THE Scottish Government has seriously underestimated how many people would take advantage of its new bankruptcy rules.
New legislation brought into effect on 1 April last year enables those classed as low-income, low-asset debtors (LILA) debtors to petition for their own bankruptcy. In the past, creditors showed little appetite for legal action against those owing relatively small sums and with few if any assets to their name. Unable to petition for their own bankruptcies, such debtors had insufficient means to pay off their dues and could only watch as the interest on outstanding credit rolled up.

Now, the law allows individuals in this position actively to petition for insolvency and escape a debt trap that would otherwise ensnare them indefinitely.

Initially, the government predicted that LILA bankruptcies in the first year would be as low as 2,000, although it has since upgraded the forecast to between 3,500 and 6,500. Unfortunately, it seems unlikely that the total number of LILA bankruptcies will fall within the 6,500 upper limit forecast for the year, given the insolvency figures recently published by the Accountant in Bankruptcy (AIB).

In the first three months from 1 April 2008 there were 1,709 LILA debtor applications. In the following quarter the figure jumped by 62 per cent to 2,773, making a total of 4,482. Even if the next six months only return the same number of applications, which would appear highly unlikely given the increases in unemployment, that would make a grand total of 8,964 LILA applications for the year.

This is 2,464 above the top estimate of 6,500 and given the numbers involved, it seems unhelpful that the government's review into LILAs, which had access to the latest AIB insolvency figures, is so sanguine over the number of bankruptcies it expects to see from this channel.

Why is this so important? In the first instance, it is worrying that the government is apparently in denial over the extent of the problems faced by those struggling with debt. If we are to deal effectively with the problems that lie ahead, then factually sound and incisive analysis of the figures is a must. There is also a huge cost to be borne by the Scottish economy, given the amount of debt that is being written off through LILA bankruptcies. The average debt in such cases is £17,288 and in light of the 2,464 cases that are due to come in over and above what has been publicly estimated, there will be a further £42.6 million of debt to write off.

History has shown us that failing to confront a problem simply leaves us with a bigger one to deal with tomorrow and it would be much better to be realistic about the size of the financial commitment we are going to have to make as a nation if the new LILA rules are to be kept in place.

Equally, let's not scrap the legislation and heap more misery on those who can least afford it.

Instead, we need a frank and accurate appraisal of the data so that we can deal effectively with what is coming our way.

For those facing debt, seeking independent, professional advice as early as possible will help then stave off bankruptcy, whether brought on voluntarily or not.


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A Derbyshire travel firm has gone into voluntary liquidation but holidaymakers have been told most of them will get their money back.

Draycott-based Winter Sunshine Holidays (WSH) ceased trading after 20 years.

One woman said her mother had arrived in Spain only to be told she had to pay £800 to stay in a hotel because WSH had not paid for the accommodation.

A spokesman for the liquidators said the company had set up a trust fund and most people would get a refund.

Elena Gallagher told the BBC her mother found out about the company's problems only when she arrived in Spain.

"The hotel manager told her that WSH Travel had not paid for the accommodation and the only way that they could stay there would be to pay £800.

"She was panicking how to pay for it but she did have her debit card with her. She had no choice really or there was nowhere to stay."

Bob Young from liquidators Begbies Traynor said: "Those who've paid on a credit card will get all their money back from their credit card provider.

"Those who paid by debit card or cheque will get most of their money back from this trust fund, so even thought the company's going into liquidation, steps have been taken to protect holidaymakers.


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Four out of five UK suppliers may have to write off unpaid debt due to “ineffectual” new rules governing so-called “revolving-door” administrations, according to the country’s largest credit insurance broker.

Aon is calling for change in legislation to give unpaid suppliers of collapsed companies the opportunity to seek recourse before a pre-pack deal - sometimes known as a “revolving door” administration - is drawn up. The pre-pack process - which lines a buyer up before an insolvency technically occurs - has been surrounded by controversy as they have been accused of leaving creditors out of pocket.

In a pre-pack deal, a collapsed company can be sold on without its liabilities, leaving creditors such as HM Revenue and Customs, suppliers and landlords stranded with unpaid invoices on their hands.

They have also come under fire as a way for the management which oversaw the downfall of the company to buy back the collapsed business minus the debts attached - often in a rapidly-executed deal behind closed doors.

Pre-packs have become increasingly popular as the downturn bites - the Insolvency Service recently forecast at least 100 pre-pack administrations every month - and firms such as USC, Whittards of Chelsea and The Officers Club have opted for the process in the last few weeks.

Currently there is no legal obligation for administrators of pre-packs to involve suppliers of the failed business in creditors meetings.

But January 1 saw the introduction of new rules, called Statement of Insolvency Practice 16 (“SIP 16”) rules, which aimed to increase transparency by requiring administrators to release full details of the pre-pack to all creditors.

Under the new rules administrators should provide creditors with the reason a pre-pack deal was chosen and any links the new owners had with the previous management team as well as the price paid. But Aon said this was unlikely to happen before the insolvency has taken place and is calling for a review of the controversial insolvency legislation to give creditors a greater say.

Aon Trade Credit director James Bowker said: “The new insolvency rules don’t go far enough and legislation must be reviewed to support the UK supplier. Often the first knowledge the supplier has of the pre-pack is when the new owners contact them to discuss new supply arrangements – the ultimate indignity being that there is no recourse to the new company in respect of debt attaching to the old company.”

But many insolvency practitioners believe pre-packs offer the only hope of stability for a collapsed company and the best way to preserve jobs.

James Martin, Midlands chair of insolvency trade body R3 and partner at the Birmingham office of Begbies Traynor, defended pre-packs, saying suppliers’ losses were not due to the administration process but are down to the fact a company had failed.

He said: “A loss is caused by the failure of their customer, against which they will of course seek to defend themselves, but for the moment this is on the increase. The pre-pack is an increasingly useful way of trying to preserve businesses.”

“Independent research has shown that pre-packs perform better than business sales in preserving employment – in 90 per cent of such cases, 100 per cent of jobs are saved.”

A committee of MPs is set to consider plans to reform administration processes with Peter Luff, Tory chairman of the Department for Business, Enterprise & Regulatory Reform committee planning to use an inquiry into the operations of the Insolvency Service as an opportunity to examine the practice of pre-packs.

Insolvency Service chief executive Stephen Speed is due to be questioned about potential abuses of the system and his proposals for changes when he appears before MPs on January 27. The number of company collapses in England and Wales has snowballed in the past year, with 1,006 companies in administration in the third quarter of 2008.


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CANADA – Quebec employment minister Sam Hamad has proposed legal measures to guarantee pension benefits to pensioners and workers whose schemes go bust as a result of the financial crisis.

The bill, which the minister tabled at the Quebec National Assembly, applies to 950 defined benefit (DB) corporate plans, which group one million participants and beneficiaries and have C$98bn (US$79bn) of assets under management.

Public employees’ retirement plans, as well as certain corporate plans subject to federal provisions, will be excluded.

Under the proposal, the Quebec Pension Plan - the compulsory public insurance plan – would take over the management of insolvent pension plans and guarantee payments to entitled members of the scheme.

Hamad said: “We are offering an advantageous option to pensioners: guarantee their benefits and possibly improve them by having the Quebec Pension Plan managing schemes’ assets if a company goes bankrupt. All investments will be managed prudently.”

In addition, Quebec companies will have 10 years instead of five to make up for their total solvency liabilities. They will also be able to smooth over a period of maximum five years the assets of the plan, in order to spread out the losses on their investments.


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The Business and Enterprise Regulatory Reform (BERR) committee is launching an investigation into the way failed businesses are being put into "pre-pack" – where a buyer is lined up before they go into administration – amid allegations that the practice enables them to escape debts and creditors.

Creditors have voiced concern about the steady trickle of businesses involved in what is described as "revolving door" administration by critics and a "legitimate process" by the failed operations.

Retailers such as Whittard, USC and The Officers' Club are among the more prominent business failures pre-packaged for administration in recent weeks.

Sir Tom Hunter's West Coast Capital group immediately bought back USC after the business went into administration. The deal caused a stir but a spokesman for the Scottish billionaire said yesterday the arrangement had saved jobs without producing protests from creditors.

He added: "We used a legitimate scheme to rescue as many jobs and stores as possible. The alternative was closure of the entire business, losing 1,427 jobs, leaving suppliers and landlords with effectively nothing.

"USC's largest creditor was West Coast Capital. That, I hope, speaks for itself, as does the fact we are working very well with all our suppliers going forward and have received not one complaint from them."

Peter Luff, Tory chairman of the BERR committee, plans to use an inquiry into the operations of the Insolvency Service as a platform to examine the administration system and the pre-packaged practice. Stephen Speed, head of the Insolvency Service, will be questioned about whether the scheme is being abused and asked if changes are needed when he appears before MPs on January 27.

Business advisers, creditors and other groups are being invited by Mr Luff to submit their views. He said yesterday: "We may well expand the inquiry."

• Lord Mandelson, the Business Secretary, is expected to come under pressure from Labour members of the committee to give more details of the planned part-privatisation of Royal Mail when he appears before MPs on Wednesday.



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The company behind the controversial Lapland New Forest Christmas theme park is to go into liquidation.

The move, by the company's director Victor Mears, from Brighton, means that thousands of people may not get a refund for their tickets for the park dubbed a “winter blunderland”.

People paid up to £30 each to visit the site on the Hampshire-Dorset border which promised to be a snow-covered winter wonderland.

But families arrived to find a few sickly-looking animals and a fairground in a muddy field where customers queued for hours to pay £10 to see a Santa who lifted his beard to wipe his mouth while bewildered children sat on his knee.

The park shut after more than 5,000 people complained to Trading Standards about the “attraction”.

Ivan Hancock, Dorset Trading Standards divisional manager, said: "Members of the accounting and consulting firm Grant Thornton UK LLP have met with Victor Mears.

"Mr Mears has asked Grant Thornton to take steps to place his company into creditors' voluntary liquidation (effectively close down the company and handle any claims).

"We understand that two partners at Grant Thornton will be appointed as joint liquidators in due course.

"Once they have control of the company, customers will have the opportunity to lodge a claim against Lapland New Forest Limited."



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The last Woolworths stores closed their doors yesterday as just one of a series of massive businesses collapsing in the economic slowdown. Peter McCusker discovers what choices are available to struggling businesses

LAST year saw company after company going into administration in a last ditch effort to sell their business as cash-flow was hit by the looming recession. But experts fear 2009 will see many more businesses going directly into liquidation.

In 2008 the number of companies described as being distressed more than doubled as directors struggled to find ways to meet debt repayments and battle against falling sales.

The latest figures available show that, here in the North East, the number of companies going into administration has risen by 50% year-on-year.

With the country heading into recession, and cash and confidence draining out of the economy, more managing directors are expected to choose liquidation in 2009, accepting there is no way of securing their company’s future.

Simon Lundy, of the Newcastle office of insolvency experts Begbies Traynor, has worked in business recovery for over 30 years and says this is the worst economic situation he has witnessed.

“We are heading into a severe recession. This is far different to any other recessions I have witnessed. The problems with the banks and bank lending is something which we have not experienced before.

“In many cases there is not going to be the chance for companies to carve up their business. In many cases there is little or no confidence in the future as consumers have stopped spending.

“Then, even if the company is confident, it also has the problem of securing funding from the banks and that route does not seem to be available either.

“In many cases companies are going to be left with just one choice, and that choice is to close the business down.”

Here in the North East there have been a number of high-profile administrations in recent months including Newcastle-based Arctic Windows and the Officers Club, the Cramlington-based clothing retail chain.

In the case of the Officers Club a new company was formed out of the remnants of the old one by the same management team. This so-called pre-packed administration allows directors to jettison loss-making parts of a business, along with its debts, while almost immediately setting up a new one to take over the profitable operations.

Mr Lundy said in many cases such moves are the only viable alternatives. “It is better than closing the business down. It means there is still a business there and the new company will be preserving jobs. In the long run it may even be better for the creditors.”

Mr Lundy said new rules which came into force on January 1 legislate for administrators to provide greater disclosure on what steps have been made to sell the business, or restructure its operations. He said he had not yet had any complaints from any creditors as a result of a businesses being reborn in a new form.

Colin Stratton, the regional chairman of the Federation of Small Businesses, likewise said he had not yet been approached by any of his members with similar concerns.

He said: “Cashflow is vitally important at a time like this and I expect to see many of members turning to factoring organisations in the coming months.

“Factoring companies are popular as they charge a premium for chasing the recipient companies for payment while guaranteeing the cash to the supplier.”

Begbies tend to work with SMEs employing between 20 and 200 people, with a turnover of between £10m and £15m, and Mr Lundy says it is hard to find any sector that is not affected by the downturn.

