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September 2021

After an unexpected decline in the number of company insolvencies in the UK in July, the August total rose to levels not seen since before the pandemic according to the latest official monthly company insolvency statistics released by The Insolvency Service

For England and Wales alone, the total number of corporate insolvencies for August 2021 was 1,348 - this was up 251 from the 1,097 recorded in July and is 71% higher than the 788 insolvencies recorded in August a year ago. 

The total is also broadly similar to the pre-pandemic total of 1,366 from August 2019 and represents the fourth consecutive month both of insolvencies numbering over 1000 and being higher than the same month a year previously.   

Of these 1,348 company insolvencies, the vast majority were Creditors Voluntary Liquidations (CVLs) making up 1,256 of the total amount. 

Additionally, there were 35 compulsory liquidations; 55 administrations; 2 company voluntary arrangements (CVAs) and zero receivership appointments. 

Breaking these down further we see:

There were 89 company insolvencies in Scotland last month, up from 72 in July. This was also nearly double the number from a year ago and was 13% higher than in August 2019. 

This comprised 11 compulsory liquidations, 76 creditor voluntary liquidations and two administrations. There were no CVAs or receivership appointments recorded. 

From a historical perspective, compulsory liquidations have been the most common type of insolvency recorded in Scotland but since April 2020 there have been more than twice as many CVLs as compulsory liquidations. This has now been the situation for 15 out of the previous 16 months. 

In Northern Ireland there were 9 company insolvencies registered which although five less than in July it was more than double the number from a year ago although 59% lower than August 2019. 

This was made up of eight CVLs and one compulsory liquidation. 

The overall total of UK company insolvencies for August 2021 is 1,446, which is up 266 from last month.


Colin Haig, President of R3, the insolvency and restructuring trade body said: “The insolvency figures published today highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months.

“The increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations (CVLs). 

“Numbers for this process were 115% higher than this time last year, and 30% higher than in 2019, which suggests that despite the opening up of the economy, there are a number of company directors who are opting to close their businesses after a year and a half of trading in a pandemic. 

“This comes despite the fact that August was one of the better months for businesses since the start of the pandemic. The lifting of the final restrictions and continued impact of the vaccine rollout means that more people are working, shopping and spending and that looks set to continue as we enter the autumn.

“However, with the furlough scheme closing at the end of this month, company directors need to be aware of the signs of business distress and seek advice if any of them appear. 

“If a firm is having problems paying rent, staff or suppliers, has issues with cash flow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting until the problem has become worse.”


The numbers couldn’t be any clearer. 

For the fourth month in a row, company insolvencies are higher than they were a year ago and now are nearly back to where they were before the pandemic began. 

This is before the furlough scheme finally winds up at the end of September and winding up petitions can begin for businesses that owe creditors over £10,000 - under this amount continues to be suspended until the end of March 2022. 

As HMRC begins to increase their clawback of outstanding debts including overdue bounce back loans and VAT arrears, the next few months look increasingly tough for businesses already struggling with their finances. 

If there’s a time to look for help and get expert advice on what options are available then it’s now. 

Any business owner or director taking advantage of our free initial consultation might be surprised at how much room to maneuver they actually have, but until they get in touch and let us know their situation - they won’t know for sure.

What we know for sure is that the longer businesses leave it, the less opportunity they will have to act when they really need to.  

British pubs

After the most difficult 18 months imaginable, most are able to finally reopen. 

Even with some restrictions remaining in place, this is the moment many restaurants, bars, nightclubs, takeaways and other hospitality venues have been looking forward to. 

But look a little closer and each one has further difficulties of their own to overcome. 

According to the latest figures released from the Office for National Statistics, job vacancies passed 1 million for the first time on record and the unemployment rate has dropped to 4.7%.

So why are many hospitality businesses struggling to recruit or retain returning staff? 

The furlough scheme is still in operation until the end of September but the proportion of the working population out of work remains higher than before the pandemic. 

Industry sources indicate that a gap of approximately 180,000 has grown between available positions and potential recruits available to fill them. 

Various reasons have been posited for this gap including former employees finding work in other industries during enforced business closures, better pay, working hours and work/life balance elsewhere, Brexit and the potential uncertainty of businesses continuing to remain open. 

Many restaurants and bars were caught out in the “reopen then close” loop before. 

Hospitality recruiters are now looking at offering higher pay and benefits as UK wages have risen by nearly 7.4% which is causing more headaches for desperate employers tempted or forced to offer unsustainable packages to entice badly needed staff to join and meet an expected high demand from customers who are either staying in the UK for their holidays or are eager to eat out once again after lockdown. 

The worry for some directors and hospitality business owners is that any rise in demand is temporary and they will be in the impossible position of paying higher wages and costs with reduced demand just when furlough and other government support measures and restrictions on creditor actions are withdrawn in just six weeks time, 


Six weeks to save your business? Why the end of September is bringing big changes you need to know about.


Nightclubs and other parts of the night time economy have also found reopening a struggle. 

The much heralded “freedom day” was disappointing for most as a mix of low consumer confidence, confusing messaging and staffing issues means many are still some way off operating at even 50% capacity. 

They are also operating under a forthcoming requirement for vaccine passports which the government still plans to make mandatory for entry into large-scale venues from the end of September. 

Will Power, owner and operator of the Lab 11 club in Birmingham said it was “complete madness” to limit nightclub entry only to those who’ve been double jabbed. 

He said: “It’s great to be back but we saw a pretty large number of no-shows on our opening weekend.

The venue sold 1,400 tickets for its welcome back night but only 450 attended. A second event saw 850 attendees against 1,500 advance tickets sold and they have had to refund as much as 40% of ticket sales for some events. 

While they haven’t had to cancel any events, Power said the venue was in a “vicious cycle.”

“Every time we’ve had to reschedule events due to restrictions it lowers consumer confidence in purchasing advance tickets for future events.”

Michael Kill, chief executive of the Night Time Industries Association (NTIA), said: “These are businesses that have just spent months - some have been waiting for this moment ever since they shut down in March 2020 - preparing to reopen. 

“Then, on the much-vaunted day of reopening, they are told, ‘Actually, you are going to have to completely change key features of how you operate within months’. It just isn’t fair and it isn’t right to treat businesses this way.”

Even surviving so far should be a reason to celebrate for a lot of nightclubs. 

A study from UKHospitality showed that nearly a third of clubs had closed for good during the past six years alone. 

491 clubs from all over the UK, some 29% of the sector, have shut their doors since 2015 going from 1,694 in 2015 to 1,203 in February this year. 

The ones that reopen might also be facing a hiring crisis of their own as licensed door and security staff numbers are falling too. 

Door Staff require an up-to-date SIA (Security Industry Authority) licence to operate although applications received in the last 12 months are reported to have significantly reduced. 

Following the pandemic and subsequent lockdowns approx. 51% of nightclub staff including security personnel have been made redundant; the majority of whom would have been employed under zero-hours terms which would have made them ineligible for furlough under the coronavirus jobs retention scheme. 

