12th May 2021 Press Release from InfolinkGazette
Figures released today by InfolinkGazette show the sharpest fall in in the number of profit warnings ever recorded. In the first 4 months of 2021, the number of profit warnings issued by UK listed companies was down from 404 in the first 4 months of 2020 to 122, a fall of almost 70%. Greg Connell, Managing Director of InfolinkGazette, said: “the spectacular fall shouldn’t be interpreted as resilience in the face of the Covid crisis; many listed companies simply suspended issuing guidance after the first couple of profit warnings”.
FTSE 250 listed aerospace, defence, and energy company Meggitt PLC warned on profits, reporting that the start of the year has been marked by ongoing travel restrictions across a number of regions with international activity remaining weak, leading to a to a slight softening in expectations of the extent of the recovery in the second half. Greg Connell, Managing Director of InfolinkGazette, said: “for Q1 2021, the group reported revenue down 29% against the same period last year, but this was an improvement on Q4 2020, where revenue was down 35% on the corresponding quarter in 2019”. Greg added: “the rate of civil aviation decline seems to be slowing, but the recover has yet to take off”.
Jet2 plc, the UK’s 3rd largest scheduled airline has issued a profit warning, stating that: “as a result of the Covid-19 pandemic, the Board expects to report a Group loss before FX and tax for the year to 31 March 2021 of between £375m & £385m. The board added: “for the year ending 31 March 2022 the impact and duration of the proposed Covid-19 travel restrictions for Summer 21 remain difficult to determine. Jet2 made the decision to extend the suspension of flights and holidays from 17 May to 24 June 2021.” Greg Connell, Managing Director of InfolinkGazette, said: “the projected loss represents a huge reversal of fortune for a company with a pre-pandemic pre-tax profit of £148m.”
This weeks award for the most entertaining Outlook Statement in a Trading Update goes to Grafenia plc for the following board statement: “The road to economic recovery looks a little hazy. Are those sunlit uplands? Or did someone start a fire in the top field? Tricky to say. There's lots of reason to believe our clients will reopen to increased demand. Events will restart. Diners will feast. Drinkers will sip, or gulp. And when they do, we'll be ready. In hundreds of neighbourhoods, ready to design. To make. To ship. All using our software platform to smooth the process.
14th April 2021 Press Release from InfolinkGazette
A sharp rise in UK insolvencies is expected later this year. New data from InfolinkGazette has demonstrated that UK insolvencies have, so far, remained well below normal levels and aren’t showing any signs of picking up in the near term. The extension of the statutory ban on commercial evictions to 30 June 2021, ongoing forbearance from HMRC, easy access to government underwritten loans and the furlough scheme have all combined to ensure that even the businesses that weren’t viable before the pandemic are avoiding insolvency. However, InfolinkGazette expects to see insolvencies begin to move upwards in July 2021 when landlords are able to resume enforcement action but notes that the real surge may not begin until after furlough ends in October 2021. Greg Connell, Managing Director of InfolinkGazette, commented: "Even if post-pandemic trading profits replaces the reliance on government stimulus measures for the majority, there are still between 5,000 and 10,000 companies with a pre-pandemic vulnerability to insolvency, where the reprieve has only been temporary.
Jessops Europe Limited, owned by one of the multimillionaire dragons obviously didn’t get the first Administration application across the line, because they have filed another Notice of Intention to appoint an administrator in the High Court today (07/04/2021). Jessops filed the original application on 26/03/2021. Greg Connell, Managing Director of InfolinkGazette, said: “maybe the secured charge holder is playing hardball.”
Tasty PLC, the operators of the Wildwood chain of restaurants looks towards avoiding a formal CVA. The board confirmed the Group has successfully achieved consensual lease concessions and rent reductions to March 2021 on more than two-thirds of the estate. However, given the current third lockdown and the moratorium expected to end in June 2021, anticipate requiring further landlord support. The board stated: “with continued creditor assistance, a more formal procedure such as a company voluntary arrangement ("CVA") may be avoided but we continue to consider all options.”
Pushing the Envelope – Greensill Capital
Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited, both filed Administration Applications in the High Court on 8th March 2021, following its insurer Credit Suisse refusing to renew $4.6 billion of insurance. Signalling a spectacular fall from grace for a business once valued at £3.5 billion.
Greensill claimed to be the market-leading provider of working capital finance for companies, promising to: “unlock capital so the world can put it to work”. Founded in 2011 by Lex Greensill, the company headquartered in London provided Supply Chain Finance to customers across Europe, North America, Latin America, Africa and Asia and worked with a host of banks and institutional investors that underpinned the companies claims to “provide solid funding streams”.
To the casual observer Greensill’s Supply Chain Finance business was essentially a factoring business with a fintech makeover, where the creditor relationship had been switched. But Greensill believed they were about much more than Supply Chain Finance. Greensill’s claims included harnessing the power of financial markets to: “unlock capital on terms that fit the precise requirements of our clients, from 20 days to 20 years and beyond”. With the benefit of hindsight, these claims look like they were underpinned by daring financial manoeuvres breaching risk limits that cannot be exceeded safely.
