Pic: Morpeth Herald
As one of the nation’s leading credit intelligence circles ICSM Credit likes to bring you the latest news, views and analysis in the world of creditors, bad debts and companies in trouble. There’s only one motivation behind our news and that is to save our members from being caught out when one of their clients goes bust.
Muddle over masks
Ian Carrotte said: “There has been much muddle and confusion for industry as business emerges from shut-down. A v-shaped recovery looks unlikely as so many jobs are going and a lot of firms are going bust. The face-mask and PPE industries are seeing a boom so there’s a small silver lining there – but what we need is business and social life to return to normal in August or it will be a tough old recession this winter.”
Masks must be worn by adults in shops from July 24 according to the latest Government announcement with £100 fines for non-wearers. The news has not gone down well with the retailers and police as Michael Gove MP implied mask wearing would be voluntary when questioned by the BBC on Sunday. Chief executive of the British Retail Consortium Helen Dickinson said the plan left more questions as she felt it should not be up to shop workers to enforce reluctant shoppers to cover up. The police are also unhappy. Ken Marsh, chairman of the Metropolitan Police Federation said it would be impossible to patrol every shop and enforce the new law.
Ian Carrotte said he feared this was a backward step as the death rate from Covid 19 was getting lower, and the idea masks must be worn in shops but not in pubs was ‘difficult to equate.’ He added masks made sense in March but with August days away questions will be asked about ‘the delay in implementation.’
ICSM Credit took interest in the celebrity chef Tom Kerridge story this week when the restauranteur complained publicly of no-show customers. Namely people who booked a table and then failed to show up – despite the overwhelming demand following the lifting of restrictions post Covid-19. He said that 27 people booked and failed to turn up at his restaurant at the Corinthia Hotel in London making the evening a disaster financially – just when the place needed to start making a profit. Kerridge’s experience is not alone as many restaurants have had the same problem with people sending an email booking and then changing their mind. Perhaps the only answer is to make a booking only valid with a deposit.
Ian Carrotte said the problem was not unique to the dining out industry as printers, couriers, builders, hoteliers and a host of other businesses are frequently contacted with so-called definite orders and bookings – which then fail to turn up. He said: “It’s down to people not thinking and being selfish. Sales people will often come away from a meeting having thought they have a big order only to find it cancelled a day later when the potential customer has used their specifications to source it cheaper elsewhere.”
New world order for print industry
Jo Francis in Print Week has written a timely piece on the new world order for the print industry which seems to be all about redundancies or calling it a day and shutting up shop. She writes about Dundee-based Tradeprint who are cutting 30% of its 164-strong and Portsmouth’s Bishops Printers who are also making the same number of staff redundant. Francis quotes Bishops Printers CEO Gareth Roberts as saying: “Our ‘event driven print’ has naturally been severely depressed and although we are starting to see recovery – with volumes rising towards 50% of norm in July – we do not see a ‘V shaped’ return to normal trading. It was therefore evident in early May that we would need to restructure throughout all parts of the business to remain viable. Sadly, this has meant approaching 30% of our 270 strong workforce being made redundant since we simply don’t believe we can carry the additional staff without the work we normally expect for the remainder of the calendar year.”
Summer cover for directors
Website Business Sale reports on the plight of directors of insolvent firms who have been given a bit of breathing space this summer. Under the Corporate Insolvency and Governance Act that came in last month the temporary protection from wrongful trading given to firms was extended to the end of September from the end of June. They reported: Although the threat of personal liability has been significantly reduced, company directors must remain attentive to other considerations relating to the continued trading of their businesses as they are still bound by directors’ duties as set out in company law.”
It means that firms that were technically insolvent during the Covid-19 shut down can continue to trade during the summer without fear of the directors being personally liable for any debts. Normally it is illegal to trade while insolvent but the idea is firms will spring back into life and quickly make up the lost ground in August.
Construction firm owed £11m
The Business Sale website reports on the Lancashire-based contractor Construction Partnership UK who owed close to £11 million to creditors when it collapsed in April, according to a new report from administrators Duff & Phelps. The website reported: “The company’s administration was blamed on the impact of coronavirus and “contractual issues” following the loss of several contracts.This included The Rise, a £23.4 million mixed-use development in Liverpool, that led to £3 million in bad debt. The contract was due to be the firm’s biggest ever job but work stopped last year when developer Primesite Development ran into funding issues. When work halted, Construction Partnership UK had completed work worth £7 million.”
The administrators Duff & Phelps said the firm was hit by ‘a combination of late and missed payments, overrun on projects and increasing materials costs.’ They reported that the 94 staff were made redundant after being furloughed in March and former employees were unlikely to be paid.
China shops collapse
The Yorkshire Post has reported on the demise of the giftware and china retailer Peter Jones of Wakefield whose ten shops have closed. Despite furloughing staff the 70 employees will be made redundant and the 50 year old business liquidated.
The newspaper said: “It enters insolvency after a period of weak trading followed by significant cash flow pressure related to the COVID-19 lockdown. The retailer, which has stores in Barnsley, Doncaster, Batley, Huddersfield, Castleford, Pontefract, Wakefield and Wetherby, has been closed for business since lockdown with its 70 employees on furlough.”
Ian Carrotte of ICSM Credit said a pattern was emerging of firms locking down and furloughing their staff while the directors ‘get their ducks in a row’ and take the firm into administration with a view to sale or liquidation. He said: “We’re seeing a lot of this activity and it is something we predicted before the lockdown. A lot of zombie companies who were barely solvent and struggling before Covid-19 have faced the reality and are pulling the plug. That is why all suppliers must be careful of accepting orders from firms in that situation as they probably won’t get paid.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk