at heel group of people than the debtors at the bankruptcy courts in the Strand would be hard to find. Waiting for their papers were mothers with fractious children, weary old men, an Italian singer, a lorry driver, a decorator, a former City trader, and scores more, all with their stories to tell.

Then astonishingly there was Micky waving at me, still with the studs in his nose and eyebrows, an unexpected old friend. He was in the next-door flat when I lived briefly on the Clapham Park Estate, a man I wrote about in my book Hard Work. Once he was a social worker, but when I met him he'd been out of work for six years following a nervous breakdown. So what brought him here today? He smiled, and shrugged. The same as just about everyone else in that waiting room - credit card debts.

He owed £20,000. How on earth did that happen? There was an overdraft and then some cards, until a company offered to sweep all his debts into one - at an even worse interest rate. The most he'd earned was £12,000 a year, and that was a while back, but he was offered all these cards. Recently he called Provident, the lender of absolutely last resort, looking for a loan just to hold off the threatening letters. Yes indeed, they said - but at 184% APR. That's when he finally gave in and went for bankruptcy. "I got another card through my door this very morning saying I'd been 'pre-selected as suitable for a loan' from yet another company. I couldn't believe it. They're still at it. Nothing's changed."

Others round the room joined in, exchanging stories of the same debt collecting companies. "I haven't opened my front door in months," said the Italian singer who owed £46,000, juggled between five credit cards. The lorry driver had shuttled debts between cards for eight years, full of shame, until rolled-over interest swelled to £65,000; he was paying off £1,500 a month, more than the £300 a week he earned. A care-worn mother with a toddler and a baby was too depressed to speak; her brother said she'd been going through a bad time when she accumulated the £10,000 debt, and it just grew. "God knows how they let her borrow all this!"

Few waiting for bankruptcy papers that day had any assets, property, cars; some had lost their jobs. In most cases there was nothing to repossess, though one woman sectioned under the Mental Health Act risked losing her home in Bow, but the registrar delayed it. If ever there was sub-prime debt, here it was. They might have been devil-may-care good-time spenders, but most had struggled frantically to keep up payments, until debt advisers told them to file for bankruptcy.

Registrars and officers in bankruptcy courts express despairing astonishment at how debt was allowed to bubble out of control in recent years and "on-the-never-never" entered the nation's bloodstream. The Enterprise Act that came into force in 2004 toughened anti-cartel legislation, but also sought to "modernise insolvency law" - a symptom of how Labour fell under the spell of City magicians who said deregulation would let the boom rip. Debt and bankruptcy must not hurt risk-taking, they said. Start-ups must be allowed to fail painlessly, so entrepreneurs can pick themselves up and try again. The act discharged bankrupts after a year instead of three. Debts soared, bankruptcies more than doubled and kept rising.

British law is now so lax there is even bankruptcy tourism, especially from prudent Germany where it takes six years to be discharged. A German car dealer with large debts back home was waiting in court that day: he only had to establish a token business here and British law would wipe out his German debts in a year's time.

One wise judge said there was now no reason why the penniless with nothing to lose shouldn't seize every opportunity the credit industry offered to borrow until they bust - then do it all over again. The banks spread the cost invisibly among the rest of their customers in a secret redistribution. It had suited everyone, fuelling high street spending. Luckily for reckless capitalism, the poor are willing to work hard in essential jobs that don't pay a living wage, so they need to borrow: they are mostly honest and easily shamed by debt collectors. That's why banks go on lending to them, as most move heaven and earth to repay.

But while some drown in credit, a credit drought is killing off others. As the real economy shrinks for the first time in 16 years and shares again plunge alarmingly, ministers promise small businesses protection from going bust due to banks refusing loans. Will it happen? The British Bankers' Association retorted this week that the onus is not on banks to keep businesses afloat. "It seems inevitable some businesses will not survive," it said. Already some 280 small businesses are folding every week. Yesterday I was contacted by Powertech, a thriving solar boiler company that has just landed a string of orders worth £3m, including a contract with Aga/Rayburn to fit all new ranges - the fruition of 10 years of development. With new orders from Canada and the US, it needs to hire staff and pay for containers from China. Yet its bankers of many years are refusing more than a £20,000 overdraft. Without credit they can't fulfil orders, and would be bought out.

We the people own so much of the banking system yet still allow banks to use state funds to fatten up their capital assets, instead of giving good credit where it's desperately needed. How is it that bad credit at toxic rates still isn't firmly controlled? A government that this week had nothing to say about Lloyds TSB paying out bonuses from taxpayers' money seems equally incapable of asserting its authority to make banks lend. After being rescued from certain catastrophe, bankers are as full of hubris as ever; and the government is as eager as ever not to interfere, but to sell off its holdings as fast as it can.

Spam in my inbox yesterday from Churchwood Finance offered: "Refused a loan? Judgements, defaults and blacklisted? No problem! Loans from £500 to £250,000." Meanwhile, here's a small test of Labour's willingness to use its new bank ownership well: will the government see that one of the people's banks lends money to Powertech, part of the green future?



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Print management company T.D. Gorman has ceased trading on 8 October following "a number of trading issues" that impacted on the business' cash flow.

Bailey Ahmad's Tom Ahmad and Paul Bailey were appointed as joint liquidators by the members and creditors of the London-based company, which traded as TDG Print Management.

T.D. Gorman has since been placed into creditors' voluntary liquidation on 22 October and its seven staff were made redundant on 8 October.

Bailey said: "There were a number of trading issues that occurred during 2008 which impacted cash flow.

"Without the availability of outside investment, director Tom Gorman was left with no alternative but to cease trading and ask for our professional assistance with the winding up of the company."

The TDG Group consists of three companies, TDG Print Management, TDG Artwork Management and Colour Point Studio.

Bailey said that none of the other inter-company entities are in an insolvency process.

The TDG Group was set up by Gorman in 1998 and the T.D. Gorman's largest client was the Body Shop.

At the start of the year, the TDG Group signed a 12-month agreement with global delivery services giant TNT Post.

Tom Gorman said at the time that he hoped to increase turnover from £6m to £8m in 2008. T.D. Gorman’s turnover for 1 April 2007 to 31 March 2008 was £5.1m.


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Britain’s Pension Protection Fund may have a seat at the Lehman Brothers creditor’s table in the US when it comes to divide the proceeds of the liquidated group among lenders, according to the administrator of its UK pension fund.

The PPF said on Wednesday that the Lehman Brothers Pension Scheme had entered the stage where a full accounting of assets and liabilities takes place to determine whether there is enough money to ensure all guaranteed benefits are paid.

If there is a shortfall, that will be covered by the PPF which, in turn, will seek a share of proceeds of the liquidated group.