Many will have found new employment leaving a recruitment gap similar to the one facing the other hospitality sectors.

It’s not just employees in the hospitality sector that have been considering their futures during the previous year and a half. 

Many business owners and directors will be looking at their business plans and financial projections and facing some hard choices about what to do in the short and medium term. 

The mountain of obstacles facing them might just be insurmountable right now but that doesn’t mean they can’t try again when conditions are more favourable for success. 

We offer a free initial consultation to any business owner or director to discuss the most efficient and cost effective ways of closing their business and managing any debts including bounce back loans or other arrears. 

Depending on their individual circumstances, they could look to restructure their financial affairs and keep the company going or they could liquidate the old business and ultimately relaunch a new venture within weeks, hopefully without covid restrictions and just in time for a busy Christmas and New Year season. 

HMRC

 

The bounce back loan scheme was a success for many of the businesses who used it to help them to keep trading or to support themselves and their employees whilst lock down was in effect. 

The final official borrowing figures released by the government showed that over 1.5 million bounce back loans had been granted for a total of £47 billion - all guaranteed by the government. 

Earlier this year, BusinessRescueExpert.co.uk conducted an investigation into the risk of defaults around bounce back loan borrowing and found that even the official best-case scenario would see nearly 230,000 loans remaining unpaid for a total of £6.9 billion - or the equivalent of building six new stadiums the size of Wembley.

At around the same time the Department of Business, Energy and Industrial Strategy (BEIS) that they would begin to enforce bounce back loan debt recovery imminently but carefully. 

Business Secretary Kwasi Kwarteng wrote that: “HMRC would adopt a cautious approach to enforcement of debt owed to government that will have accrued” and that HMRC would soon update its enforcement methods so that any outstanding debt could be brought into managed arrangements for businesses affected by the pandemic and subsequent lockdowns. 

Specifically he said that using insolvency to enforce payment would remain a last resort and that he recognised that “the path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves.”

If BEIS are playing the good cop in this scenario then the Insolvency Service are playing the bad cop - promoting their recent successful attempts to wind up several limited companies that had been involved in fraudulent activity including dishonestly obtaining bounce back loans.

Dave Elliott, Chief Investigator at the Insolvency Service said: “The bounce back loan scheme was made available to help support businesses during the pandemic. 

“It’s outrageous that some directors have been trying to abuse this support, and the action we have taken shows we take this issue extremely seriously.”

Despite the tough talk, just how seriously are the authorities cracking down on bad bounce back loan behaviour by directors and business owners?


One growing trend we’ve noticed recently is where companies with outstanding bounce back loan arrears are attempting to dissolve their businesses, or have them struck off. 

Company dissolution is a perfectly legal method of closing a company but comes with a set of strict conditions. It is not an available tool if the company owes any money, including tax or a bounce back loan. New legislation, specifically aimed at unscrupulous directors, is due to become law this year (but will apply retrospectively) and will be a big problem for those  who’ve tried to close their company this way and avoid their legal responsibilities. 

The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill will allow the Insolvency Service to specifically target and pursue directors who close their companies by dissolving their businesses when they have outstanding debts.

One of the main new measures will see the Insolvency Service given retrospective powers to investigate directors of struck off companies and how they acted in the circumstances leading up to the dissolution. 

Being retrospective, directors of businesses dissolved not only in 2021 but within the past couple of years can expect to be contacted in the near future if they had bounce back loans or tax debt.. 

Directors of businesses with outstanding bounce back loan debts trying to dissolve their business from now on can reasonably expect to receive an “Objection to Company Strike Off Notice”.

This prevents the company from being struck off and will also be an invitation for any of their other creditors to register their objections to the striking off as well. 


Disqualification and fines

No system is 100% perfect so occasionally a business with outstanding debts slips through the net and is struck off.

What are the likely consequences facing directors who have managed to get their businesses struck off with bounce back loan arrears? 

In the first instance the Insolvency Service will be looking to disqualify any directors of companies who have allowed their business to be struck off when it has debt. The disqualifications will be for up to 15 years depending on the circumstances. The directors will also be personally liable for fines and any costs incurred. 

State of play

So now you’ve got a better idea of what could happen - we thought we’d go one step further and find out what’s actually going on with dissolution objections right now. 

Businessrescueexpert.co.uk lodged an FOI inquiry with BEIS earlier this month to ask if they are now filing objections with Companies House against companies with outstanding bounce back loans that are looking to be struck off. 

We also asked on what legal basis these objections were being lodged under. 

BEIS confirmed that it is filing objections where “a strike off notice has been issued against a company which has an outstanding bounce back loan”. 

The legal authority allowing them to do so is contained within the Companies House strike off, dissolution and restoration guidance updated in March 2021. 

Liquidation - a proper alternative

Now we have official confirmation that dissolutions are being officially objected to - with the consequences we’ve outlined - what can worried directors do?

Bounce back loan repayments are falling due, and the last support measures and protections against creditor actions are being removed within weeks

All of this adds increased pressure to cash flows that are already squeezed to the limit as they try to manage all the outgoings with reduced income - if they’re able to trade without restriction once again.

If a business is genuinely unable to meet all of its obligations and liabilities including bounce back loan arrears then there is still one legal insolvency process they can follow that would allow them to close their company, settle their debts and move on to the next chapter of their career efficiently and effectively. 

Company liquidation, or specifically a creditors voluntary liquidation (CVL), is the best route for a business with outstanding debts including unpaid bounce back loans, to follow. 

Once they’ve engaged a licensed insolvency practitioner, they will immediately take over all dealings with creditors and work through the rest of a businesses debts to compile a full picture of who is owed and how much. 

Chris Horner, insolvency director with Businessrescueexpert.co.uk, said: “Our FOI inquiry has proven that HMRC are treating improperly dissolved and dissolving companies as their highest priority, which should effectively close off this avenue for directors looking to close down their businesses. 

“We can expect to see more compensation orders being used to make directors personally liable for the debts of their struck off businesses if the Insolvency Service believe they’ve been done incorrectly or to evade oversight.

“Another common misunderstanding about bounce back loans is that because they are underpinned by government guarantee, they won’t be chased by lenders. They will. 

“The lender will try to secure repayment for at least 12 months as standard as a condition of reimbursement because they will have to show the government they tried to recover the funds they lent. 

“They probably won’t start insolvency proceedings just for bounce back loan debt but when restrictions are lifted at the end of September they could use debt collectors and bailiffs to enforce repayment. 

“If a business chooses to liquidate instead then the bounce back loan will be treated as any other unsecured debt and if the directors have fulfilled their duties to the best of their abilities, then the lender will ultimately be repaid by the government.

“The most important thing any business having difficulties repaying any debts, including bounce back loans, can do right now is to get professional insolvency advice

“The rules literally change at the end of September so if they use this time constructively to protect themselves and their business financially and legally, they could already have moved onto their next venture by the time this happens.”

So while business continues whether you’re on holiday or not, it’s a good time to look back on what’s happened to businesses in the second quarter of the year - that covers data from April 1 to June 30 2021. 