Before the fintech makeover, Supply Chain Finance was a simple low risk business with most banks offering it to blue-chip customers with investment grade credit limits. Where the process begins to get complicated, and risk starts to rise is when customers decide to delay making payments to the Bank. Whereas supplier invoices are normally settled in 60 days, users of supply chain finance can push back payments to 180 days. It is attractive to the supply chain finance provider because it increases margins, and there’s no shortage of overly indebted companies that see the attraction of this type of finance because it doesn’t appear on the balance sheet as debt. Carillion and NMC Health were major user of supply chain finance.
Greensill ratcheted up the risk a notch or two with customers availing of both supply chain finance and receivable financing, especially when the risk was so concentrated, with a reported $5 billion of receivables financing for companies associated with the GFG Alliance Group. Embracing ever higher levels of risk, Greensill pioneered turning future receivables/sales in to cash. This is probably fine with the likes of Tesco Mobile Ltd, with hundreds of thousands of customers on annual contracts, but lending cash to companies associated with GFG Alliance on the basis of several years of projected future steel sales must have created completely unpredictable levels of risk.
The Covid-19 Pandemic created new uncertainties and risks, but also new opportunities for Greensill. After being admitted to the Coronavirus Large Business Interruption Loan Scheme in June 2020, Greensill seem to have breached their £50 million loan cap with £200 million of loans to companies linked to GFG Alliance, which will invalidate the 80% government guarantee on the loans, leaving Greensill on the hook for the loans.
The “solid funding streams” now look distinctly soft and as those Greensill clients that had become reliant on Supply Chain Finance scramble to arrange alternatives, they can expect to be subject to higher levels of scrutiny than would have been the case at Greensill. And the 40 to 50 Greensill customers who pledged assets by way of a secured charge are likely to find it hardest of all to replace the lost financing.
The US owned retailer Brooks Brothers UK Limited, filed a notice to appoint an administrator on 31/03/2021. Greg Connell, Managing Director of InfolinkGazette, said: “with the Icon & Westfield stores closed, the retailer made a furlough claim in the £10K to £25K band in December and the £50K to £100K band in January.”
Jessops Europe Limited, owned by one of the multimillionaire dragons has filed a Notice of Intention to appoint an administrator in the High Court today (26/03/2021). Greg Connell, Managing Director of InfolinkGazette, said: “creditors might have seen the writing on the wall when they reviewed the 29 April 2018 accounts, but the April 2019 accounts, which should have been filed by January 2020 are still conspicuous by their absence, making it something of a record for days overdue accounts filing.”
Ward Recycling Limited went in to liquidation owing £11,780,300 to 63 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “Ward Recycling were clearly very heavily dependent on their bank, HSBC, who took a £ 5,187,000 hit”
Jersey registered BETINDEX LIMITED filed an Administration Application in the High Court on 18/03/2021 following the Gambling Commission deciding to suspend the operating licence of BetIndex Limited (t/a Football Index). Greg Connell, Managing Director of InfolinkGazette, said: “The The Gaming Commission had concerns that activities may have been carried on that were not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.”
Civil Engineers Mecx Group Limited went into liquidation owing £7,202,830 to 126 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “the last Balance Sheet looked strong enough, but with no accounts filed since the September 2018 in February 2019, trade creditors would have been left completely in the dark.”
The extension of the statutory Ban on commercial evictions to 30 June 2021 might save some companies but it might create another Intu type failure. What chance of a commercial property company focused on the retail & hospitality sector getting another rights issue away now? Even if we avoid another high-profile failure in the property sector, will the legacy of the statutory prohibition on enforcement action cause lasting damage to the sector, adversely affecting investment in retail and hospitality property for years to come? Greg Connell, Managing Director of InfolinkGazette, said: “Looking at the profit warnings of listed property companies, and the statements of affairs from failed retailers, we believe that between 60% and 80% of non-essential retail and hospitality are between 2 and 4 quarters behind on the rent and with the latest extension that could become 3 to 5 quarters behind.” Greg added: when Landlords are permitted to act, the insolvent retailers and restaurateurs will head for the exit via a pre-pack, which will take care of around 20% of the arrears, but that might stiffen the resolve of landlords to deal very firmly with those that can pay.”
Robin Hood Energy Limited, went in to Administration owing £62,325,600 to 95 unsecured creditors, including £ 37,082,652 to Nottingham City Council. Greg Connell, Managing Director of InfolinkGazette, said: “Robin Hood Energy Limited was 1 of 3 companies issued with final orders by Ofgem in October 2020, for failing to pay £15 million in Renewables Obligation and Feed-in Tariff payments. Nabuh Energy Limited, and Symbio Energy Limited were the other 2 late payers.”
Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited, both filed Administration Applications in the High Court today, signalling a spectacular fall from grace for a business once valued at £3.5 billion. Greg Connell, Managing Director of InfolinkGazette, commented: “Greensill's collapse is being represented as a huge blow to the UK's fintech sector, and though there is a very real threat to jobs in sectors it supported through supply chain finance, was Greensill really much more than a factoring company that grew too quickly with lapse governance and inadequate risk management?”