Jonathan Land, partner in the pension credit advisory business at PwC, said the trustees of the UK scheme had taken the precaution of securing a guarantee of benefits from the parent company some time before it became insolvent in September.

That makes it a creditor of the parent company rather than of the UK subsidiary and gives it a greater chance of recovering losses.

A recent legal decision in favour of the UK Pension Regulator in respect of US-based Sea Containers’ UK scheme has established the pension fund as a creditor entitled to share proceeds of companies in bankruptcy.

Mr Land said that there might not actually be a shortfall of funds available to pay PPF-level benefits.

The scheme is funded on an accounting basis typically 90 to 110 per cent of benefits guaranteed by the PPF.

The PPF pays 90 per cent of promised pension benefits up to a cap of about £28,000 and does not pay for inflation proofing in respect of benefits accrued before April 1997.

Lehman Brothers closed its defined benefit scheme to new and existing members in 1999.


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Gold Bullion prices slumped yet again early Thursday as world stock markets sank and the Dollar continued to rise – alongside the Japanese Yen – on the forex market.

Gold's fresh $25 plunge took this week's loss for US investors above 10% at $705.40 an ounce – Spot Gold's lowest price since mid-Sept. last year.

"People are liquidating gold and other commodities as their losses in stock markets deepen," said one Tokyo research analyst to Bloomberg this morning.

Hedge funds worldwide – a key source of leveraged speculation in Gold Futures between 2003 and '07 – "lost 4.6% of their value in September," reports the London Times, "the biggest monthly fall since data began in 2000."

Today the Kospi index of South Korean equities lost 7% in frantic trade, while the FTSE100 index of UK shares dropped through 4,000 for the third time this month – a level last seen in mid-2003.

Lead, copper and nickel prices fell by 7% at the London Metal Exchange (LME) this morning. Crude oil added a dollar to $68 per barrel.

"The global credit crunch has been the Dollar's salvation," notes Steven Barrow at Standard Bank in a note to clients.

"When blind panic grips a market – as it has done since Lehman Brothers collapsed – all anyone worries about is ditching positions and returning to the safety of cash.

"The fact that most of these positions seem to have been short of dollars – along with many short-Yen positions – has caused this huge Dollar surge."

The US currency today pushed the Euro back to Wednesday's two-year lows at $1.2750. The Yen hasn't been this strong against the Euro since the end of 2002.

The Japanese currency has now regained half of the 45% drop it suffered between Sept. 2000 and July '08 in the last 12 weeks alone.

Today the Gold Price in Japanese Yen – which fell through ¥3,000 per gram at the start of Oct. – took this week's losses above 15%, finally bouncing off a new two-year low.

On the economic front, Japan's balance of trade in goods sank 71% last month compared with Sept. '07. Consumer electronics giant Sony today slashed its earnings forecast for the year-to-March '09 by more than one-half.

New industrial orders in the 15-nation Eurozone sank almost 7% in August from the same month last year, the official data agency said this morning.

Europe's net trade balance sank to minus €8.4 billion ($10.8bn).

The Swedish Riksbank today slashed its key interest rate by 0.5% – the second such cut this month – after slashing its 2009 growth forecast to just 0.1%.

"Gold has fallen below the psychological $750 support and below the technical support at $730," notes Mitsui in London. "Physical demand remains strong, and you can expect this to continue in the short term.

"[But] the market feels heavy...and one has to wonder if there is long-term value in sub-$700 gold?"

Speaking to Bloomberg last night, "I think physical gold will go down some more, but as an insurance policy I'd be very happy if it went down first, allowing us to buy more," said Marc Faber – former head of Drexel Burnham Lambert in Hong Kong and now, besides running private-client portfolios from his base in Thailand, editor of the widely respected Gloom, Boom & Doom Report.


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Oryen Mortgage Packagers has become the latest victim of the credit crunch after the firm placed itself into voluntary liquidation.

On Monday the firm consulted with an insolvency practitioner and it was decided that voluntary liquidation was the best option for the firm going forward.
Oryen, which was also a member of the Association Mortgage Packagers and Distributors, had been going for 10 years after it was started in July 1998.

As part of the rules surrounding liquidation the firm is able to enter into a commercial arrangement with other firms to deal with its pipeline business.

Andrew Hewitt, operations director of Oryen, says: "It really was something that we felt honour bound to do purely because with the amount of products left for us to package and sell, we didn’t see any future in the short term to continue.

"So we took advice and it really was a question of whether we invest more of our personal money. But with no upturn in sight decided it was best to place it into voluntary liquidation.

"We are confident that pipeline business will see completion and we will obviously safe guard brokers.

"My personal opinion is that I don’t see that there is any room for packaging as we’ve known in the next 12 to 24 months because the profit margins aren’t there.

"When there is nothing left to sell where do you go?"



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Debenhams moved to reassure investors over its near-£1bn of net debt yesterday as it revealed a sharp fall in annual profits, a halving of its dividend and deteriorating sales ahead of the Christmas trading period.


Rob Templeman, the chief executive, vowed to cut its debt over the coming year, partly in response to concerns in the City. He said: "In this environment, the market does not like a lot of debt."

Over the 52 weeks to 30 August 2008, Debenhams reduced its net debt to £994m from £1.02bn.

Mr Templeman said that if Debenhams' profitability holds up, it has the "ability to deleverage a lot faster than people think". Debenhams plans to cut capital expenditure to £90m, from £129.1m the previous year, by opening fewer stores and tighter stock control. It expects to deliver a further £10m to £15m of cost savings this year, following the £20m already delivered. The department store chain is to cut its full-year dividend to 3p from 6.3p last year.

Over the year to 30 August, Debenhams posted full-year profits before tax and exceptionals down by 16.9 per cent to £105.9m. It increased total sales from £1.77bn to £1.84bn, but its like-for-like sales fell by 0.9 per cent over the year. Underlying sales fell 4.2 per cent in the six weeks to 11 October, against strong sales for the same period last year, reinforcing the view that retailers are heading for one of their toughest Christmas trading periods since the 1970s.

Mr Templeman said that fears over rising unemployment were hitting consumers' confidence more than the banking crisis. He added: "It is incredibly volatile at the moment. We are seeing big swings from week to week, which is making it difficult to forecast."

According to TNS Worldpanel, Debenhams grew its total share of the clothing market by 0.3 per cent for the 26 weeks to 17 August. Mr Templeman said that sales of its designer ranges were "holding up". He said that sales of gifts such as pasta sets, jelly beans, flying toys and iPod cases are "incredibly strong". He added: "This is partly because our ranges are a lot better, but people could be shopping a bit earlier before the big bills start hitting."