The Insolvency Service have published their second quarterly bulletin of the year revealing the total number of company insolvencies reported during this period and they show another uptick in insolvency activity.

Q2 insolvency stats 2021

When you look at the story of 2021 so far it resembles a giant V - recovering the numbers lost in the previous quarter. 

The overall number of company insolvencies for England and Wales from April to June 2021 was 3,116 - 31% higher than the previous three months data and 4% higher than the same period in 2020. 

This is also the highest quarterly total since the beginning of the pandemic. 

The main driver is the increase in creditor voluntary liquidations (CVLs)

Every other company insolvency procedure - administrations, CVAs and compulsory liquidations - was lower both in the previous quarter and the same quarter of the previous year. 

Q2 2021 (dark) v Q1 2021 (light)
Q2 2020 v Q2 2021

The 3,116 recorded company insolvencies was made up of:

CVLs made up 90% of insolvency cases in England and Wales between April and June this year with administrations taking 5% of cases; compulsory liquidations reached 3% and only 1% of cases were CVAs. 

There were a total of 165 company insolvencies in Scotland in Q2 2020, Up 91 or 32% higher than a year ago. This was made up of:

In Northern Ireland there were 23 company insolvencies, Up 15 or 35% higher than Q2 2020. This was comprised of:

The total company insolvencies for the UK for Q2 were 3,304 - an increase of 814 from the first three months of the year.

The Insolvency Service reiterates that the historic low levels of company insolvencies compared to pre-pandemic numbers are due to several factors - some temporary while others might be more influential in the medium to longer terms. 

Along with the unprecedented and historic level of government back financial support measures such as the bounce back loan scheme, suspensions of creditor recovery actions such as winding up petitions and a backlog of cases working through a court system that is still working someway below capacity have all had an influence. 

Additionally, the introduction of the Corporate Insolvency and Governance Act 2020 brought in new legal powers including a statutory insolvency moratorium period and court sanctioned restructuring plans. 

Since the introduction of the act on 26 June 2020, there have been five companies obtaining a moratorium and a further nine that had their restructuring plans approved and implemented by the courts. These measures are noted by the Insolvency Service but are not included within the statistics as they are not classed as formal insolvency processes. 


Liquidation Rates
q2 2021 liquidation rates

The liquidation rates figures (a number per 10,000 active companies) tends to give us a clearer picture of the broader trends at work as they indicate the probability of a company entering liquidation rather than the number that actually have. 

They are immune to one-off fluctuations or other factors and are more comparable over longer time periods than absolute figures. They indicate underlying trends affecting businesses so we can have a broader view of the direction of insolvency momentum. 

The figure is calculated based on the data from a 4-quarter rolling rate per 10,000 active companies so the rates for Q2 2021 used data covering the periods from Q3 2020 to and including Q2 2021. 

The liquidation rate for this period is 25.9 per 10,000 companies or 1 in 386 companies being liquidated in the 12 months ending on June 30 2021. 

This figure is slightly higher than the previous quarter (25.3 per 10,000 or 1 in 396 businesses) but lower than the corresponding figure from Q2 2020 (36.9 per 10,000 or 1 in 271).


If HMRC are getting serious about your bounce back loan debt - what can you do next?


Insolvencies by industrial sector
q2 insolvency by industry

Compared to the same time period a year ago, every industrial sector has seen a decline in insolvency rates

The three industries that saw the highest number of insolvencies were:

The construction industry continues to have a larger number of insolvencies than any other sector but the total number in the past 12 months is 36% lower than the previous period. 
 
Colin Haig, President of R3, the insolvency and restructuring trade body said: “The increase in corporate insolvencies - to the highest total in 18 months - has been driven by a rise in creditors voluntary liquidations (CVLs) which have increased to pre-pandemic levels. 

“It’s hard to say what’s driving this increase in CVLs but it could be that directors of a number of companies have decided they can no longer go on trading as a result of the pandemic, and are opting to close down their businesses by using the CVL process, before the situation deteriorates further.

“What is clear is that the figures show the toll the challenges of the last three months - and the twelve before them - have taken on the business community. 

“While many business owners were hoping the lifting of the lockdown would help them, they reopened amid low consumer confidence, a time when people were being encouraged to stay local, and when the economy was still a long way from recovering from the start of the pandemic. 

“The formal end of lockdown may have improved their situation but it wasn’t the boost many businesses had hoped for. 

“However, the government’s support measures have remained in place over this period and are likely the reason why today’s increase isn’t as severe as it could have been. 

“This support has been a lifeline for many businesses, but with the end of furlough in sight, directors now need to take the time to plan for how they’ll manage when this initiative ends.”


Is this summer your last chance to save your business?


The key takeaway from these latest statistics is that despite government support still being largely in place through the coronavirus job retention scheme and statutory demands,  winding up petitions and other enforcement measures remaining suspended, company insolvencies have increased relatively sharply. 

Bounce back loan repayments are coming due, business rates liability is due to resume and as the remaining support measures are finally wound up and creditors are within sight of being able to take unrestricted action once more, it’s reasonable to assume that by the end of the year if not Q3, these figures will be higher still.

So what can an informed and responsible business owner or company director do - right now - to help their company through the turbulent next few weeks and months?

How about talking? 

A problem shared might not be halved but getting in touch with us to arrange a free initial consultation chat will feel like a weight is lifted. 

Once we get a better understanding of your unique circumstances, we’ll be able to advise you on what strategic and tactical steps you can take in the short and medium terms to bolster your business. 

As the figures are beginning to show, not every company will be able to navigate the storm ahead but there are other options available that we can discuss that could lead to an alternative and ultimately better outcome than trying to rescue an unviable enterprise. 

By the time Q3 ends on September 30, many business owners will wish they had extra time available to tackle their most pressing issues. 

Make sure you use yours now. 

rainy June
 
 
For what started with great fanfare June is turning out to be something of a damp squib for businesses. 
 
The remaining coronavirus restrictions were due to be lifted on June 21st but it quickly became apparent in the days and weeks beforehand that not only was this not going to happen but that the next earliest reopening date will be another month away. 
 
The ongoing uncertainty coupled with the effects of restrictions and changes to life, work and industry still rippling through the country after 18 months of the pandemic means that it was the end of the line for some companies.  
 
For others they might have used insolvency procedures like a CVA or an insolvency moratorium to buy some time or begin to rebuild their businesses. 
 
Whatever they decided - you can find out about it here.
 


What are the pros and cons of closing a limited company?


 

Oxford University Press

A piece of world literary history is coming to an end as Oxford University Press, the publishing arm of Oxford University who published their first works in 1586, is closing its physical printing operation Oxuniprint. 
 
20 jobs will be lost in a move caused by “a continued decline in sales which has been exacerbated by factors relating to the pandemic.”
 
A spokesperson said: “This decision follows a recent business review of our operations. This has not been an easy decision for us, and we thank the team for the support and dedication to OUP, and their clients, over the years.”
 