Mr Lundy added: “There is a general lack of confidence across the whole economy and no-one knows what is going to happen, just how bad it is going to get.”

Alan Kelly, a partner at Tait Walker accountants in Gosforth, believes the problems in the economy are set to last until well into 2011.

He said: “We are witnessing increased volumes of businesses with problems, and with the economic situation set to deteriorate further, we have not seen the worst of it yet.

“Administrations allow viable businesses to start again. There is still money available and there is still some appetite in the market for asset-based lending.”

One of the problems administrators are having, which is exacerbating the problem of selling the businesses, are the difficulty of determining the value of assets.

Mr Lundy recalls how he was unable to even to get a second-hand furniture company to come and collect, free of charge, office chairs, tables and equipment from a business which recently went under.

Mark Firmin, a restructuring partner at KPMG in Newcastle, has been leading the firm’s restructuring in the region for the last two years.

Last year he handled the administration of stock-market listed Sunderland company ScS and its subsequent sale to private equity firm Sun European Partners.

He said: “It’s a fact that we have entered difficult times but there are a number of steps management can and should take to address the double whammy of a tightening of both lending and spending.

“Given we’ve all enjoyed 20 odd years of a benign economic environment, it’s understandable that some management teams will not necessarily have the skills to effectively steer their business through a downturn so calling in advisors who specialise in stabilising and turning around organisations makes a lot of sense.

“The worst thing a management team can do for their business is nothing. Sticking their head in the sand when the finances start looking tricky will only reduce the options available to them and any advisers they may bring in later, whereas a restructuring professional brought in at the first warning signs has several routes open to them for re organising the business.”



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Insolvency accountants who chase up small council tax arrears of a few hundred pounds charge up to £600 an hour, it emerged yesterday.

The huge fees were disclosed after concern that thousands of vulnerable people are forced into bankruptcy because town halls are using draconian tactics to retrieve council tax debts.

Some householders who owe less than £2,000 in arrears are suddenly faced with a bill of up to £50,000 and forced to sell their homes because of the exorbitant fees which kick in after bankruptcy.

The latest figures, obtained through the Freedom of Information Act and published in The Times yesterday, show that up to 5,000 householders were pursued for bankruptcy last year and at least 1,000 were made bankrupt.

Giles Hindle, insolvency and corporate recovery partner with Beachcroft, the law firm, said that once a householder was declared bankrupt the Official Receiver appointed an insolvency practitioner from firms such as KPMG, PriceWaterhouseCoopers, Deloitte and other well-known accountants.

The practitioner was then required to try to find the arrears and any other debts occurred by the householder by selling assets, including any equity in the home. Mr Hindle said the process could be lengthy and expensive and debtors, who had to pick up the final bill, were unaware that often they were piling on costs by obstructing the accountants.

“Insolvency practitioners charge between £200 and £600 an hour once bankruptcy proceedings have started. Where a home needs to be sold the costs go up and accelerate if the householder tries to stop or delay a sale. Where this happens lawyers are also brought in,” said Mr Hindle.

“If a case continues for several years it is easy to reach figures such as £40,000 to £50,000 in fees. Even where a debtor co-operates all the way the figure can be £4,000. Often the debtor ratchets up charges simply by putting their head in the sand.”

Vince Cable, deputy leader of the Liberal Democrats, called on the Government urgently to review the process. “This is a nice little earner for big accountancy companies who are clearly profiting enormously from individuals in distress,” said Mr Cable. “There seems to be no justification whatever for these astronomical fees for what appears to be routine work and there is a clear case for the Government to intervene either by involving the competition authorities or by opening up the business to a wider range of providers.”

Citizens Advice is also concerned about the high fees that have triggered house sales for several clients. The organisation has conducted research showing that using bankruptcy proceedings is also expensive for councils. “If someone is forced to sell their home for failing to pay a bill of a few hundred pounds, the council might be required to house them at a much higher cost,” said a spokesman.

Councils defended their use of bankruptcy proceedings and bailiffs to collect council tax arrears. Sheffield, the Liberal Democrat-led council, is one of the worst offenders in chasing arrears, with the frequent use of bailiffs and bankruptcy petitions. Last year the council, then led by Labour, filed 143 households for bankruptcy and sent bailiffs into homes to collect arrears 19,365 times.

“We have to be careful to strike a balance between collecting the council tax that is owed and being understanding with people who are in financial difficulties,” said Simon Clement-Jones, Sheffield Cabinet member for finance and customer service. “We will be looking at the council's policies to make sure we do have the right balance at a time when more and more people are under financial pressure.”

Southwark council, in London, used bailiffs 16,000 times and pursued 27 bankruptcies. Mike Lynch, Southwark Council's client manager, said: “Southwark has a poor base in terms of collection and with the recession we have been looking to be more efficient in the way we collect council tax, and bankruptcy is being more widely used by local authorities as a means of recovering arrears.”


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The Tales of Robin Hood has cancelled a school trip for the end of January, but its chief executive would not confirm if the attraction would remain closed.

Ian Walker told the BBC it was not in voluntary liquidation, as was said in a message left with the school.

He spent Tuesday in meetings with accountants and has more meetings scheduled for Wednesday.

Mr Walker said all the options were still open.

A message was left with Lady Bay Primary School on Monday morning, cancelling a trip booked for the end of January because the attraction was in "voluntary liquidation", but Mr Walker told the BBC that was not the case.

'Financial problems'

On Christmas Eve the Tales of Robin Hood announced that it was facing financial problems because it claimed there had been a massive rise in its rent.

The attraction's landlord, the supermarket firm Tesco, said it had written off a six-figure sum as a goodwill gesture and that the rent on the property had not gone up significantly.

The centre said it saw a 500% rise in revenue in both its cafe and shop after opening for free over the Christmas and New Year period.

The Tales of Robin Hood is the only attraction in Nottingham dedicated to the world-famous folk hero and it is estimated to bring in £2m to the city every year.

A total of 40 staff, including 15 full-time employees, would lose their jobs if the centre was to close.



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As we have covered on a number of occasions of late there is serious concern that personal insolvency numbers, which could lead to bankruptcy or IVAs, could hit record highs in 2009. A number of the major UK accountancy firms have come forward over the last few days forecasting that record numbers of the UK population will be hit by serious financial concerns which could result in the repossession of homes and substantial assets.

While some of the UK population seem destined for serious financial concerns there are many who appear to be ignoring their difficult situations and making matters worse. It is vital that at the first sign of financial hardship or a significant reduction in income that professional advice is sought in order to try and rectify what may not be the “end of the world”. There are various safeguards and regulations which are there to protect those in financial trouble and it is essential that the correct advice is taken as soon as possible because the pressure of financial trouble can lead to various health issues.

Those who address their problems head-on are more likely to see a generally favourable outcome as the bottom line is that UK banks would rather maximise their returns, both now and in the future, rather than write off substantial debts.

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Creditors of NHS Foundation Trusts that go bust could be left with nothing.

Though the Government has suggested that Health Secretary Alan Johnson would bail out suppliers, it has refused to guarantee this.

After many years trying to work out an insolvency regime that would give creditors similar rights to those of commercial organisations, ministers have thrown in the towel.

The NHS or the Department of Health 'might take on this debt', said the department, depending on the circumstances.

That would leave creditors in a no-man's land, with neither the certainty of Government backing nor the ability to make claims through a normal insolvency process.

Of the 225 NHS hospitals and mental health trusts in England, 113 have foundation status, meaning they are free to borrow money and enter commitments such as leasing equipment.



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The economic recession has claimed another major scalp in Britain, with the music retail chain Zavvi going into administration, leaving thousands of jobs at risk.


The company has been forced into the move after being crippled by the collapse of Woolworths, which forced it to stop taking orders via its website.

Woolworths was the main supplier to Zaavi, which was formed after a management buy-out of Virgin Megastores.

Zavvi Ireland is not believed to be subject to any formal insolvency proceedings.



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Students looking forward to graduating in 2009 may be in for a rude awakening if they are hoping a job in the financial sector will be easy to come by, it has been claimed.

In a situation no doubt mirrored in many other sectors across a range of industries, David Ainscough, deputy director of Cambridge University Careers Service, has said that accountancy graduate programmes are suffering from over-applications, and that some graduates are failing to hear back from certain schemes.

Despite graduate recruitment becoming far more sophisticated in recent years, there are problems facing recruitment in the financial sectors, and these are likely to affect accountancy graduates.

"Students who have done numerical tests are not hearing whether they've got an interview and we are hearing that some graduate schemes are full, even though it's before their deadline," said Mr Ainscough in a Times report.