Internationally, Debenhams is putting on hold plans to enter the Russian retail market in order to focus on the booming markets of the Middle East and India. During 2008, Debenhams opened 10 new international franchise stores overseas, including in India, Jordan, Saudi Arabia and the United Arab Emirates.

Mr Templeman said that Debenhams was not interested in purchasing the debt of fashion retailers such as Karen Millen or Coast, which are backed by the beleaguered Icelandic investor Baugur. "Where Debenhams is today I would not want to add to the debt structure – unless it is a slam-dunk deal."



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It is often said that death, divorce and moving house are the three most stressful events in a person's life.

As a licensed insolvency practitioner with some 25 years experience in England and Wales, I can confidently say that serious financial difficulty should be up there too in terms of the stress generated.

All the more so at the moment when very few of us are moving home but lots of us are starting to encounter money problems.

So just what are the signs that you may be starting to struggle financially, who should you turn to if you are, and how do situations like this tend to be resolved?

Before we get stuck in I would like to say one thing: it rarely turns out to be as bad as you think it is, and debt problems do not automatically mean you lose your home.

Are you struggling?

The main signs that you may be starting to struggle financially are if you are:

falling behind with your mortgage
increasingly having to live off your credit card just to make ends meet
having to take credit from parties that you would not normally take credit from
borrowing money from family or friends to pay pressing creditors
borrowing from Peter to pay Paul.
Clearly, you should try to cut back on any unnecessary spending so that you can divert some income towards paying off your debts, or at the very least try to stop them getting bigger.

But if that is too difficult to achieve, or is unlikely to have much effect anyway, then you should seek professional advice from an insolvency practitioner.

What I always try to drive home is that the sooner you do this, the more options you will have for resolving the situation.

Burying your head in the sand only makes the situation worse.

What is an insolvency practitioner?

Technically speaking, an insolvency practitioner is a professionally qualified person who is licensed to advise and act in relation to an insolvent individual, partnership or company.

Most insolvency practitioners offer an initial consultation free of charge and without obligation


In plain English, and as far as you are concerned, it is someone who knows how to resolve the sometimes grim financial situations people find themselves in as quickly and as painlessly as possible.

Insolvency practitioners are not only licensed but are also required to have professional indemnity insurance, as well as specific insurance on a case-by-case basis.

In addition, they will be regulated by one of a number of bodies, for example the Institute of Chartered Accountants.

And believe it or not, we are human, too. A lot of people expect us to be stern, Dickensian characters dressed in dark suits and are pleasantly surprised when we speak the same language as they do and are actually warm and sympathetic.

The meeting

However dire you think your own situation is, an experienced insolvency practitioner will have seen it all many times before and you should not feel embarrassed or uncomfortable about telling them absolutely everything.

Indeed, without full disclosure the insolvency practitioner will not be able to offer you the best advice.

The insolvency practitioner will start by asking you a number of questions relating to your income and expenditure, assets and liabilities in order to get a clear picture of your particular circumstances.

You should therefore take along with you a list of all your assets and liabilities, as well as details of your, and your partner's, income and expenditure.

Having gained an insight into your situation, the insolvency practitioner will explain the different options available to you, the benefits and pitfalls of each, and will answer the many questions you will undoubtedly have.

As a result, you will become much better informed and be able to make a rational decision about how you wish to proceed.

The insolvency practitioner will also fully explain any costs associated with each option and what options there are if you have no funds or only limited funds available.

For example, some insolvency practitioners will agree to draw fees over time rather than be paid up-front.

But if you have no income or assets, it is more likely that bankruptcy will be the way forward.

Given that most insolvency practitioners offer an initial consultation free of charge and without obligation, there really is nothing to lose.

The IVA

Subject to your own personal circumstances, an insolvency practitioner may propose an Individual Voluntary Arrangement (IVA).

An IVA is a legally binding arrangement with your creditors that an insolvency practitioner will help to put together in order to give you the necessary breathing space to get your affairs back in order.

The creditors will be given an opportunity to examine what is being proposed and if they agree to it, they will effectively take a back seat while you take the steps necessary to implement the arrangement.

For example, the arrangement might be for you to pay a proportion of your future income into a fund over a period of time so that at the end of the agreed duration of the agreement creditors are paid more than they would have been had you been declared bankrupt at the outset.

Alternatively, the arrangement might be for a third party to introduce funds for the benefit of creditors so that they agree to accept a lower sum now than that which is due, but in full and final settlement.

In many circumstances, you may be able to retain the ownership of your private residence.

After the initial consultation, setting up an IVA may well cost about £1,500, and probably more if your affairs are complex.

Bankruptcy

If an IVA is not appropriate for you, then it may be that bankruptcy is the way forward, which will involve going to your local county court to start the process.

A bankruptcy usually lasts for 12 months but can be less in many circumstances, and often you can continue to work during it.

After the conclusion of the bankruptcy, you are "released" and can carry on rebuilding your life.

With bankruptcy, a professional person, known as a trustee, is appointed by the court to realise any assets you may have and to deal with your creditors.

The main asset most people possess is their house.

However, if a spouse and/or children are involved, a trustee cannot dispose of the house for at least 12 months, and often may have no interest in it at all.

It is a common misconception that going bankrupt means you automatically lose your house.

This is not the case and the outcome will depend on the value of the house, the outstanding mortgage, the level of any other interest in the property and the circumstances of the case generally.

It is also a common misconception that bankruptcy brings it with a social stigma. Thirty years ago, maybe. Today, not at all.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.



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Pensions | View All

Top pension schemes face increasing risk of corporate insolvency
By Maryrose Fison | 09:37:00 | 21 October 2008

Equity price movements will have a 'significant impact' on pension schemes, with one quarter of FTSE 350 schemes exposing more than half of their assets to the stockmarket, says pension consulting firm Mercer.

Figures from Mercer’s latest research revealed a 21% decline in UK equities over the past 18 months.

But it said that despite the volatility, there had been an investment bias towards return-seeking assets, leaving exposure to equity market volatility accounting for a substantial portion of total risk.

Dr Deborah Cooper, principle in Mercer’s retirement business, said recent equity market falls had been ‘offset’ on an accounting basis by falls in liability values, meaning company balance sheet liabilities would not have increased by as much as was expected.

But she warned against complacency.

‘This will not always be the case. Those schemes most exposed to equity markets continue to present the highest risk to their sponsoring employer, especially with the uncertainty in global financial markets,’ she said.

‘Recent high profile corporate failures act as a stark reminder of the very real risk of sponsoring employers becoming insolvent, which could leave members with reduced benefits if funding levels are low,’ she added.