 

Lloyds Bank and Halifax

Lloyds Banking Group which owns the Lloyds Bank and Halifax brands has announced they will be closing an additional 44 branches across England and Wales this year. 
 
29 of the branches are Lloyds and 15 are Halifax sites and will permanently close between September and November. This brings the total number of branch closures announced and will be completed in 2021 to 100. 
 
Vim Maru, Lloyds retail director, said: “Of the closures announced, over a third are branches situated in or around cities and large towns, with another branch very close by. 
 
“Our digital banking customer base has grown by over 4 million in five years to almost 18 million. This means that, like many businesses on the high street, we must change for a future where branches will be used in a different way, and visited less often.”
 
Lloyds confirmed that all branch transactions had dropped by at least 10% a year in the five years to March 2020 and significantly further in the year of lockdowns since. 
 
According to research from consumer group Which?, there have been 4,299 bank and building society closures since January 2015 which is the equivalent rate of 50 per month.
 


 

Stobart Air

Irish regional airline Stobart Air announced it was going into liquidation this month with the immediate closure of the service. 
 
A spokesperson said: “It is with great regret and sadness that the board is in the process of appointing a liquidator to the business and the airline is to cease operations with immediate effect. 
 
“This unavoidable and difficult decision means that all Aer Lingus Regional routes, currently operated by Stobart Air under its franchise agreement with Aer Lingus, have been cancelled.
 
“Last April, Stobart Air announced that a new owner had been identified. However, it has emerged that the funding to support the transaction is no longer in place and the new owner is unable to conclude the transaction. 
 
“Given the continued impact of the pandemic, which has virtually halted air travel since March 2019 and in the absence of any alternative purchasers or sources of funding, the board of Stobart Air must take the necessary, unavoidable and difficult decision to seek to appoint a liquidator.
 
“A franchise flying partner to leading domestic and international airlines, Stobart Air has acknowledged the significant contribution, loyalty and dedication of its 480 strong team of skilled and talented aviation professionals.”
 
Stobart Air operated a number of regional routes including from Belfast to Edinburgh, Exeter, East Midlands, Leeds, Birmingham and Manchester airports and flights to Dublin too. 
 


 

Bison Concrete

Concrete manufacturer Bison is closing its Swadlincote factory on the Leicestershire/Derbyshire border as a result of a drop in demand caused by the coronavirus pandemic. 
 
The businesses hollowcare flooring division at the same site was closed last year so the full closure will see the loss of 200 jobs. 
 
A spokesperson said: “Over the last year there have been changes in demand for certain construction products. 
 
“The Covid-19 pandemic served to compound an already challenging situation for our bespoke precast concrete products division. The operation had struggled to make a profit for a number of years and following the completion of the Leicester prison project, no further opportunities were secured. 
 
“When the high site overheads are also taken into consideration, regrettably it means that this facility is no longer sustainable. The only option that could enable profitability is to permanently close Swadlincote and consolidate our offering into another site.” 


 

Ockbrook School 

One of the oldest private schools in the UK will close after becoming insolvent. 
 
Ockbrook school in Derbyshire was first founded in 1799 and will shut its doors for the final time on Friday 9th July. 
 
The school wrote to parents to say “It is with great sadness that we are informing you of our decision to close Ockbrook School. 
 
“At the start of the pandemic, we launched a detailed strategic review of the school to identify the best way forward in these challenging times and ensure the long-term viability of Ockbrook School. 
 
“Following the consideration of a number of options, it has become clear that the school is significantly loss-making, a situation exacerbated by the pandemic, and we have not been able to find any backers to take on the scale of those losses. 
 
“As a result, the school has become insolvent and we have no choice but to close at the end of the 2021 Summer Term. The decision was not taken lightly but we have unfortunately exhausted all alternative options and keeping the school operating is simply not viable anymore. 
 
The school was a coeducational day and boarding school for children from three to 18 years old who will have to move to other schools in time for the new school years starting in September. 


 

AF Biomass

Administrators have been appointed at AF Biomass, a straw merchant who supplied the product for energy, food and farming across the UK. 
 
A spokesperson for the business said: “AF Biomass had no realistic prospect of being able to meet its contractual obligations to supply straw to the power stations and the market had changed dramatically since the company was established in 2013 as a wholly-owned subsidiary of the AF group - a farmer owned co-operative. 
 
“In these circumstances, the directors have been advised that AF Biomass is insolvent and cannot continue to trade. It has therefore been decided to appoint administrators. 


 

Riccall Carers

A care business providing home visits for elderly and vulnerable people in York and Selby has ceased trading and gone into liquidation
 
Riccall Carers provided personal care home visits for 180 residents in the area for private funded clients as well as council funded clients since 1998. 
 
Director Helen Thompson said: “It is very sad for us to see the end of the business which my parents started 23 years ago. 
 
“While we have contracted over recent years, we remain one of the larger providers in the York and Selby areas. Unfortunately, the growing demand for our services has coincided with ongoing challenges over staffing with further disruption caused as a result of the Covid outbreak. 
 
“It has been difficult to retain team spirit and integrate new staff during the series of lockdowns since March 2020. Following extended periods of remote working, we have simply been unable to recover as a cohesive team and keep up with the pace of change required of us.”
 
Due to the ongoing challenges facing the sector, particularly around staffing and the pandemic, the directors felt they had no choice but to put the business into liquidation. 


 

Oxis 

Being involved in a cutting edge industry is no guarantee of success or solvency.
 
Lithium-sulphur battery developer Oxis Energy have appointed administrators to wind up the business after failing to secure the essential funding needed to continue their research and development. 
 
60 members of staff have been made redundant as the firm’s specialist testing equipment and approx. 200 patents are being marketed for sale along with their physical testing centre and R&D facility. 
 
The company blamed Covid-19 for the halt in operations and were looking to expand before the trading conditions proved insurmountable.


 

Market Halls

London-based outdoor food hall operator Market Halls has launched a company voluntary arrangement (CVA) proposal to secure the future of its three locations in the capital - in Victoria, Fulham and the West End. 
 
None of them have been able to reopen since the first pandemic lockdown in March 2020 and the CVA is being pursued to allow the business to financially restructure itself so it can reopen in a stronger position. 
 
Founder and chief executive Andy Lewis-Pratt said: “The past 14 months have been the most challenging of my career. 
 
“Prior to the pandemic, we were fast-growing and had exciting plans for our business. But with prolonged restrictions forcing us to close our doors indefinitely, the future of Market Halls is now at real risk. 
 
“We’ve been working incredibly hard to find a way through, and after much consideration, it’s our firm belief that these CVA proposals represent the best means possible of giving us the flexibility we need to secure our future.”


 

VIAM

Civil engineering firm Vital Infrastructure Asset Management (VIAM) based in Liverpool and employing 300 staff has gone into administration
 
Administrators confirm that its trading performance was impacted by disputes with certain customers leading to receipts being withheld. This has led to severe liquidity pressure and ultimately the circumstances have required this decision. 
 