Accountancy graduates prepared to be flexible typically stand a better chance of finding work in the new year, as to apply their skills to insolvency positions will no doubt offer a greater chance of success in the jobs market.


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Staff at Borcombe SP have been sent home and the company is understood to be set for liquidation, just two months after being bought out of administration.

Around 160 employees at the Romsey site were told this morning that the company was to be closed just weeks after it was acquired by an investment vehicle owned by Datateam Publishing.

The company is understood to have been passed to a liquidator, although there has been no official confirmation as yet.

Ann Field of Unite described the move as a "scandal" saying that staff at the site "have been dismissed without wages, notice, holiday pay and redundancy pay".

In some cases four weeks of overtime are owed, she added.

The company had been in consultation with 42 staff. One employee told PrintWeek that he was expecting a £4,000 redundancy cheque to be paid today, which had not yet been received.

Geoff Burt, an employee who moved over to Borcombe following the closure of then sister company Butler & Tanner in April said: "19 great years at The Friary Press [which became part of Butler and Tanner] and have been put through the whole MPI, Butler & Tanner and
now Borcombe fiasco.

"We were given 30 days notice of redundancy on the 22 November and on the day we were to receive our redundany payments the company goes into liquidation."

Field said: "This is the end of the MPI scandal and the beginning of a new chapter of bringing those who would treat employees and customers in this manner to book and justice."

Borcombe was acquired by HS Printers from administration, following the collapse of MPI.



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Hundreds of high street retailers will collapse next year despite a last-minute Christmas spending rush, according to a retail insolvency expert cited by The Guardian.

The wave of bankruptcies caused by the recession will leave "big holes on the high street", and the failures are expected to include some of the most well-known names.



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The level of debt in the UK is "disturbing," the head of the International Monetary Fund has said.

But Dominique Strauss-Kahn told the BBC that given the severity of the economic downturn, more government borrowing was the lesser of two evils.

Mr Stauss-Kahn was responding to a BBC question about it being easier to get insurance against McDonald's defaulting than UK government bonds.

He said 2009 would be "a really bad year" and society was going to suffer.

Public debt has risen to £650bn - 44.2% of UK gross domestic product. Consumer debt is more than £1.4 trillion.

In last month's pre-Budget report, the chancellor announced plans for a £20bn economic stimulus package, which would bring public debt close to 50% of GDP.

'Less bad solution'

Shaun Ley, of BBC Radio 4's The World This Weekend, asked Mr Strauss-Kahn: "Markets seem to have made their own judgements about this: it is cheaper to get insurance against big multinationals like BP and McDonald's defaulting than it is to get insurance against UK government bonds going under. That is quite disturbing, isn't it, when a country is viewed in that way?"

"Yes, it is," Mr Strauss-Kahn said. "That is a good example of the fact that we are facing something which is almost unknown."

He said governments around the world had no choice but to step in and spend more.

"I'm specially concerned by the fact that our forecast, already very dark... will be even darker if not enough fiscal stimulus is implemented," he said.


"The threat is that big today that I think that between two different problems, increasing deficit - which is never good - and fighting against recession - which is even worse - we have to choose the less bad solution."

He added that measures announced by the G20 group of leading industrial countries last month may not be sufficient to revive the global economy.

Interest rate cuts would not do enough and governments had to use fiscal stimulus, he said.

It would take a spending package equivalent to about 2% of global GDP - about $1.2 trillion (about £800bn) - to make a real difference, he said.

"The problem is that all the whole society is going to suffer," he added.



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More than 10 national or regional retail chains risk going bust next month, insolvency experts are warning.

The warning comes from Nick Hood, a partner at Begbies Traynor.

"Not a lot of them are profitable because of the discounting at a time when they would normally generate all their profits for the year," he said.

It comes as research from accountants PricewaterhouseCoopers suggests that 82% of retailers are discounting their merchandise this weekend.

The figures are compiled from London's Oxford Street, where many of the country's top retailers have stores.

One month ago, only 52% of them were cutting prices.

Vulnerable in January

"The problem facing the management of retail chains is whether they can find funding to restock in January, pay their VAT bills and survive through until Christmas starts again next October," Mr Hood told the BBC.

The danger facing them is that banks and suppliers that might have been prepared to support retailers during Christmas trading, may be unwilling to do so afterwards.