As of 30 September 2008, the aggregate funding level of the FTSE 350 was 100%. By contrast, the funding levels at 31 December 2007 and 30 June 2008 were 97% and 90%.



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UK – Trustees must respond to the threat of corporate insolvency and should consider their exposure to counterparty risk, Mercer warns.

The consultant said FTSE350 pension schemes were “heavily exposed” to market fluctuations and faced an increasing risk of corporate insolvency and volatile funding levels.

Its report highlighted the growing threat of counterparty risk and corporate insolvency as fall out from the economic crisis, and called for greater diligence by trustees and companies.

Mercer principal Deborah Cooper said: “This counterparty risk originates from schemes’ reliance on the ability of external entities to meet their obligations and relates to positions in investments such as swap contracts.

“The demise of some of the world’s largest banks shows that, while risk can be mitigated and transferred, eliminating it altogether is nearly impossible.”

The report also noted that there remained an investment bias towards return-seeking assets, so exposure to equity market volatility still accounts for a substantial portion of total risk.

The headline equity proportion was estimated at 47% for FTSE350 companies. However, 25% of FTSE350 companies continue to hold over 60% of their pension scheme assets in equities.

Cooper added: “Schemes have reduced their exposure to volatile ‘return-seeking’ assets in recent years, with a marked increase in bond holdings, but often for good reasons they remain considerably exposed to equity markets.

“Those schemes most exposed to equity markets continue to present the highest risk to their sponsoring employer – especially with the uncertainty in global financial markets.”

However, despite current market volatility, using standard accounting measures, defined benefit (DB) funding levels have not been hit as hard as drastic stock market falls might have expected.

When measured using IAS19, the aggregate FTSE350 pension scheme had a surplus of £1bn (US$1.75bn) as at 30 September this year.

Mercer's concerns echoed the sentiment of The Pensions Regulator head of scheme-specific funding Ian Cordwell, who earlier this month warned trustees it was likely scheme sponsors' assets would have been depleted by the credit crisis.

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As of today Debtsgone Limited is located in our new offices at:

3rd Floor,
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Silver Street,
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DN1 1HL

Our Fax and phone lines remain the same.


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Fallen soccer star Paul Gascoigne is facing the threat of bankruptcy over massive debts to the taxman.

His finances will be probed in court by the Inland Revenue at London's High Court on November 6.

The ex-England ace, 41 - who has been battling booze and drugs addiction - has just £250,000 left of his £14million fortune.

Court papers give his address as his father's home in Gateshead, Tyne and Wear, and his occupation as "unknown". Gazza was once one of football's highest paid stars becoming a millionaire overnight when he was transferred from Newcastle to Spurs in 1988. And over the years, the money poured in.

He secured a £1.25million-a-year wage deal when he joined Italian giants Lazio in 1992 on top of a £1milliona-year boot contract.

His divorce from former wife Sheryl cost him a one-off payment of £1million-plus maintenance and he has lost huge sums in failed business ventures including a clothes store which went bust.



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THE number of bankruptcies in Scotland has jumped again following the introduction of new rules making the process easier, official figures show.

The Accountant in Bankruptcy said there were 4,055 cases between July and September this year, 42 per cent more than in the previous quarter and an increase of 162 per cent on the same time last year.

The figure forms part of the total of 5,998 individual insolvencies in Scotland in the second quarter of this financial year – up 27 per cent on the previous quarter and 70 per cent on the same period in 2007.

The statistics, published by the Scottish Government, also showed that 289 notices of companies going into liquidation or receivership were received over the past three months, an increase of 30 per cent on the previous quarter and a rise of 43 per cent on the same time last year.

Protected Trust Deeds – a voluntary arrangement by which debtors pass their estate to insolvency practitioners – were down 2 per cent on last year at 1,943.

The government said the increase could be due to the introduction on 1 April of a new route into bankruptcy for people who have a low income and low assets.

The Bankruptcy and Diligence etc Act 2007 introduced the Low Income, Low Asset route, allowing people who meet the relevant criteria to apply for bankruptcy without proving apparent insolvency.


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The biotechnology sector looks likely to be hit by a wave of bankruptcies and failures as small companies find themselves out of funding and out of options.

On Thursday, Cell Genesys Inc (CEGE.O: Quote, Profile, Research), which was formed 20 years ago to focus on gene and cell therapies, said it is considering its alternatives, including liquidation of the company, after its experimental prostate cancer drug failed a late stage trial.

Last week, 15-year-old Atherogenics Inc filed for Chapter 11 bankruptcy protection due to an intolerable debt burden that hampered development of its experimental diabetes drug. This week the company's shares were delisted from Nasdaq.

"These are old-school biotech names," said Christopher Raymond, an analyst at Robert W. Baird. "Usually such names can get funding at some level, or someone will buy them before that, so it is very unusual and represents another data point showing that things are not peaches and cream."

The pain being felt by biotech companies who find themselves shut out of the capital markets, or who suffer the blow of a failed product, represents an opportunity for pharmaceuticals companies, which need new drugs to fill their pipelines as major products lose patent protection.

John Lechleiter, the chief executive of drugmaker Eli Lilly and Co (LLY.N: Quote, Profile, Research), said in an interview that his company plans to take advantage of the desperation in the sector to make further acquisitions, even as it executes its recent $6.5 billion acquisition of ImClone Systems Inc (IMCL.O: Quote, Profile, Research), which makes the cancer drug Erbitux.

"Certainly traditional sources of funding and the traditional capital markets that biotech companies have accessed are withering right now," he said. "I think you can expect us to be opportunistic."

Over the past two years, shares of small cap biotech stocks, defined as those with a market value of less than $500 million, have fallen an average of 30 percent. Shares of the large-cap biotechs have risen 25 to 30 percent over the same period.


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Gordon Brown was accused today by the Tories of "irresponsibly" having claimed to have abolished boom and bust as unemployment rose to its worst level since 1999.


Commons leader Harriet Harman acknowledged that ministers were "very much concerned" and not at all "complacent" about the jobless situation.

Standing in for the Prime Minister, who is at a European summit in Brussels, she told MPs it was a "serious moment" for the economy and - using a slogan recently adopted by Tory leader David Cameron - insisted Mr Brown was a "man with a plan".

Shadow foreign secretary William Hague, leading for the Tories, said the lengthening dole queue marked a "grim day" for the British economy.

He branded Mr Brown's boast to have abolished boom and bust "one of the most foolish, one of the most hubristic, one of the most irresponsible claims ever made by a British Prime Minister".

But Ms Harman warned him against "writing off" the British economy, which was made of "sterner stuff," and insisted the Government was determined to take action to "see this country through".

Mr Hague said: "On the day we discover unemployment has risen by 164,000, the largest rise in 17 years, it is a grim day for the British economy and a time of anxiety for many families.

"Given that many companies have been hit by the credit problems, if they can be given some breathing space, job losses can be reduced. Will you now reform the insolvency laws along the lines that we have proposed?"

Ms Harman said the Government had already changed the insolvency provisions under the Enterprise Act in 2003.

"As far as unemployment is concerned, yes, we are very, very much concerned about unemployment and we are not complacent at all about the situation - despite the fact that unemployment is considerably lower than what it was in 1997."

She said the Government had announced £100 million extra to help people who lost their jobs to retrain.

"There are still 600,000 vacancies in the economy and we need to help people who lose their jobs get new jobs.

"There will be extra help too for those who become unemployed, who are homeowners. Instead of having to wait 39 weeks before they get help to pay their mortgage, there will be help after 13 weeks."

Mr Hague said statements about the situation in 1997 may now be regarded as being "complacent," given that unemployment was now expected to rise to three million by 2010, exceeding the rise in the early 1990s.

He said the £100 million programme announced by the Government was spread over three years. "That amounts to £18 per year for each unemployed person.

"And that money has already been allocated to the skills budget and already been announced."

He said it would be a good idea to adopt the proposal made by the Conservatives and save thousands of jobs from going under.

Ms Harman said again that changes in the insolvency laws had been made five years ago, adding: "We are not complacent about the situation in the economy.

"We have made no bones about the fact that our economy faces hard times. But nor should you write our economy off. Our economy is made of sterner stuff.

"The Chancellor and the Prime Minister have said we will take every action we can, not only to stabilise our economy nationally, but to work internationally with other governments to stabilise the global system. That's why he's not here today."

Mr Hague said: "I'm glad you aren't complacent because you wrote in your blog in February that 'people know there is global financial turbulence but are not worried about their own prospects in 2008'.

"Perhaps you will now acknowledge that is no longer the situation.

"If you won't take the measures on insolvency we have proposed, I want to ask about another group of people hit in recent days by the economic crisis - people who have retired, one such group being pensioners forced to buy an annuity on retirement or at age 75."

Mr Hague said they would be "locked into a lower income for the rest of their lives" and again urged the Government to suspend this rule, adding: "Can you now cut through the delay and announce a decision, to suspend this rule, helping the incomes of thousands of pensioners into the future."



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Linens ‘n Things, the US retailer of housewares and homewares that filed for bankruptcy protection in May, is going up for sale at auction today.

One potential bidder, a joint venture group, is looking to liquidate the company. However, Linens 'n Things says there is also interest from other parties that want to operate all or part of the remaining business as a going concern.

The chain has suffered a sales decline of up to 30% in some weeks since the bankruptcy, with customers believing the stores had gone out of business, and a lack of merchandise exacerbated by nervousness amongst suppliers.

Linens 'n Things originally operated almost 600 stores but has sold a significant number since May.



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WORK has been stopped on a development of apartments in Millom.

The firm, which is registered as being based at Montgomery Way, Carlisle, went into compulsory liquidation in May, casting doubt on the future of the development.

Finedale was granted permission to build the flats four years ago, but the property has been left untouched for around six months, with scaffolding being up for more than three years.

Kay McMahon, of Barrow-based Speedier Scaffolding, said the scaffolding surrounding the building was being taken down this week.

Mrs McMahon added: “We’ve not had any payment for some time and although they did pay some of the bill, they’ve not paid a lot.”

Another firm registered at the same address as Finedale – Briarwood Homes (Cumbria) Ltd – went into compulsory liquidation in June, after the government applied for a court order because of unpaid tax bills to HM Revenue and Customs.

Briarwood director, David Simpson, of Beckside, The Green, said: “Briarwood Homes was wound up after problems between ourselves and the highways department, but they (HM Revenue and Customs) have already taken £80,000 towards the debt.

“I used to be director of Finedale but I’m not anymore.”

Tony Gravel, representing SHM, is the official receiver for Finedale.

He said SHM plans to sell the flats as they are.

David Shaw, of Totality Solutions, is the insolvency practitioner dealing with any creditors who may have a claim against Briarwood Homes.

He can be contacted on 0870 4958695.

The directors of Finedale are Steven Watkinson, of Spring Gardens, Grizebeck, Colin Mason, of Monument Way, Ulverston, Paul Walters, from Cleveland, and Gordon Wiggins, of Skipton.

As well as David Simpson, other directors of Briarwood Homes include Colin Mason, Gordon Wiggins and accountant Leslie David Ackerley, who lived at Foxcroft, Haverigg, but who moved to Chester a year ago.

All assets of both firms will be sold off to pay outstanding revenue taxes and anything remaining will be divided up between creditors, which include the Royal Bank of Scotland.

Assets of Briarwood are stated on Companies House records as 7 Ruskin Close, Millom, and land off Lowther Road, Millom.



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ALEX Salmond insisted yesterday that Scotland would have been better off in the current economic crisis had it been independent.
The First Minister was responding to Labour claims that an independent Scotland would have experienced the sort of difficulties currently affecting Ireland, which is in a recession, and Iceland, which has had a banking meltdown.

Mr Salmond argued that Scotland would have been able to act quickly and decisively, like Ireland had done, to restore confidence in its banks, and might have been more like Norway, which is cushioned by a multi-billion-pound oil fund.

The argument was started by Jim Murphy, the new Scottish Secretary, who seized on remarks made by Mr Salmond several years ago when he praised Ireland, Iceland and Norway as the "arc of prosperity" and said Scotland should aspire to join that group.

Mr Murphy derided the three countries as the "arc of insolvency".

But Mr Salmond responded by insisting that Ireland and Iceland were not suffering because of their size, but because of the global crisis.


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Dave Whelan believes the time will come when a Premier League club is left in a financial crisis because their foreign owner "spits his dummy" and quits.

With nine Premier League outfits having foreign owners, Wigan chairman Whelan said it is probable that one will walk.

"I can see a foreign owner spitting his dummy and leaving a club piled high with debt," he told BBC Radio 5 Live.

"When it does happen I think it will be an awful shame for that club, which is left with £100m to £150m of debt."

Only last week, Football Association chairman Lord Triesman spoke of the financial dangers facing Premier League clubs, who have accrued an estimated £3bn debt between them.

And speaking to the Sportsweek programme, Whelan, who conceded that Wigan's debt stands at £22m, said that a form of salary capping was the only way to avoid a club from England's top flight going into receivership.

"There is no doubt that Europe is very, very jealous of the Premier League," he stated. "The more we dominate Europe, and last year we had both teams in the Champions League final, the worse it's going to get."