A spokesperson said: “This is unfortunately a very challenging period for the group’s stakeholders, and in particular its employees. Despite the best efforts of the directors, the group was unable to generate the cash needed to sustain its trading operations.
 
“Our immediate focus is on supporting the group’s employees to ensure all relevant claims are submitted as promptly as possible.”


 
We’re in the middle of the year and you’d be forgiven that things are becalmed and in a holding pattern right now. 
 
Nothing seems to be moving forward with any certainty and if you’re a business owner or director, this can be the worst thing for your company. 
 
If you can’t make any concrete plans or move forward with decisions you’ve already taken - then where does that leave you?
 
Why not get in touch with us before you spend another moment worrying. 
 
We offer a free initial consultation so you can explain what you’d like to do with your business and what issues are stopping you. 
 
Then we can work together on a realistic and effective roadmap that will put the plans into place.  

bounce back loan borrowing
When we published the first part of our series looking at the UK’s bounce back loan scheme earlier this month, it was to get a better view of the overall borrowing levels.

We found several official projections indicating that billions of pounds lent under the scheme would ultimately not be repaid, with the losses equal to the cost of building between six and 23 Wembley Stadiums from new. 

In the second part, we broke down the borrowing by industrial sector - comparing how much retail, hospitality, construction and all the other sectors had borrowed under the bounce back loan scheme.

For this final article in the series - we’re looking on a more local basis. 

Which nations and regions saw the most demand for bounce back loans? Which areas had the most borrowing per capita and which parliamentary constituencies had the highest bounce back loan borrowing rates?

Our methodology

The data sources used to compile the various best and worst-case scenarios used in the projections are taken from the Office of Budget Responsibility’s Fiscal Sustainability Report; the latest  BEIS annual report and the National Audit Office (NAO)’s regularly updated COVID-19 cost tracker

The UK regional and parliamentary constituency lending breakdowns were compiled and published by the British Business Bank

The number of businesses in each region was taken from the Department of Business, Energy and Industrial Strategy’s business population estimates. 

Using this public data as our benchmark, we projected three different scenarios for bounce back loan scheme defaults as outlined within them.

The scenarios set out a best case (with a 15% bounce back loan default rate); a median case (40% default rate) and a worst case scenario (60% default rate).

Finally, the regional classifications used are the official Classification Of Workplace Zones (COWZ) administered by the Office of National Statistics


Can a business consider liquidation if it has outstanding bounce back loans?


North East businesses most likely to borrow bounce back loans - but obtain the least money from them

regional bounce back loans

Source: https://www.british-business-bank.co.uk/coronavirus-loan-schemes-continue-to-support-businesses-evenly-across-the-uk-new-analysis-shows/ 

When talking about millions and billions of pounds, It can be easy to lose sight of what these figures mean for individual businesses. 

Taking out a bounce back loan might have been the difference between closing down and remaining open at the time for many of the small and medium-sized businesses that are ultimately the bedrock of the UK economy. 

We’ve collated the total amount each devolved nation and English region has collectively borrowed under the bounce back loan scheme as well as the overall number of bounce back loans taken out by businesses based in that area. 

We also list the average amount borrowed by these companies individually, the ratio of businesses to loans in that area and the projections for default rates, based on our analysis:

While bounce back loans were supplied by banks and other lending institutions, because the funding was guaranteed, the amount lent was limited to between a minimum of £2,000 to a maximum of whichever was lower - £50,000 or 25% of the applicant’s 2019 turnover.

As might be expected then, the areas with both the highest number of bounce back loans taken out and the highest total amount of borrowing were London, closely followed by the South East of England. 

But if we look at the ratio of local borrowing - which is the total number of BBLS loans approved for that location divided by the total number of businesses operating in an area - then the picture changes.

For instance, 27.5% of businesses in the North East, over one in four, applied for finance under the bounce back loan scheme, which was the highest demand in the country. But the average amount actually loaned per applicant was £26,751 - the lowest figure in the UK.

That’s nearly £7,000 less than a comparable London-based business that borrowed an average BBLS amount of £33,480, the highest average amount in the country.     

27% of North West businesses applied for support funding, which were given £29,568 on average (nearly £3,000 more than their North East counterparts) while Welsh companies were the next most eager. 26.4% of businesses based in Wales took out bounce back loan borrowing to an average sum of £27,226 each.

Businesses in South West England had the lowest overall borrowing ratio with just over one in five (20.6%) applying to the scheme and taking £28,432 in bounce back loan lending support.

Businesses on the other side of the Irish Sea from the UK mainland in Northern Ireland saw the lowest overall number of bounce back loans taken out with just over 38,000 approved - nearly eight times less than the amount applied for by London based companies. 

Northern Ireland also saw the least amount of total borrowing too with £1.1 billion lent, although even this total could be subject to defaults in the range of £165 to £660 million depending on the ultimate level of defaults occurring.


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


Every MP has constituents who’ve taken out bounce back loans

bounce back loan not London

We’ve taken a deeper dive into the available data and analysed bounce back loan scheme lending according to the makeup of each of the UK’s 650 parliamentary constituencies. 

Regional and national data gives us a good understanding but we can see how the story looks even closer to the ground with this additional information.

The table below shows the top five constituencies for the total number of bounce back loans taken out by companies physically located in the area.

It also shows the total amount they borrowed, the average amount borrowed by businesses located there, the projected default rates and who the sitting MP is. 

This is who businesses might be contacting in future for help if their fortunes take a turn for the worse in the intervening weeks and months. 

Once again, London based companies dominate these results


 

Bounce back loan borrowing by parliamentary constituency

Source - https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

The City of London and Westminster constituency includes some of the most prominent and pricy real estate in the world including Pimlico, Hyde Park and most of Covent Garden. 

Businesses here dominate both the number of bounce back loans taken out (16,122) and the highest aggregate amount borrowed under BBLS at well over half a billion pounds (£633,881,829).

Some of the other areas in the top five might be more surprising. 

The neighbouring constituency to Westminster is Holborn and St Pancras, represented by Labour leader Sir Keir Starmer. This has the second-highest number of businesses taking out bounce back loans, borrowing a total of over £354 million, of which at least £53 million could be lost if just 15% of these borrowers default in the coming months. 

Hackney South and Shoreditch, most commonly associated with technology startups and the hipster coffee hangouts, were the next most eager to borrow with over 9,000 bounce back loans obtained, which provided over £300 million in support collectively for the app builders and small artisan brewers in this quarter of the city. 

The top five constituencies outside of London represent some of the other city centre areas of Birmingham, Manchester, Glasgow and Liverpool, along with a more surprising entry - Slough. 

Most famous as a commuter town at the southern edge of the Thames Valley and the fictional headquarters of Wernham Hogg paper as seen in the titles of The Office, Slough is also one of the largest mixed commercial estates in Europe combining a number of large manufacturers and corporate headquarters which will attract other companies wanting to be located closer.