Subprime lender Non-Standard Finance needs to raise new capital to avoid covenant breaches and address material uncertainties about its going concern status. Greg Connell, Managing Director of InfolinkGazette, commented: “the capital raise has the support of major shareholder Alchemy, so should raise the required funds but there must be some uncertainty over how the loan book will be impacted by future increases in impairment provisions in a post COVID-19 pandemic world when government support and stimulus measures have come to an end.”
An interesting article but I think we are going to need to re-write the rule book on the relationship between profit warnings and insolvencies. In 2020, between 4,000 and 5,000 companies that would have become insolvent regardless of the pandemic, were able to dodge the bullet by virtue of government stimulus measures. The top 3 reasons behind the decision to enter insolvency are: 1) inability to fund an upcoming payroll; 2) make a quarterly rent payment; and, 3) inability to fund an HMRC payment. Furlough has taken care of the payroll for at least 800,000 companies; statutory restriction on landlord enforcement action have resulted in many leaseholders not paying rent since March 2020; and HMRC has virtually called a halt to petitioning for the wind up of companies with overdue tax liabilities. However, when the government stimulus measure wind down, the insolvencies will wind up.
The majority of the Arcadia Group Statements of Affairs have now been finalised and total losses for UK based unsecured creditors (suppliers & landlords etc) stands at £140.5 million. Greg Connell, Managing Director of InfolinkGazette, commented: “the group had operated from 459 leased locations, very few of which will be occupied by the time the High Street begins opening up in April.” Greg added: “sadly, only a few of the 7800 employees will be returning to work in retail anytime soon.”
According to figures released by InfolinkGazette UK listed company profit warnings more than doubled in 2020 from 363 in 2019 to 739. The number of companies issuing 3 or more profit warnings within 12 months increased 4-fold from 12 to 44. Greg Connell, Managing Director of InfolinkGazette, commented: “on a historical basis 3, or 4 profit warnings in the space of a year flagged up an insolvency risk of 20 times the median rate.” Greg added: “government stimulus measures should help avoid a 4-fold increase in listed company failures, but some look very fragile.”
UK company secured lending volumes remain depressed, down 12% in the final quarter of 2020 versus the final quarter of 2019. For the 9-month pandemic period 1st April to 31st December 2020 the total number of secured charges registered at Companies House was down 20% on the same prior year (PY) period. Lloyds Banking Group remain the No. 1 secured lender, but with just 8,524 secured charges registered during the 9-month period versus 10,797 during the same PY period. HSBC leap frog Barclays in to 2nd place, and Nat West (RBS) fall from 2nd place to 4th. Bibby Financial Services Ltd (Factoring) drop out of the top 20 charge holders. Greg Connell, Managing Director of InfolinkGazette, commented: “Lenders are permitted to ask for additional security from the borrower in the form of a personal guarantee for CBILS loans of more than £250,000. Recovery of loans under the personal guarantee is capped at a maximum of 20%, but that still means there has been a substantial switch in exposure from corporate liability to the personal assets of business owners and directors.”
28th January 2021 Press Release from InfolinkGazette
Edinburgh Woollen Mill Limited (The) went in to Administration owing £184,680,000 to 1425 unsecured creditors, or £44,680,000 to 1424 unconnected creditors. 108 unsecured creditors stand to lose over £40,000. Greg Connell, Managing Director of InfolinkGazette, said: “EWM hadn’t been paying the rent since March 2020, so landlords including local government authorities are big losers, but the biggest single loser was the Pension Protection Fund with losses estimated at £17,500,000, which will mean lower future pensions for former employees.” Greg added: “trade credit insurance was still available up until the summer of 2021, meaning some trade suppliers will have been covered, but the scale of the problems facing the group were becoming apparent from August.”
Tyre & battery fitters Alltyres Trading Limited went in to liquidation owing £1,681,600 to 44 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “Alltyres looked to be in pretty good financial shape Pre-Covid but now form part of the first wave of Covid corporate demises.”
In a recent trading statement, Town Centre Securities PLC name and shamed Premier Inn, claiming that the hotel chain owned by Whitbread Plc, unexpectedly paid only half of their rent due for the latest quarter, leaving £0.1m unpaid, without any agreement. Greg Connell, Managing Director of InfolinkGazette, said: “Whitbread Plc have issued 3 profit warnings in the last 12 months.”
Landlords take a hammering as a result of Peacocks Stores Limited entering administration owing £40,715,300 to 944 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “rents hadn’t been paid across the entire group since March 2020”. Greg added: “trade credit insurance was still available up until the summer of 2021, meaning some trade suppliers will have been covered, but the scale of the problems facing the group were starting to become apparent from August.”
Paperchase Products Ltd, the troubled stationery chain filed a 2nd notice of intention to appoint an Administrator today (19/01/21). Greg Connell, Managing Director of InfolinkGazette, said: “Paperchase originally filed two weeks ago on 05/01/21, but presumably weren’t able to complete the appointment within the permitted 14-day moratorium”. Greg added: “they now have another 14-day moratorium”.