Retailers are vulnerable in January because they generally have more cash and less stock than at any other time of the year, so if creditors are going to force them into administration it is the best time to do so.

It has already been a tough few months for well-known retailers, with MFI already having closed down and Woolworths due to shut its shops in January.

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QUARTERLY rent bills, due for payment at the end of December, could spell the end for struggling Sheffield firms, according to corporate recovery expert Andy Wood.
Mr Wood, regional chairman of R3 – the Association of Business Recovery Professionals – and a partner with the P&A Partnership, is urging local companies who think they might face financial troubles to seek help before Christmas, instead of waiting to see how things turn out in the new year.

Mr Wood says firms should think now about whether they are likely to have problems paying their next quarterly rent bill – normally due at the end of December – and to start talking to their landlords as soon as possible about the problems they're facing.

"The period around the turn of the year is already regularly a peak for business insolvencies, as companies battle through to Christmas and then fail in the early months of the new year, but these problems could well be significantly exacerbated this year," said Mr Wood.

"Quarterly rent is obviously one of the biggest expenses a company has to pay, and if it already has problems, this can be a decisive blow, especially in the current economic climate.

"Landlords are generally commercially astute enough to accept a proportion of the rent that is due to them, as opposed to none at all, so there may be an opportunity to renegotiate rent terms, through arrangements such as paying on a monthly basis or agreeing a temporary payment reduction or holiday.

"We would strongly urge anyone who feels their company could be facing severe financial problems after Christmas to take action now, and get the sort of professional advice that might help them to continue to trade through 2009 and beyond."


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Woodco Scotland Ltd has ceased trading while creditors wait to find out how much they can expect to recover from the firm.

Woodco, founded by husband-and-wife pair Bob and Sylvia Craine, supplied and erected environmentally-friendly log homes and other timber-framed buildings from its base in Wick.

Last year the firm was among the first batch of companies to secure support from the North Highland Regeneration Fund (NHRF).

It received a £50,000 low-interest loan towards its then export drive. The petition to begin the moves to wind the company up was presented at Wick Sheriff Court by a London couple over a £14,000 debt.

Aberdeen-based insolvency specialist Donald McNaught has since been appointed provisional liquidator and he is expected to call a meeting of the creditors once he establishes the extent of the company's indebtedness.

Woodco's national profile grew when it won the contract to build the Big Brother house for the hit Channel 4 reality series in the spring of 2002.

The order came out of the blue after it built a house for an actor near the set at the Elstree Film Studios in Hertfordshire.

The spec for the three-room house included 60 two-way mirrors to ensure every move of the residents was caught on film.

Three years later, the firm built a log cabin for the set of BBC TV's House of Tiny Tearaways.

Woodco's clients included the National Trust, Epping Forest Council and Kent County Council.

As well as contracts throughout the UK, Woodco's interests extended overseas, including a wooden chalet development in the Limousin region of France.

It had been operating with a workforce of about half a dozen from its workshop in Wick Airport Industrial Estate. Mr McNaught, of Invocas Business Recovery & Insolvency Ltd, said yesterday: "The company has stopped trading and I've been appointed to investigate the assets. My investigation is at a very early stage but once the wind-up order is confirmed I'll be convening a meeting of the creditors and table a report to let them know how much they can expect to get back."

Woodco was one of the first firms to get support from NHRF, which has been underwritten by £1.5 million from the Nuclear Decommissioning Authority. Fund director Neil Robertson yesterday said Woodco had repaid about £12,000 of the £50,000 unsecured loan. He said: "It was very disappointing to learn what has happened to the company.

"As far we understood, Woodco had a fairly full order book but trading conditions for the construction industry are pretty tough just now. Anything in the construction industry is working capital-driven and banks are generally pulling back on the limits they will work to." Mr Robertson said NHRF was involved in risk and expects a small percentage of firms to default on the loans they receive.

"This is the first problem we've encountered so far," he explained. "It is, of course, bad news but it will happen when risk is involved."

Mr Craine could not be contacted at his home near Castletown. It is unclear how the current move will affect Mr Craine's other local business interests.



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Call now for help with corporate debts.

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Happy New Year!!!!


Call now for help with corporate debts.

Call us on: 0800 071 1616

Email us on: info@debtsgone.co.uk

Website: www.debtsgone.co.uk