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


Bounce back loan borrowing by parliamentary constituency (excluding London)

Source - https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

bounce back loan by constituency

Chris Horner, Insolvency Director with Business Rescue Expert, said: “The data gives a fascinating insight into the distribution of bounce back loan borrowing across the whole of the country.

“It’s especially interesting when you look at which areas have seen the most businesses borrowing and the amounts they have loaned.

“Based on the insolvency cases of the small businesses we’ve worked with this year, over 41% of them entered liquidation with an outstanding bounce back loan balance of £37,350 - higher than the individual borrowing averages of any location. 

“No matter where a business is based, the important thing for them to remember is that they do have options if they’ve taken out a bounce back loan and think they’ll have trouble repaying it.

By getting professional insolvency advice quickly, possibly before any potential problems appear, they will be in the best position to react and respond. 

“After nearly two years of consistent decline, company insolvency figures are starting to rise once more and as support measures are removed later in the year, we’d only expect this trend to gather pace. 

“It won’t happen at a uniform rate across the country, it will affect some areas more quickly and deeply than others.

“That’s why finding out more administration procedures and liquidation options now before circumstances force them to, could be the best call any business could make in 2021.”

April 2021 insolvency stats
So it’s natural to expect some spluttering and stalling before an engine recovers its temperature and rhythm to start firing on all cylinders again. 

The parallels and similarities with the UK’s economic engine and machinery struck us when we saw the official registered company insolvency statistics for April 2021 released by The Insolvency Service

The total number of company insolvencies for England and Wales last month was 925.

This is a slight reduction on the 992 recorded in March and is 23% lower that the 1,199 recorded in April last year and 35% down on the 1,429 reached in April 2019.   

Despite lots of headlines about a “return to normal” we are still experiencing extraordinary times from a statistical viewpoint. 

The numbers of registered company insolvencies have reached historic lows since the start of the year of lockdowns, and still remain significantly subdued.

The 925 company insolvencies in England and Wales consisted of 819 creditor voluntary liquidations (CVLs), 26 compulsory liquidations, 75 administrations and 5 company voluntary arrangements (CVAs). 

In comparison to the data for the same month from the previous two years, we see how depressed the numbers are right now. 

Additionally, there were 38 company insolvencies in Scotland (made up of 9 compulsory liquidations, 28 CVLs and one administration) which was down 17% year on year and 63% lower than April 2019. 

There were also 5 company insolvencies registered in Northern Ireland (made up of 3 compulsory liquidations and two CVLs). This is down two from last month and while 67% higher than a year ago, is 74% lower than April 2019 - but while dealing with such relatively low totals, any change could produce high percentages.

The overall UK total of company insolvencies for April 2021 is 968. An overall reduction of 74 on last month’s figure. 


As statutory demands and winding-up petitions are still suspended until the end of June 2021 and with other measures such as the CJRS furlough remaining until September, the figures are being artificially depressed from levels we would expect to see given similar trading and external economic conditions. 

“Government has a challenge on its hands” 

Christina Fitzgerald, Vice President of R3, the insolvency and restructuring trade body said: “The monthly fall in corporate insolvency numbers shown in the latest published figures has been driven by a drop in both Compulsory Liquidations and Creditors Voluntary Liquidations. 

“We now have a year’s worth of pandemic insolvency figures, and it’s clear the Government's support measures have prevented a significant number of businesses from becoming casualties of the economic consequences of Covid-19.

“The big question is what will happen to insolvency numbers as we come out of the pandemic, but there are too many variables to say with much certainty about exactly what this will look like. 

“Government has had a challenge on its hands in terms of managing the exit from lockdown and the withdrawal of its financial support measures. How it handles this will help determine if there is a sharp spike of business failures or simply a smoother return to pre-pandemic insolvency levels. 

“Company directors need to make the most of the time they have left before these support measures finish to plan for the future, and work out how they will manage without state support. 

“The situation is still tough for many British businesses. While spending is increasing, it’s still below 2019 levels and consumer confidence remains low, although people are more optimistic about their finances over the next 12 months. 

“The easing of the lockdown in the middle of April, and the further lessening of restrictions recently will be a boost to many businesses. That said, a large number are still having to work in a way that complies with Covid guidelines, adding cost and complication to their operations. 

“The temporary ban on winding-up petitions is due to finish at the end of June, and other Government support schemes are due to be withdrawn in the next few months, which will clearly increase pressure on financially struggling firms.”


You might be forgiven for experiencing a sensation of deja vu when you look at the latest official company insolvency statistics. 

They appear to constantly be at historic lows thanks to a mix of economic support, legal restrictions and increasing customer demand. 

Sadly none of these factors are guaranteed to last for many more months this year. Two are almost certain to be withdrawn and demand can fluctuate due to various factors even at the best of times, never mind during reopening from a worldwide pandemic lockdown. 

The one piece of advice we have consistently offered to directors and business owners during this fairly static period becomes more pertinent and imperative with every passing week - get some professional advice!

This time can be valuable to plan the next steps in your business’s recovery strategy or to consider moving in different directions. 

We continue to offer a free initial consultation where we can learn about what challenges your company is facing and offer you actionable choices that you can make, often immediately, to bring you closer to your end goal. 

Because when the economic winds do change, you’ll be surprised how strong they’ll become and how quickly a April shower can turn into an actual storm.

car showroom
When people are doing better and generally feel more confident in their current and future prospects then they’ll be more likely to consider buying a new car or used car.

Similarly if their personal circumstances are changing and they need to look at buying first cars for their growing families or changing down to smaller, less powerful cars themselves as they get older and do less long distance driving. 

No matter what their circumstances are, there’ll be a car dealership that will be focussed on meeting their needs. 

But the coronavirus pandemic and the year of lockdowns waylaid any hope for a normal trading year in 2020 - for the automobile industry and many others related to it. 

So what is the current state of play for new car dealers and second hand car sales specialists? 

Are they looking forward to 2021 with hope or do they fear that by the time the public feel confident enough to start looking at buying or leasing a car again, it will be too late for smaller, independent dealers? 

Have debts but want to keep your business open? A CVA could be the solution

The latest monthly sales figures from The Society of Motor Manufacturers and Traders (SMMT) show an industry that’s beginning to bounce back. 

Last month there were 141,583 new vehicles registered - which was a huge increase on the corresponding total from April 2020 when only 4,321 vehicles were sold. The lowest recorded total since February 1946. 

Apart from the collapse in demand as the first lockdown commenced, many manufacturing plants ceased production while showrooms closed their doors to the public alongside them.  

New and used car dealerships were finally able to reopen to the public from April 12th in England while the subsequent growth of delivery, click and collect websites and other online services helped car purchases to recover some of their previous strength. 

The sales total, while encouraging, is still down 12.9% on the average for the month when comparing sales figures for the previous ten Aprils.

SMMT Chief Executive Mike Hawes said: “After one of the darkest years in automotive history, there is light at the end of the tunnel. 

“A full recovery for the sector is still some way off, but with showrooms open and consumers able to test drive the latest, cleanest models, the industry can begin to rebuild.”

If the future looks brighter for the industry as a whole, the present provides more pressing problems for a lot of car dealers. 

Apart from inventory issues as the manufacturers begin to ramp up again to meet demand, there is also the issue of home working to contend with. 

Less commuting between cities and home means a new car becomes less of an essential purchase and the very idea of a company car loses its lustre if office attendance isn’t mandatory anymore and sales meetings can be conducted via the internet. 

The pandemic has also forced many families to consider their own financial situation and may have decided that while there will be an immediate uptick in going out and spending once lockdown restrictions are finally lifted, the economic picture in the medium term is more mixed. 

So much so that the lack of wear on their current car means that it can be kept for an additional year or two rather than be traded in and upgraded. Which while making perfect sense to them, will further damage the balance sheets of used car dealers in particular. 

There’s also the issue of government economic support ending shortly for businesses as the staff furlough scheme is withdrawn in September and repayments for the bounce back loan scheme (BBLS) start to come due this month. 

Combined with the imminent lifting of restrictions on creditor actions such as winding up petitions and statutory demands, for car businesses that already owe money and will struggle to service existing debts, this could be the toughest period to get through, just when the idea of a recovery becomes tantalisingly tangible. 

Should I be worried about wrongful trading when I open my business again?

Sadly, some car dealers might not have a clear lane to be able to viably trade their way back to profitability even if all lockdown restrictions were to end tomorrow.

If the sums just don’t add up for them, then there are several insolvency options such as liquidation that they could consider to help close the business efficiently, even if they’ve taken out BBLS loans or owe large amounts to different creditors including HMRC

Closing down an automotive business is essentially the same as any other business and we can guide you through the process at every stage.

This could leave you free to start a new car dealership or move into a different sector altogether. 

Alternatively, if there’s a real and credible path back to solvency then administration might be a better solution.  

It will buy the dealership valuable time to look at different options to restructure its debts and bring in new finance through selling some assets or other methods. 

During this time, creditors won’t be able to pursue the business which might be all a dealership needs to get back on its feet just in time for a hopefully Covid-free summer. 

If you’re in the motor trade and feel your company needs a financial tune up then you should get in touch with us. 

After a free initial consultation with one of expert advisors, you’ll have a clearer idea of what you can do - right now - to drive the business forward to where you want it to be. 

The Insolvency Service have published their first quarterly bulletin of the year revealing the total number of company insolvencies reported in January, February and March and the finding continues to surprise.  
q12021a insolvency stats
 
 
 
In our analysis of the last quarter’s figures we said they resemble a ski jump - increasingly downhill before a sharp uptick at the end.  Well this analogy continues because after a skier launches themselves into the air, they continue to fall downward.
 
Which is what is happening to the number of insolvencies. 
 
The overall number of company insolvencies for England and Wales from January to March 2021 was 2,384 - 22% lower than the previous quarter and 38% lower than the corresponding quarter from last year - which straddled the pre and post lockdown economy.
q12021b insolvency stats
Breaking down further the total number of insolvencies we see that creditors voluntary liquidations (CVLs) still remain the most frequent method of insolvency by far with 2,047 procedures in the first 12 weeks of the year - 86% of all company insolvencies.
 
This is a decrease of 18% from the previous quarter’s figures and down 24% on the same period in 2020. 
 
There were 108 compulsory liquidations which is down 26% on the last three months of 2020 and down a huge 86% on 2020’s Q1 figures. The number of administrations remains at a low total with 192 - down 44% on the previous quarter and by more than half - 52% - on the corresponding timescale from a year ago.
 
We only saw 37 Company Voluntary Arrangements (CVAs) in the first three months of 2021 which is down by 54% at the end of 2020 and down 46% in Q1 2020. There were also no receivership appointments recorded in the previous six months.
 
The Insolvency Service continues to think of new ways to restate the logical reasons why the overall numbers continue to remain low. 
 
A combination of a range of government backed financial support measures such as the bounce back loan scheme, an ongoing suspension on creditor recovery actions such as statutory demands and winding up petitions and courts operating below their usual functioning levels have all contributed to the overall picture.
  


q12021c insolvency stats
 
The liquidation rates (per 10,000 active companies) gives us a clearer picture of the broader trends at work as they indicate the probability of a company entering liquidation rather than the number that actually have. 
 
They are immune to one-off fluctuations or other factors and are more comparable over longer time periods than absolute figures. 
 
In the four quarters that ended in Q1 2021, the company liquidation rate was 25.3 per 10,000 active companies in England and Wales. This is the equivalent of 1 in 396 businesses being liquidated in the previous 12 months. 
 
This is down 3.9 on the previous quarter when the rate was 29.2 per 10,000 active companies and down 15.3 on the corresponding quarter in 2020 when the rate was 40.5 per 10,000 businesses.  
 


Which liquidation is best to close my business? 


 
When it came to the individual sectors of the economy, all saw a decline in insolvency rates compared to 12 months ago. 
q12021d insolvency stats
 
Looking at the 12 month period ending at Q1 2021 the three industries that saw the highest number of insolvencies were:
 

 
The construction industry tends to have the largest number of insolvencies than any other sector but the total number in the past 12 months is 44% lower than the previous period. 
 


 
Chris Horner, Insolvency Director with Business Rescue Expert, said: “Given that company insolvency figures started rising again the previous quarter, it’s a little surprising to see them fall back again. 
 
“Some coronavirus support measures remain in place but others such as the bounce back loan scheme are seeing repayments start and while businesses will begin to trade more freely, they will also have to start paying business rates, VAT arrears and other bills again too.   
 
“The total number of corporate insolvencies between April 2020 and March 2021 fell by more than a third compared to the same period a year earlier, while GDP fell nearly 8% at the same time. 
 
“A drop in corporate insolvencies during an economic climate like that tells us that it’s still a case of when, not if, insolvency rates begin to rise again, and how quickly. 
 
“By the time the Q2 statistics are released at the end of July, we’ll have a far clearer picture what the insolvency landscape will look like for the rest of the year, especially as the majority of the business support measures end in June.
 
“We’d definitely advise directors and business owners that are unsure or worried about the prospects for their business to get in touch now to get some advice while they have time to implement any changes that are needed.”
 


Could your company survive a downturn? A Business Viability Review will tell you and a lot more


 
The thing with trends and movements is that by the time the majority of people notice them, they are already well underway.
 
Once company insolvency figures start to rise this year, it might come as a big surprise for some - especially if they haven’t been paying attention.
 
That’s why it’s our job to keep you informed about all the big insolvency stories and news as it happens so our clients have a broader view of the state of play in their industries and the wider economy beyond. 
 
Getting your plans in order now and making the decisions and changes that you need to means that when the wind does eventually change, your business won’t be blown away in the storm whenever it arrives.

business suit

April has certainly showered us with a lot of stories that you might have missed but don’t worry - you can catch up in one place right here!


Pre pack administration - what directors need to know


Peacocks and Bonmarche emerge from administration
An investment consortium led by former Edinburgh Woollen Mill (EMW) CEO Steve Simpson completed a buy out of retailers Peacocks allowing them to exit administration. 

The group will retain 200 of the chain's 400 plus stores, keeping 2000 jobs with hopes to keep more depending on the results of negotiations with the landlords of various outlets. 

Peacocks went into administration in November 2020 as part of a process involving its parent - the EWM group. 

Another former property of the group - Bonmarche - was also purchased by Mr Simpson in a separate deal with negotiations continuing regarding the fate of the previous 72 stores and 531 employees the company had. 

The timing for these deals is fortunate as non-essential retailers were allowed to reopen to the public from April 12 and can take full advantage of consumers pent up demand. 

Grensill jobs go
In a story that is continuing to make headlines for other reasons, 440 workers in Warrington have been made redundant after Greensill Capital Management Company Limited went into administration following the collapse of the parent company in Australia. 

Greensill were also the main lenders to Liberty Steel so the ramifications of this process could continue to be felt throughout the year, especially if no buyer can be found for the business. 

Total Fitness
The various lockdown restrictions have severely impacted the health and fitness industries more than most. 

While some are still struggling with restoring full services until all restrictions are lifted, Total Fitness has moved to take advantage of the protection insolvency procedures can bring to a company by entering a company voluntary arrangement (CVA). 

A spokesperson said: “The cumulative effects of the lockdown restrictions have had a major impact on gym and health clubs across the UK. 

“Total Fitness clubs have now been closed for eight months. With membership payments on pause, this means we are operating with very limited income and continuing costs.

“Total Fitness has been no exception to the impact of Covid-19 and is now seeking the assistance of all partners including landlords and suppliers to support the strong, long-term future of the business by launching a CVA.” 

16 of its 17 facilities will remain in operation, opening when allowed while managers work with landlords and creditors to secure a solid and stable future for the business. 

Brooks Brothers
Another casualty of the coronavirus pandemic is the office outfit. 

Working from home hasn’t stretched to wearing or buying a new suit so this collapse in demand has badly affected the upscale and upmarket clothes retailers. 

One example is Brooks Brothers - the American based suit manufacturer and retailer have put their UK division into administration. This follows the parent company opening bankruptcy proceedings in the US before eventually being bought out by a consortium. 

A spokesperson said: “The reason for appointing administrators is because of the prolonged closure of non-essential retail, despite the directors best efforts and regular communications with landlords and local creditors, mounting rent arrears and the problems of the worldwide group.”

The administrators have intimated that they would reopen the business’s three UK based stores at the O2 Arena, Westfield London and Bicester Village in Oxfordshire as soon as practicable, although the company had already surrendered the lease of their flagship London location on Regent Street.

Fellow US-based retailer Gap have also announced that they are considering moving to an online-only model in Europe which would have consequences for their retails stores and staff in the UK.  

The downward trend continues for the fashion industry as Menswear supplier Prominent Europe that owns Chester Barrie and supplies retailers such as TM Lewin and Moss Bros has proposed an orderly wind-down and closure of its business. 

Founded in 1993, the group’s owners stated that the decision was due to unprecedented changes in the menswear tailoring market.

A spokesperson said: “After deep consideration and with a heavy heart we have had to announce to our 40 employees that we will close our business over the next year in an orderly manner whilst satisfying our orders and liabilities. 

Quilliam Foundation
Times are tough if you’re a retailer but what if you’re a charity and already rely on grants and donations to function?

The Quilliam Foundation was formed in 2007 as a think-tank to counter the growing influence of extremism in religious communities by fostering a shared set of social belonging and to advance liberal democratic values. 

11 employees have been made redundant. 

Maajid Nawaz co-founded the organisation in 2007 with best-selling writer Ed Husain, and said: “Due to the hardship of maintaining a non-profit during Covid lockdowns, we took the tough decision to close Quilliam down for good. This was finalised today. A huge thank you to all those who supported us over the years.”

Phantom Orchestra halved 
Arts and entertainment have also been under huge pressure and even gradual reopening won’t be enough to bring the sector back in its entirety. 

One example is the announcement from the Cameron Macintosh and Really Useful Group that their revived production of The Phantom of the Opera would only be using a slimmed-down orchestra rather than the full standard West End ensemble. 

As a result, 13 musicians have lost their positions and won’t be playing when the curtain rises on the 35-year-old show’s new performances resuming at Her Majesty’s Theatre in July.

These include the harp, oboe, trumpet, horns and percussion as well as several violins. 

A spokesperson for the promoters said: “The new production will be using the acclaimed orchestration for 14 musicians that was created for the international productions of the show. 

“These orchestrations are just as thrilling and rich as the original but would not have been possible with the technology available in 1986. The new Phantom orchestra will remain one of the largest in the West End. 

StepChange losing staff due to falling demand for services
StepChange, one of the UK’s largest national charities that offers expert debt advice and fee-free debt management is making close to 10% of its staff - 140 to 170 posts - redundant.  

Chief Executive Phil Andrew said: “We are not immune from the wider pressures arising from Covid, despite the significant additional support we have received from Government and other sources during the pandemic. 

“The Government, the Money and Pensions Service, and the debt advice sector itself were expecting a huge wave of demand to materialise once the emergency support measures fade away, and we still do. 

“Based on 2021 experience to date, however, our original expectation of advising 400,000 clients this year is not going to materialise. The fact that we expected demand to increase in the future doesn’t change the current reality. 

“As a prudent charity, we will not compromise our financial stability by relying on future funding to support our current operating costs.  

The charity’s income is based upon how many clients it helps, with those volumes affecting the level of funds received from central government and devolved regional authority funds. They also receive an amount from creditors in recognition of its work to support people in repaying their debts.

They supported 200,000 clients in 2020, down from 300,000 in the previous year. 

The charity has frozen pay and as well as making redundancies, still has staff furloughed under the CJRS.

Mr Andrew said: “It is not what we would have wished to do, even though it is absolutely the right thing to do.”

Breast Cancer Haven
The charity Breast Cancer Haven has also announced that it is suspending operations at all of its UK centres and putting all staff on notice of redundancy. 

A spokesperson said: “It is with huge sadness our Board of Trustees have made the extremely difficult decision to suspend operations for the time being including pausing the delivery of our live online service. 

“As a result of the pandemic our income has decreased significantly. At the beginning of March 2020, we were forced to close our five centres and other in-hospital face-to-face services.  

“Despite this series of cost cutting measures and saying goodbye to valued colleagues, we are not able to continue normal operations at this time.

Despite the resumption of trading for many businesses this month, there is no sector or part of the country that has remained unscathed from the economic effects of the coronavirus pandemic and subsequent lockdowns. 


Liquidation or striking off? What’s the difference?


If you want your business to be around to take part in the recovery then one of the best things you can do now is to get in touch with us for some specialist free advice.

After an initial chat with one of our experienced advisors, you will be in a better position to understand what choices you can make now to better prepare your business or to move in a new direction entirely

Whatever you ultimately decide, you’ll be glad you got in touch. 

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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