Begbies Traynor Group plc acquire CVR Global LLP for a consideration of £20.8m - In the financial year ended 31 March 2020, CVR Global reported annual revenue of £9.5m, normalised pre-tax profits of £1.2m and Net assets of £4.1m. Greg Connell, Managing Director of InfolinkGazette, said: “we are expecting substantial growth in the insolvency sector this year.” Greg added: “there were over 3,000 companies that would have entered insolvency in 2020 even if there hadn’t been a pandemic but didn’t enter formal insolvency because of government stimulus measures; when the stimulus measures stop, the insolvency volumes will surge”.
£10 million construction company Goodwins Construction Services Group Limited went in to Administration owing £1,307,750 to 211 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “HMRC were pursuing Goodwins for £250,000 of Construction Industry Scheme (Subcontractor) under payments.” Greg added: “the company obtained a £700,000 CBILS loan in June, but needed another £600,000 to keep going, but further funding was not forthcoming.”
Paperchase Products Ltd, the £125 Million stationery chain filed a notice of intention to appoint an Administrator today (05/01/21). Greg Connell, Managing Director of InfolinkGazette, said: “Paperchase spent six months in a Company Voluntary Arrangement (CVA) in 2019, only exiting the CVA in August”.
Directors and Members called time on over 13,000 solvent businesses in 2020 with a surge in the number of England & Wales resolutions for voluntary winding up, increasing from 8,573 resolutions in 2019 to 13,046 in 2020. Greg Connell, Managing Director of InfolinkGazette, said: “these member voluntary liquidations are solvent companies, so not counted in the insolvency statistics but the steep rise is a clear indication of highly negative business sentiment.” Greg added: “many of these MVLs will be companies that have decided that racking up debt is not the answer to lost trading profits, and some will be racing for the exit in advance of anticipated CGT hikes.”
The extended restrictions on commercial landlords' ability to take enforcement action against commercial tenants who are in rent arrears has deferred the traditional Christmas holiday surge in Administration application. Only 2 Administration applications were lodged in the High Court during Christmas 2020 versus 22 during Christmas 2019. Greg Connell, Managing Director of InfolinkGazette, said: “In the absence of further extensions, landlords will be able to forfeit for non-payment of rent from 1 April 2021.” Greg added: ”by then, there will be thousands of retail and hospitality tenants 3 to 4 quarters' rent in arrears and we expect to see a surge in Administration applications on the eve of the restrictions expiry, before landlords can begin enforcement.”
Auto Spares and Parts Limited went in to liquidation owing £4,116,740 to 108 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “the 31/12/2018 accounts weren’t signed until 26/05/2020.”
I C S Distribution Limited went in to Liquidation owing £2,252,260 to 172 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “the company hadn’t filed a financial statement since July 2019 when it lodged October 2018 accounts. When the 2019 accounts were due to be filed, the company extended the accounting period”. Greg added: “suppliers who continue to trade on open credit terms with customers that have not filed a financial statement in the last 12 months are incurring heavy losses.”
A collaboration with Marstons and an imaginative solution saves Welsh brewers S.A.BRAIN & COMPANY LIMITED. Greg Connell, Managing Director of InfolinkGazette, said: “S A Brain are unlikely to be out of trouble, the 2019 accounts are long overdue filing at Companies House, and a negligible net pension scheme liability in 2018 may well have become a significant deficit in the last 27 months. In the absence of any recent financial statements, creditors should assume the worst.”
Landmark Southport hotels Southport Promenade Hotels Limited and D'Urberville Hotels (Southport) Limited have both filed a second Notices of Intent to Appoint and Administrator. The first High Court notices were filed on 8th December 2020, with the second filing on 22nd December. Greg Connell, Managing Director of InfolinkGazette, said: “when the application doesn’t proceed to an appointment within the statutory 10 days, during which a company has protection from its creditors, we are seeing a number of follow up applications.”
Family-owned building contractors J A Ball Limited went in to Administration owing £2,092,790 to 178 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, said: “looking at the Administrators report it seems the company was in deep trouble before Covid-19 have taken on a number of projects that ultimately turned out to be loss making in 2019, with losses estimated at £3.1 million.”
Sparkle Dental Labs Limited, which operated from state-of-the-art million-pound premises at the University of Bolton went in to liquidation owing £2,642,460 to 60 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “associated company Genix Healthcare Limited are owed £1,506,451.” Greg added: “Genix Healthcare Limited reported a near £5 million negative net worth and a £7 million working capital deficit in their most recently filed accounts.”
BLUE GROUP UK RETAIL LIMITED, trading under the Bensons for Beds brand went in to Administration owing £15,078,200 to 187 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “unsecured creditors will be having sleepless nights with no expectation of a dividend.” Greg added: “the Covid-19 enforced closure along with ongoing trading underperformance caused a breach of covenants in relation to lending facilities.”
Four separate Deltic Group companies significantly controlled by Nightclub operator Deltic Group, filed Notices to appoint an Administrator in the High Court on 17th December. Greg Connell, Managing Director of InfolinkGazette, commented: “it is difficult to think of an industry, closed by law since March 2020, with no prospective opening date that has received so little government support.”
Home improvement company G2SGroup Limited went in to liquidation owing £2,729,630 to 60 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “It was doubtful that this business was a going concern back in 2019 when it reported a negative net worth of £750,000 and £1,800,000 of disputed invoices with a supplier”.
Crowd funded affordable homes builder Eliot Design & Build Limited went in to liquidation owing £3,084,700 to 148 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “these unsecured creditor losses have occurred despite the fact that the company owned freehold land and buildings estimated to realise £450,000 against a book value of less than a £40,000.”
8th December 2020 Press Release from InfolinkGazette
2020 has been an eventful year: profit warnings have rocketed to unprecedented levels, more than doubling to 760; upmarket retailers and casual dining chains have collapsed in to insolvency; secured lending has fallen 25%; there has been a double digit decline in GDP; and yet 2020 corporate insolvencies are down below two thirds of 2019. However, in the last 2 days of November, 57 E&W companies filed insolvency applications in the High Court, compared with a recent run rate of 7 applicants a day; high court filings are a leading indicator of near term insolvencies. Some of the volume has been generated by the 1st December deadline on Crown Preference and some of it is the Arcadia collapse, but we are now seeing the beginnings of the insolvency surge. Corporate insolvencies in 2021 will include the unmaterialised insolvencies from 2020, the businesses that would have failed but for Government stimulus measures, plus the natural 2021 insolvencies and the insolvencies brought on by COVID-19; 2021 will probably be too early to see the insolvencies resulting from taking on too much debt, but we will see the insolvencies that are as a direct consequence of reduced trading during Covid-Countermeasures. Trade Suppliers who don’t have Credit Insurance will be bracing themselves for a period of unprecedented losses, exacerbated by the resumption of Crown Preference.
Final flurry to beat the Crown Preference deadline - Greg Connell, Managing Director of InfolinkGazette, commented: “we normally process around 4 or 5 Notices of Intent to Appoint an Administrator per day, but in a final rush to appoint, there have been 43 HMCourt filing since Friday and we’re expecting to see even more before the midnight deadline”. Greg added: ”these will be the final few insolvencies where HMRC stand inline with all of the other unsecured creditors, and from tomorrow onwards, the insolvency of a customer will become an altogether more painful and expensive experience.”
Audio conferencing platform LoopUp Group PLC warned on profits for the second time this year, blaming a lack of differentiation and increased competition.
Digital cinematography hire company Procam Television Limited went in to Administration owing £14,772,800 to 200 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “the company had been losing money since 2016 and due to the decline in demand resulting from the Covid-19 lockdown, were unable to raise funds to restructure.”
Upmarket retailers GUESS U.K. LIMITED, owned by Guess Inc and Aspinal of London Group Limited have both filed papers in HMCourts to enter a CVA. Aspinal of London Group Limited’s subsidiary ASPINAL OF LONDON LIMITED had already entered a CVA. Greg Connell, Managing Director of InfolinkGazette, commented: “year to date insolvencies are down more than a third on prior year, and that’s down to government stimulus measures, but no amount of stimulus will defy gravity indefinitely.”
Manchester based civil engineering contractor Bemus Construction Services Limited went in to Liquidation owing £4,872,750 to 250 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “the Government-backed temporary reinsurance scheme, which has been critical to the construction sectors ability to continue accessing trade credit insurance runs out on 31 December 2020; without an extension, there is a real risk of a construction credit crunch”.
Bus and Coach operator Mike De Courcey Travel Limited went in to Administration owing £3,691,980 to 130 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “the fact that vehicles with a book value of almost £800,000 are only estimated to realise £65,000 is a good indication of the scale of damage that has been inflicting on this sector.”
The outlook is bleak at Nakama Group PLC, the AIM quoted recruitment consultancy working across the UK and Asia. In a recent profit warning, the board stated: “as the various government support schemes are ended, the Company will face a number of trading and cashflow challenges and without access to additional capital the Group's working capital situation may deteriorate. The Company's largest shareholder has made it clear to the Board that they would not support a fundraise and would vote against the necessary shareholder resolutions to issue new shares.” Greg Connell, Managing Director of InfolinkGazette, commented: “there are no persons, or entities with significant control, so there may be some hope, but suppliers should be looking to manage down exposure.”
Secured lending volumes collapses in the 6-month period 1st April to 30 September 2020, compared to 2019. The total number of secured charges registered at Companies House was down 25% on the same prior year (PY) period. Lloyds Banking Group remain the No. 1 secured lender, but with just 5,824 secured charges registered during the 6-month period versus 7,207 during the same PY period. HSBC leap frog Barclays in to 2nd place, and Nat West (RBS) fall from 2nd place to 4th. Bibby Financial Services Ltd drop out of the top 20 charge holders. Greg Connell, Managing Director of InfolinkGazette, commented: “the number of CBILS and BBLS granted during this peak period seems to be driving down the volume of new secured lending facilities across the majority of finance providers.”
Listed architect Aukett Swanke has warned it will slip back into the red this year. The board reported: “the Group returned to profitability in the first half. However, Covid-19 has impacted the second half year such that the Group now expects to report a small loss for the full year”. Greg Connell, Managing Director of InfolinkGazette, commented: “there is still a great deal of uncertainty over the size and timing of future construction projects”.
INGLEBY (1949) LIMITED the owners and operators airport lounges NO1 LOUNGES have filed papers in the High Court to enter a Company Voluntary Arrangement. Greg Connell, Managing Director of InfolinkGazette, commented: “Airport Lounges have been largely open, albeit with restricted services and reduced opening hours, but it is hardly surprising that they are facing financial difficulties with air passenger numbers down around 80%.”
Cruden Construction Ltd, went in to Administration owing £13,786,100 to 161 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “when you analyse the scale of the losses sustained by individual unsecured creditors, relative to their size, you have to hope the suppliers had secured trade credit insurance cover, because if not, many of them won’t be able to recover from their losses.”
Cote Restaurants Limited, the operator of 100 UK restaurants went in to Administration owing £7,193,450 to 264 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “Cote had been growing revenues and posting operating profits, and was undoubtedly a casualty of the nationwide lockdown; suppliers to the hospitality sector will continue to pay a heavy price, which will be further exacerbated by Lockdown 2.0.” Greg added: “where credit insurance is available, suppliers should seek cover and not rely on shrinking dividend pay outs from firms in Administration.”
Specialist engineering and defence contractor Pressure Technologies issued a profit warning blaming tougher trading conditions, Covid-19 disruption and the deferral of revenue and profit for a defence contract into FY21. Greg Connell, Managing Director of InfolinkGazette, commented: “Pressure Technologies warned on profits in April, unrelated to Covid-19 disruption.”
Clothing retailer J. Crew U.K. Limited went in to liquidation owing £2,915,910 to 22 unsecured creditors. Greg Connell, Managing Director of InfolinkGazette, commented: “the audit would have been signed off in October 2019 and based on the latest trading statement it is incomprehensible that there wasn’t an explicit material uncertainty report.” Greg added: “you wonder what it takes to trigger an Auditors material uncertainty report, but as we start to see audited financial statements that have been effected by Covid-19, creditors shouldn’t assume that the Auditors have tested the going concern basis with sufficient rigour”.
Revolution Bars Ltd applied to the courts for a Company Voluntary Arrangement on Monday 27th October. Greg Connell, Managing Director of InfolinkGazette, commented: “sales have halved since the imposition of the 22:00 curfew and multiple outlets are going to have to close permanently”.
13th October 2020 Press Release from InfolinkGazette
Three recent UK Administrations highlight the value of trade credit insurance. New research from InfolinkGazette has identified that just three recent Administrations have resulted in 851 creditors being owed nearly £105 million. All three businesses are well-known, established names: TML Realisations Limited - formerly menswear retailer T.M Lewin & Sons (£19,990,000 owed to 446 unsecured creditors), the Casual Dining Group of Companies (£39 million owed to 300 unsecured creditors), and Wigan Athletic A.F.C Limited (£45,695,700 owed to 105 unsecured creditors). Greg Connell, Managing Director of InfolinkGazette, commented: “The UK Government-backed Trade Credit support Scheme has been helping to ensure continuity of trade insurance cover in the UK; and, it isn’t just existing policyholders that benefit. With insolvencies set to spike, uninsured trade supplier looking for increased peace of mind might want to take another look at trade credit insurance”.
Jaeger Retail Limited, ultimately owned by The Edinburgh Woollen Mill (Group) Limited has filed a Notice of Intention to appoint an administrator in the High Court. InfolinkGazette's Managing Director, Greg Connell said: "trade suppliers should be wary of costly pre-pack”.
Parent company Paintbox Group Limited allowed Paintbox Birmingham Limited to enter Administration with 30 unsecured creditors owed £9,696,950, which includes £6.7 million owed to Group Companies. InfolinkGazette's managing director, Greg Connell said: "Paintbox Group look very vulnerable”.
Multinational medical equipment manufacturing company Smith & Nephew announced a third quarter underlying revenue decline of approximately -4% but a strong recovery on the second quarter when declines were running at -29.3%. InfolinkGazette's managing director, Greg Connell said: "the results continue to reflect a Covid-19 impact but point to a recovery in global levels of elective surgery.”
Dividends paid to unsecured creditors from insolvent companies will shrink next year, partly due to HMRC becoming a preferential creditor but also the collapse in business asset values that have become stranded assets (assets that can't be fully utilised under Covid-Countermeasures). InfolinkGazette's managing director, Greg Connell said: "it is easy to see how a £300 million cruise ship, or an airliner becomes worth next to nothing when it is no longer possible to operate them profitably, and the same is happening with expensive fit outs in restaurant kitchens and with high end retail leasehold improvements.
Wigan Athletic A.F.C Limited went in to Administration owing £45,695,700 to 105 UK unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “there are 9 football clubs listed amongst the creditors, including Barnsley Football Club, who are owed £1,500,000 and Everton Football Club Ltd, who are owed £1,268,136.”
Luxurious Shoreditch members club, AL Curtain Tenant Limited, t/a The Curtain went in to liquidation owing £7,043,860 to 156 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the company was incorporated in July 2018, but by using the old trick of once extending, and twice shortening the accounting period, they managed to avoid ever filing any accounts”.
Building services company Ilec Ltd went in to Administration owing £2,738,730 to 103 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the Administrators report blames Brexit and Covid, at InfolinkGazette, we think it might have more to do with paying out more in dividends than the profits that had been generated”.
Declines related to Covid-Countermeasure in the global casinos and gaming sector are having a knock-on-effect in other sectors. Security and surveillance system experts, Synectics plc issued a profit warning today, stating that the anticipated recovery in financial performance is unlikely to take place in the 2nd half of the year. InfolinkGazette's Managing Director, Greg Connell, said: “the Synectics board believe the vast majority of planned surveillance system projects and upgrades in the sector will now be delayed beyond 2020, because of ongoing interruption to gaming activity around the world”.
TML REALISATIONS LIMITED, formerly menswear retailer T.M.LEWIN & SONS LIMITED, established in 1898 went in to Administration owing £19,990,000 to 446 UK unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “in common with many retailers with a nationwide network of stores, the introduction of Covid-countermeasures has accelerated T M Lewin’s move to online-only”. Greg added: “in an uncertain trading environment, retailers will continue to close out their bets on a store network and restructure around online-only”.
The Casual Dining Group of Companies went in to Administration owing over £39 million to over 300 UK unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the group, which includes Bella Italia and Café Rouge was sold to Epiris LLP, an independent private equity firm for an initial consideration of £9 million, with a further £9 million deferred until assignment of the leasehold portfolio”.
On 17/09/2020 Trainline PLC issued a Profit Warning stating: Government measures to curb the spread of COVID-19 resulted in a significant slowdown in all the markets in which Trainline operates. The impact was particularly marked in the first quarter of the financial year, when industry passenger volumes in the UK fell to c.5% of the same period in the prior year through April and May, with similar declines across International markets. Trainline also processed a significantly higher number of refund requests (more than 2 million in the UK alone). InfolinkGazette's Managing Director, Greg Connell, said: “Trainline was the largest IPO in 2019, when it’s shares soared on their first day of trading after the tech giant made its £1.7bn stock market debut”.
Preventing Landlords from taking legal remedies for 2020's unpaid rent until after 31st December 2020 (extended from 30th September 2020) is far too blunt an instrument. Some of the uncollected rent is due from solvent tenants who are taking advantage of the moratorium to either not pay rent or seek lower contractual terms and the insolvent tenants will owe as much as 9 months’ rent when they eventually yield to the inevitable insolvency.
Designer outlet AQUASCUTUM (1851) LIMITED have filed a “Notice of Appointment to appoint an administrator” at HM Courts. InfolinkGazette's Managing Director, Greg Connell, said: “this is a document that is filed in court signalling the company’s intention to go into administration. It is often used as a way of restructuring a failing business to stop it from being liquidated and can also be used as part of the pre-pack administration process. Greg added: “the court records provide a vital early warning for creditors because nothing has been filed at Companies House, or published in the Gazette.”
Technology Company CDI Group Limited went in to Administration owing £3,297,090 to 74 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “at the time of the insolvency, the accounts were overdue, despite a long history of shortening, and extending the accounting period between filing dates”.
8th September 2020 Press Release from InfolinkGazette
Forthcoming service aims to reduce the critical time delay between the actual decision to appoint Administrators and unsecured creditors being aware of the fact. InfolinkGazette has advised that it soon intends to begin offering a new service to clients which aims to reduce the critical time delay between the actual decision to appoint Administrators and unsecured creditors being aware of the fact. Greg Connell, Managing Director or InfolinkGazette notes that occasionally the filing of a notice to appoint Administrators is picked up solely due to the fact that they form part of a Listed Company and are required by the Regulator to inform the Market of such events. When there is no such obligation, unsecured creditors are generally blindsided until the notice appears in the Gazette or is filed at Companies House. As Mr Connell stresses: "Clearly such a delay can make a huge difference to the quantum of any subsequent Creditor claim."
Arlington Engineered Systems Limited went in to Administration owing £17,294,300 to 630 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “Arlington were very late filing 2019 accounts, which not surprisingly resulted in the withdrawal of credit insurance; unable to secure credit terms, it looks like the group ran out of cash.”
Expensive burger chain, Byron Hamburgers Limited went in to Administration owing £15,378,000 to 139 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the Byron management had already realised that selling expensive burgers from 51 sites was unlikely to turn a profit and 19 or more locations would need to close, but when they all had to close as part of the Governments Covid-Countermeasures, Byron ran out of time.” Greg added: “Byron wouldn’t have qualified for access to CBILS because accumulated losses exceeded 50% of capital”.
FOUR SEASONS HEALTH CARE LIMITED (Company number 05165301), the UK's largest, but financially troubled independent health care providers filed an Administrator Appointed document at Companies House today. InfolinkGazette's Managing Director, Greg Connell, said: “the company filed a Notice of Intention to appoint an administrator at HM Courts on 04/08/2020, almost a full month before the official appointment.” Greg added: “Four Seasons Health Care Group Limited filed the notice of intent at the same time, but the Administrator Appointment was confirmed on 20/08/20.”
Archant Community Media Holdings Limited, part of the Norwich based Archant newspaper and magazine publishing group filed a Notice of Intention to appoint an administrator ahead of the bank holiday weekend. The group publishes four daily newspapers, around 50 weekly newspapers, and 80 consumer and contract magazines. InfolinkGazette's Managing Director, Greg Connell, said: “Archant appear to have been purchased by a private equity firm; the outlook for creditors is not yet know, but Archant’s defined benefit scheme had a £25 million deficit in 2018, and that deficit is likely to have grown since then”.
Suppliers are about to be hit by a Quadruple whammy: HMRC as a preferential creditor; the deferred insolvencies that have simply been delayed for the past 5 months; the insolvency growth of companies in at least 80 sectors that are no longer viable under Covid-Countermeasures; and, the collapse in asset values from what will become stranded assets (assets that can't be fully utilised under Covid-Countermeasures). The situation will be made even worse by the knock-on effect, whereby previously viable companies will fail as a consequence of mounting unsecured and uninsured losses from corporate failures.
Celine Group Holdings Limited, the parent Company of Debenhams Retail Ltd (in Administration) have filed a Notice of Intention to Appoint an Administrator and a further Notice of Appointment to appoint an administrator at the High Court. InfolinkGazette's Managing Director, Greg Connell, said: “Celine is controlled by Debenhams’ lenders and only took control of Debenhams on the 04/04/2020. Greg added: “we only see these types of High Court filings when companies are about to formally enter Administration, and a moratorium will already be in force.”
In the latest profit warning from Lookers PLC, the board reported that the temporary closure of the Group's dealerships throughout the lockdown period had made a significant impact on the Group's revenue and expects to report H1 revenue of approximately £1.6bn (2019: £2.6bn). In addition to the revenue decline, the Group also experienced margin pressure in both new and used vehicles with the former impacted by reduced levels of manufacturer volume bonus receipts. The Group expects to report a material underlying PBT loss for H1, after receiving c£29m from the Government's Job Retention Scheme. InfolinkGazette's Managing Director, Greg Connell, said: “the company has now issued 4 profit warnings in a little over 12 months and has also widened the scope of its audit into a £19m black hole in its 2019 financial results.”
CATH KIDSTON LIMITED (now CKL Realisations Limited) went in to Administration owing £6,874,509 to 430 UK unsecured creditors, plus £68,398,991 to unsecured group company Cath Kidston Acquisitions Ltd. InfolinkGazette's Managing Director, Greg Connell, said: “the private equity owners of the business held a secured charge, so it looks like they will come out OK, and dividends to unsecured creditors will be negligible”.
Chartered Surveyors, Fletcher King plc issued a profit warning today; the company had announced that performance to 30 April 2020 was not materially affected by the COVID-19 virus outbreak. However, the huge uncertainty and market dislocation caused by the current situation has had a material adverse impact on transaction-based fees. The Company has also been impacted by a severe contraction in the Professional Indemnity insurance market, particularly with regard to property valuation work, with the renewal premium more than doubled, increasing by just over £200,000 for the financial year. InfolinkGazette's Managing Director, Greg Connell, said: “property valuations are set to become extremely contentious; if The Trafford Centre was valued at £1.7 billion when it had an annual income of £85.3 million, what's it worth today if the annual income drops to £60 million, or £40 million.
Hammerson PLC continues to top the FCA Short Seller list with a total net short position in its stock of 14.29%. Eleven companies have taken a position shorting Hammerson’s stock with net short positions ranging in size from 0.6% to 4.33%. InfolinkGazette's Managing Director, Greg Connell, said: “Hammerson's rights issue should enable it to avoid breaching its banking covenants in the short term.”
Construction firm SQ-M2 Ltd went in to Administration owing £3,817,020 to 244 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “the company’s problems stem from a project involving cladding issues, arising from a cladding supplier that ultimately went in to liquidation”. Greg added: “unfortunately, insolvencies like these have a serious knock-on effect and several of SQ-M2’s unsecured creditors will be forced in to Insolvency themselves”.
Logistics firm Amco Services (International) Limited went in to Administration owing £2,561,080 to 364 unsecured creditors. InfolinkGazette's Managing Director, Greg Connell, said: “Amco was highly leveraged but seemed to be part way through a turnaround, which was snubbed out by the widespread economic decline caused by the effects of Covid-Countermeasures.”
This is not a normal cyclical recession, it has nothing to do with interest rates/inflation, or asset bubbles, it is a recession brought about by the government shutting down the econo