"Uefa are going to say things about debt and I agree. What we should be doing is limiting the debt a club has.

"Let's say 25 or 30% of income and you can't have any more debt on the balance sheet than that. If you do you're breaking rules and get points deducted.

"It is a salary cap but I think it would regulate clubs and stop these awful things happening when clubs go into receivership."



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The landscape for British savers shifted, it seemed, almost by the hour last week. From the failure of Landsbanki and its Icesave deposit arm to the dramatic bailout of British banks, savers could have been forgiven for wondering whether they were coming or going. However, one question probably dominated their thoughts: how safe is my money?


If anything, the position over government guarantees is even less certain than it was following the Icesave failure. The Government stepped in on Wednesday to guarantee individual customer deposits in the Icelandic internet bank – although not those of local authorities – regardless of size. And Lord Turner, head of City regulator the Financial Services Authority, was correct in arguing last week that "not one individual saver has lost a penny since this thing [the credit crunch] started".

However, the official guarantee for deposits is still set at £50,000, or £100,000 for a joint account. As a result, it is unclear whether the Government will choose to lift that limit or stick strictly to it in the event of another banking collapse.

"During the early part of last week we saw a quiet run on the banks, with depositors moving their money out into Post Office accounts or National Savings, or even just keeping it at home. The Icesave measure, combined with others taken last week, should hopefully stop this," says Jasmine Birtles from financial advice site Moneymagpie.com. "But while the decision to refund Icesave customers was welcome and should help to restore some confidence, we need to know what will happen if a bank fails again,"

Interestingly, National Savings felt the inflows of cash were so healthy last week that it lowered the interest rates on some of its key accounts. Meanwhile, Northern Rock, now a fully nationalised bank, has virtually shut its doors to new savers. This way, neither organisation can be accused of actively trying to attract saver cash from the troubled high-street banks.

The eventual compensation bill for Icesave could be as high as £4.5bn, which would make it the biggest payout in the history of the Financial Services Compensation Scheme. "You have to ask: if there were any further calls on the FSCS, how much more could it reasonably fund? What is already pledged is coming from government coffers – which means taxpayers," says Andrew Hagger at information website Moneynet.co.uk.

Disturbingly, Icesave, although a high-profile new entrant to the UK savings market, was only a bit-part player. If one of the really big names were to go belly-up, the consequences could be a lot worse.

What's more, even if the compensation scheme were to work under such duress, savers might be surprised that there is a big caveat to the compensation regime. "If a bank goes insolvent then the practitioner sorting out the mess will offset your credit balance against your debt," adds Mr Hagger. "This means that if you have savings and a mortgage with the same bank and it goes under, you will only get back whatever is left after your savings have been used to meet the mortgage debt." So, for example, a customer who has savings of £50,000 and a mortgage of £100,000 with an insolvent bank could actually end up owing £50,000 to the receiver.

But a UK banking insolvency is unlikely, say the experts, as the Government offered last week to shore up the balance sheets of seven big banks and the Nationwide building society. "We have to believe the plan will do the trick and British banks are healthy enough now that they are protected from insolvency," says Ms Birtles.

Nevertheless, financial advisers are urging people to spread their money between providers to keep below the £50,000 limit. "No one wants to take risks and we are definitely advising clients to spread themselves around," says Keith Churchouse from independent adviser Churchouse Financial Planning. "Another thing people need to be aware of is to avoid having more than one account with the same banking group, as they will only be entitled to a single £50,000 limit. For example, people with £100,000 spread between Birmingham Midshires and the Halifax will only be covered up to £50,000 as they are both part of HBOS."

In the same vein, and in light of the Icesave collapse, Mr Churchouse suggests savers steer clear of foreign- owned institutions: "The system of passporting – whereby foreign banks are allowed to trade in the UK because they are regulated at home – needs to be reviewed urgently. It has clearly failed with Icesave and what is the point of receiving a bumper rate of interest if the bank goes and collapses and you can't get your money back?"

Instead Mr Churchouse advises people to stick to the long-established British banks, the biggest of which can now call on the Government for funding under the deal that was announced last week.



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Angry local businessmen confronted football tycoon Kevin Heaney as he was forced to come face to face with his creditors over his failed house-building firm.
The heated exchanges came at the liquidation meeting regarding the Truro City Football Club owner’s company Cornish Homes (UK) Ltd in Exeter today.
The official report by liquidators The Kelmanson Partnership identified 162 businesses and individuals owed money by the company when it folded. A further four were listed as creditors but owed ‘nil’.
Mr Heaney, reported to be worth £145 million in the Sunday Times Rich List, told the meeting he had done nothing illegal and was hurt by the firm’s failure, which he blamed on the credit crunch.
One of the few creditors who attended, Derek Giles, whose Helston-based construction company DA Giles was owed £38,222 for work at Truro City’s grounds, said: "I’m pretty fed up really.
"Our debt was not with Cornish Homes but Truro City Football Club.
"We were told to invoice Cornish Homes and subsequently it’s not being paid."
Mr Giles also said he feared he would have to let staff go due to the debt.
John Kelmanson, who is handling the liquidation investigation, said after the hearing: "It was a long and heated meeting where concerns were expressed by creditors represented which will be forming part of my investigation into the affairs of the company as the duly appointed liquidator.
"The company has gone into voluntary liquidation and will not trade under that name again.
"There are connections to his other companies within the group that have becom


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LONDON (Reuters) - More unlisted European property funds aim to extend planned expiry dates to avoid selling assets into freefalling property markets, a study by industry body INREV showed on Wednesday.

INREV's Fund Termination Study 2008 showed almost 60 percent of real estate funds due to wind up in 2008-2010 are set to be extended in an attempt to protect returns until investor demand for property recovers.

Just 29 percent of funds due to wind up in 2008-2010 plan to liquidate when originally planned, compared with 52 percent of funds in 2007, the report showed.

"Currently, the flexibility of a one-to-two year extension is attractive from a timing standpoint as it delays the need to decide whether to sell assets into a market where capital values are falling," Andrea Carpenter, INREV Research director said.

"This is particularly the case for funds invested in the UK, where the credit crunch has hit hardest so far, and where nearly half the funds surveyed are investing," she added.

The study said investors and fund managers rarely disagreed on proposals to extend the life of property funds to exploit or circumvent extreme market conditions.

When European property prices were soaring in 2006, short-term extensions were popular among fund managers who wanted asset sales to coincide with the peak of the market.

But since the market downturn gripped in summer 2007, an increasing number of managers have persuaded investors to roll over their investments to give more flexibility in the timing of the exit.

However, INREV warned some extension plans could be hindered by an acute shortage of credit.


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Greater Manchester-based pram and children’s furniture retailer The Baby has been put into liquidation less than 18 months after it opened a large showroom in the city centre.

A sign attached to the window of the Cheetham Hill Road premises said the company had ceased to trade on October 5 and this was today confirmed by Manchester-based liquidator Leonard Curtis. All of the company’s 20 staff have been made redundant.

Despite figures showing that the UK is currently experiencing a baby boom, the retailer is believed to have struggled as it serviced the higher end of the market. Increasing rent was also believed to have become an issue as consumer spending slowed.

The Baby was founded by former Daisy & Tom directors Janet Rawnsley and Liz Stephenson four years ago. According to its latest accounts for the year to the end of September 2007, it had fixed assets of £189,764, up marginally from £185,609 a year earlier. Shareholders’ funds decreased significantly to £26,894 from £152,398.

The company, which was backed by Richard O’Sullivan, the former managing director of Millie’s Cookies, and Bill Holroyd, had its original outlet on the Stanley Green retail park near Cheadle.

John Titley, director at Leonard Curtis, said: “Unfortunately the business ceased to trade on October 5 and all 20 staff were made redundant. The business will be liquidated at the end of this month and we will endeavour to recover losses for creditors. No returns are being made to shareholders.

“It is a tough retailing environment, and The Baby is one of a number of smaller retailers that has struggled in the wake of the credit crunch.”


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Pfandbrief literally translates to “collateral letters” in German. We think. It always reminds us of Pfannkuchen (pancakes) though.

Regardless of its literal meaning, the word’s been in the news more than usual recently, thanks to the bailout of Hypo Real Estate.

The German bank was thrown a second lifeline last night after a first rescue package (involving a consortium of other banks pledging to provide liquidity support) fell through. That package broke down, reportedly, after the other banks found out Hypo needed more than the €35bn first discussed. That bring’s last night’s bailout to about €50bn and has left some analysts scratching their heads, with good reason.

There’s an irony here. Hypo was the uber-cheerleader (and issuer) of the ultra-safe German covered bond - the Pfandbrief. It’s funding, like its Pfandbriefe, should have been relatively safe.

Pfandbriefe are more highly regulated and require less leverage than similar commercial mortgage backed securities (CMBS). They also remain on banks’ balance sheets –allowing them to borrow against them.

Thus while CMBS pretty much died in recent credit-crunched months, research from Eurohypo shows that €58.5bn of Pfandbrief loans were issued in the past 12.

As FT Deutschland notes today, Pfandbriefe have also benefitted from an implicit government guarantee that Berlin would never let an issuer fail. We’ve seen that in action over the past week with Hypo.


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'I'm worried and I can't sleep,' says Steve Marks. 'The stress really isn't helping my health.'

Steve [not his real name] is one of more than 500 people who last Monday rang the National Debtline, the free and confidential helpline for anyone with a debt problem. His level of debt is typical of callers: he is £500 in arrears on his mortgage, more than £1,000 behind in council tax payments and owes £23,000 on three credit cards. It is all getting too much for the 38-year-old father of three from Leicestershire.

It wasn't the first time Steve had rung. This time he had been concerned about a visit by a debt collector pursuing an unsecured bank loan from HSBC. 'I'm being harassed,' Steve complains. 'They've been ringing me at work and then a complete stranger turns up at my house and won't even give me his name.'

Naomi Harflett, one of 48 advisers on duty at the Birmingham-based call centre, advises him that debt collectors have to comply with the Administration of Justice Act, which expressly bans threatening behaviour.

She takes the opportunity to remind Steve that the loan he is being pursued for isn't necessarily the debt he needs to attend to most urgently. 'You must sort your priority debts - mortgage arrears, gas and electricity and your council tax - from non-priority debts,' she says. 'You must make sure that you keep paying the priority debts.'

Steve is stretched though. He has agreed to pay £70 on top of his monthly mortgage repayments to clear his arrears, £100 a month in another deal with the bailiffs over his council tax and £20 a month to each of his creditors. Harflett is anxious that Steve has over-committed himself. 'Do you know if what you've offered is affordable?' she asked. No, Steve didn't.

The National Debtline is on the front line of the credit crunch. Paul Mullins, the charity's chief executive, reckons its advisers will take 200,000 calls this year. 'We have just come to the end of the third quarter for 2008 and demand is 30 per cent higher than last year,' says Mullins. 'In the second quarter it was about 15 per cent higher. We're about to enter a period where demand is going to rise very rapidly.'

The helpline, which gets one third of its funding from government and the rest from the finance industry, doesn't advertise its services but is listed in telephone directories. In the three-month period to August, 16 per cent of callers were in arrears on their mortgage, compared with 12 per cent last year. 'We're seeing similar rises in fuel debts,' says Mullins. 'If you don't pay your gas or electricity bills, you could find yourself without heating with winter coming.'

The National Debtline offers what advisers call 'assisted self-help'. 'We give the best technical advice we can and we're there to lend a sympathetic ear,' says Mullins. Advice is free, impartial and not time-limited. Case notes are taken by trained staff and callers can ring back. More often than not they do, some as many as 20 times.

'Debt problems are an area where, if you present people with information, the majority can deal with it themselves,' says Mullins. That appears to be borne out by a new survey of clients who have contacted the helpline since 2003. Nine out of 10 who have made new payment arrangements with their lenders have been able to stick to them.

Back on the phone lines, the calls are non-stop. 'Aside from the priority debts, do you have any money owing by way of credit cards, loans or overdrafts?' asks adviser Pamela McGrath. 'All of the above,' replies Trevor, a 38-year-old from the Midlands who is married with two children. He has called the helpline for an information pack but McGrath, mindful of the charity's responsibility to ensure that callers' priority expenses are met, quizzes him about money problems: 'How much do you owe and to how many creditors?'

'About £25,000 on six cards,' Trevor replies.

Are you struggling to meet your monthly mortgage payments?

'Yes, we are,' replies his wife (the call has been switched to speakerphone).

Any equity left in the property?

'Not a lot,' he says, 'about £25,000.'

McGrath advises the couple to complete the National Debtline budget sheet, which enables them to calculate available income after they have paid their mortgage, council tax, gas and electricity. If there is any money left over for the creditors, they need to work out what they can afford to pay and contact creditors making 'pro rata' offers.

Alternatively, the couple could enter into a free debt-management plan, whereby the charity will act as middleman as long as they owe at least £5,000, have at least three creditors and £100 a month of available income. Then there are the less attractive options of bankruptcy or individual voluntary arrangements. But first McGrath suggests that Trevor and his wife consider terminating a hire purchase agreement on a £13,000 car. 'You could sell that tomorrow, buy a smaller vehicle for £3,000 and have £10,000 as a lump sum which you could offer towards your creditors as full and final settlement,' she says. The option is not enthusiastically received by Trevor, who clearly wants to keep his motor.

McGrath and Harflett both reckon that the average level of debt for those ringing in with mortgage arrears is between £20,000 and £30,000. But, adds Harflett: 'Last week I spoke to an independent financial adviser who owed £255,000 on credit cards with his wife.'

'The larger institutions are becoming better listeners,' reckons Mullins. 'It's good business sense. If they come down heavily, they're going to lose clients they spent a lot of money acquiring.'

Some lenders do 'come down heavy' though. 'I have a problem,' begins Harflett's next caller. Paul and his wife aren't in mortgage arrears, but they face being made bankrupt, losing their home, as well as some, possibly all, of the £70,000 equity in that house. Their problem is a five year old credit card bill of £3,538. A debt collector has issued a bankruptcy petition and a hearing is due next week.

'You need to act quickly or you could lose your home,' Harflett advises. Bankruptcy would mean their property would have to be sold, with the equity used to pay off administration costs as well as credit cards. 'That's really aggressive behaviour,' says Harflett, 'but we're seeing more of it.'



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MORE people could be forced to delay retirement in order to pay off their debts, new research has indicated.

Those aged between 50 and 60 owe an average of £41,400 in unsecured debts, 25 per cent higher than the average unsecured debts of other age groups, according to a survey of 40,000 consumers by debt solutions company Payplan.

The situation is worsened by the longer than average time it takes those "pre-retirees" between 50 and 60 to pay off those debts.

They have an average repayment term in a debt management plan of 11 years, said Payplan, compared with nine years for other age groups.

The research also found that pre-retirees spend 15 per cent of their total expenditure on energy bills, compared with 13 per cent across the other age groups.

John Fairhurst, managing director of Payplan, said: "Most people imagine that as they reach the countdown to finishing work, they will have paid off their mortgage and be busily saving for a comfortable retirement.

"These figures show that this is simply not the case for many pre-retirees and highlights a hugely concerning trend towards indebtedness in later life."



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The company that introduced the concept of buy-to-let hotel rooms, boasting that investors could "earn money while others sleep", fell into administration yesterday.

GuestInvest owned Blakes Hotel in London's Mayfair and was developing a string of other hotels, including one on the site of the former Whitbread Brewery in the City of London. HBOS owned 19.9% of the company.

Hundreds of investors paid upwards of £250,000 for a GuestInvest hotel room where they earned 50% of the room rate plus the right to stay for 52 nights a year. The rooms at Blakes were on sale for £1m each but were rumoured to have found few buyers.

Its advertisements were plastered across London's transport network and initially, while hotel occupancy rates were buzzing and finance was cheap, investors earned returns of about 10% a year.

In 2006, founder Johnny Sandelson entered into a £140m joint venture with HBOS to finance new acquisitions, and brought in financier Sir Mark Weinberg as a non-executive director. Amid poor sales and slowing hotel occupancy rates in London it appointed Deloitte as administrators yesterday. Joint administrator Nick Edwards said he had immediately secured the future of Blakes but is assessing the future of the group's other assets and the position of investors.

"The Blakes Hotel is unaffected by the insolvency of the GuestInvest Group. It is a very prestigious trading asset and is not subject to any form of insolvency proceeding. Blakes continues to trade as usual."

Firms which acted for buy-to-let investors pointed the finger of blame at HBOS.

Stuart Law, chief executive of property investment firm Assetz ,said: "It is very sad to hear the news that GuestInvest has gone into administration following an HBOS reduction in lending facility and we hope that a new owner comes forwards shortly."

Others blamed GuestInvest for overspending on acquisitions and development projects.


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Merseyside's maritime revival could be sunk by swingeing business rate rises, port companies said yesterday as they braced themselves for bills expected to be triple last year's levels.

The government's revamp of the rates system for ports could put dozens of businesses into insolvency, threatening 3,000 direct jobs and thousands more in hired labour, said the Mersey Dock rating group, a campaign group of 70 companies fighting to reform the law.

Until now, the port authority has been responsible for paying business rates, based on port turnover, and collected them as part of the rent charged to leaseholders, a legacy of nationalisation. In 2003, the government announced a nationwide change to the rules, switching to a direct levy as in the rest of the economy.

But because the valuation process has taken so long, companies such as freight forwarders and repair yards are now being asked for three years' rates in one go.

Fortress, which handles timber in Tilbury, Essex, went into administration this month after receiving a court order to pay a £2.4m bill, costing 20 jobs.

In Hull, one of the largest ports, the bill has risen from £3m to £20m this year. The city council, which collects business rates, has agreed to hold off in the hope of a government U-turn.

At the 55 ports affected, business leaders are predicting the potential loss of businesses worth up to £20bn and up to 150,000 job losses.

Louise Ellman, MP for Liverpool Riverside and chairman of the transport committee, said: "This backdating is just unfair. Maritime industry has been a success story here and we do not need a blow like this."

The Mersey ports, which almost shut in the 1980s as trade left for the east coast, have begun to turn the corner. After more than £350m of private investment, cargo volumes hit 32m tonnes last year, up from 9m in 1984.

David Pendleton, business development director at Mersey Maritime, which represents the local industry, said: "The industry is worth £2.6bn to our local economy and employs 26,000 people, and exciting plans are under way to invest . . . in new infrastructure and facilities. While everyone understands the need to pay fair rates, we are appealing to the government to withdraw the requirement for backdated bills, which could devastate many smaller operators."

Kieran Hall, managing director of Birkenhead-based Denholm Handling, said: "We have been trading here for 20 years and at this site we turn over £2m and employ 22 people. Not only that, but our wider business provides £2m haulage income to subcontractors and we spend £300,000 a year on local hired labour."

Liverpool city council has agreed to talk to the group about possible solutions to the big bills, which are to be sent out within weeks.

PD Ports Ltd, which leases the Hull Container Terminal from Associated British Ports, said it was facing an increase totalling "hundreds of thousands of pounds".

Martyn Pellew, PD Ports' group development director, said: "This increase affects the profitability of the terminal." There was a "strong possibility" that extra costs might have to be borne by consumers.

He said the assessment was under appeal but conceded that companies had had notice of the change.

The Department for Communities and Local Government said it had changed the rules to bring the sector into line with others. "We would encourage port operators to contact the Valuation Office Agency if they have any queries," it said,

The VOA, which calculates property values, said the legislation required it to backdate bills to April 1 2005 and that operators had been told in 2006.

Mr Pendleton said ministers should look to the Scottish Executive, which was planning a self-financing transitional scheme to help companies adjust.


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