What are the main business stories from this month?
As the weather turns colder, so do thoughts turn towards the warm memories and anticipation of the Christmas holiday period.
If you’re a business owner or director you will have additional responsibilities and worries because for many this year might need to be a bumper one in terms of sales and trade after the uncertainty of the previous 18 months.
But before the first door on the advent calendar opens, we need to catch up on all the important business and insolvency stories that happened in November including more energy companies entering administration, well established businesses entering liquidation and others being able to restructure their debts successfully with a CVA.
Energy Industry fallout continues
Bulb Energy, the largest energy company to run into financial difficulties this year, has gone into a special administration leaving their 1.7 million customers in unforced limbo.
Since September more than 20 energy companies have entered insolvency, effectively halving the energy market. At the beginning of 2021, the UK domestic energy market had 47 large, medium and small suppliers – this is now down to 25.
The combined cost of these business failures is estimated to be approaching £2 billion leaving 3.7 million customers looking for a new supplier.
A spokesperson for Bulb said “The rising energy crisis in the UK and around the world has concerned our investors who can’t go ahead while wholesale prices are so high.”
Additionally the company criticised the UK’s rising energy price cap which was designed to set a fair energy price for the 15 million homes using standard energy tariffs but hasn’t kept pace with the rocketing increases in the wholesale energy markets.
The price cap has increased by £139 for customers on a default tariff raising the average bill from £1,138 to £1,277 while prepayment customers saw an average increase of £153 – from £1,156 to £1,309.
Because Bulb has so many customers, Ofgem the industry regulator will use a special administration process which will keep the business providing energy while its future is explored by the Department of Business, Energy and Industrial Strategy and the Treasury possibly for months.
Other energy businesses which have failed this month include BlueGreen, Zebra Power, Omni Energy, Ampower and MA Energy.
Legal businesses go into administration
Affinity Finance, a specialist litigation funder specialising in financial mis-selling claims and personal injury cases has stopped taking new business and filed a notice of appointment of an administrator.
The business helped provide funding to other law firms to pursue these cases on behalf of their clients.
Another UK claims firm, Pure Legal, also went into administration this month with the loss of over a hundred jobs along with Liverpool based personal injury specialist Hampson Hughes who were unsuccessful in finding new investment or a buyer for their business.
The business sees 20 staff lose their positions after a long-term fall in turnover that was brought about by personal injury reforms in the sector.
People’s Fibre fails to find enough customers
Alternative ISP provider People’s Fibre which began building a 1GB Fibre to the Premises (FTTP) network in 2020 was placed into administration at the request of investors after a “breakdown in the relationship between them and the company’s sole director.”
Networks were being built in the Deesside area of the North Wales border and in Braintree in Essex but work was halted when investors were granted an administration order against the business.
The administrator is hopeful of being able to conduct a sale of the business’ assets including the already built parts of the network to other operators.
Last Orders at Lancashire pubs
The owners of a business that ran the historic Black Dog pub in Oswaldtwistle near Bolton which had been open since the 1800s, has gone into liquidation.
The pub had been run by Colin Manford, brother of comedian Jason, since 2016 and despite battling against the pandemic restrictions and considering all viable restructure and rescue options, the decision to cease trading and enter liquidation was the only responsible option available to the business and its owners.
A spokesperson said: “The owners are not the first to suffer this result in the pub industry and unfortunately, will not be the last.
“It’s been an extremely challenging time for everyone, but we know this has been a particularly difficult decision for the owners who had great plans for the pub with a community focus.
“Liquidation was the necessary step in order to protect the business and the interests of creditors.
Hawthorns, another popular wedding venue and restaurant in the town has also gone into liquidation with the owners deciding to close the doors only 19 months after acquiring the business and spending £139,000 on refurbishments.
The owners also closed another of their establishments in Blackburn during the previous week saying: “Covid-19 has been one of the main factors for us having to shut.
“The lockdowns and rising costs and debts have led to the closure and it is a dead fish as we were not able to put money into it. It’s heart-wrenching that we’ve invested time, money and lots of effort and pride into the project to get it in a good position but it has been a difficult time.
“We’ve been closed for eight weeks as we’ve been trying to get eight staff jobs filled. We need a team of four or five chefs and a manager but have been unable to recruit sufficiently.”
Worst month for Construction in over 18 months
R&W Rail, a railway renewal works specialist for Network Rail, is the latest construction business to close down this month joining the other 22 which is the highest monthly total for the sector since March 2020.
The business entered voluntary liquidation after directors understood that it had become unviable.
A statement issued by the company said: “The team have worked tirelessly to build the business from a start-up in 2016 to a tier one provider to Network Rail in 2021, a fantastic achievement that makes the closing of the business, although a necessity, a very hard decision to make.”
Additionally one of Scotland’s oldest family-owned construction businesses Weir & McQuiston has gone into administration with the loss of nearly 100 positions.
They provided mechanical and installation services for the commercial, industrial and residential sectors.
A spokesperson said “The administration was caused by unsustainable cash flow problems stemming from wafer thin margins in the construction sector, the cessation of construction activity and the widely reported problems with labour and materials shortages.
“The business had expanded rapidly in recent years and diversified into new markets becoming established as one of Scotland’s leading mechanical contractors
“The directors did everything possible to keep the business trading, however the scale of cash flow problems and the impact of the lockdown left them with no alternative other than to cease trading and place the company into administration.”
Sheffield based metalwork specialist Architectural Fabrications has also gone into administration with the loss of 70 full time positions.
The business could not find a purchaser and blamed issues surrounding the sourcing and cost of steel over the months leading up to the administration as the main contributing factors to the failure of the business.
In the previous 12 months the cost of fabricated steel has increased by 72.6% amid shortages of material.
Two Sheffield based joinery companies have also gone into liquidation this month.
Birley Joinery employed 18 staff and manufactured tobacco kiosks in supermarkets and other projects in the hospitality sector but orders were delayed and contracts lost during the pandemic which proved to be insurmountable.
A spokesperson for the company said: “Due to a combination of issues and despite great efforts to secure the future of the companies, sadly neither has been able to continue trading and as a result they have now been placed in liquidation.”
Dernie & Bell had been operating since 1953 primarily manufacturing staircases for house builders. They split their operations between two sites but this caused delays and a fire at one of the premises caused further delays and disruption along with a huge rise in the cost of timber compounding financial difficulties.
A further 14 members of staff were made redundant as a result of the liquidation.
The surveying and property maintenance arm of an Isle of Wight property company has entered voluntary liquidation.
Gully Howard announced their decision earlier in November but their commercial property agent business will continue to trade as normal.
The business issued a statement which read: “The directors of Gully Howard Ltd have this week announced an orderly closing of the business. All creditors will be paid in full and we are pleased to reassure our clients past, present and future that the property side of the business will be unaffected by the closure.”
Online second-hand clothing retailer Looper has gone into administration after failing to secure enough funding.
The business was launched in Newport, Wales in 2017 aiming to reduce the environmental impact of the fashion industry.
The company had raised money to support expansion from investors including the Development Bank of Wales.
A statement from the business said: “A crowdfunding campaign to secure private investment to match further capital from the development bank failed to reach its target and as a result the business has entered voluntary liquidation.
“Any proceeds from the company administration will be distributed to the company’s creditors according to priority.”
This could still be a good Christmas for your business if you act while you can
The upcoming Christmas trading period will be the busiest for years for many companies but it will also bring with it moments of calm and clarity when thoughts can turn to more fundamental issues surrounding the company.
It could be the ideal opportunity to reevaluate the health and direction of the business beforehand and if necessary, take steps to improve things before the rush arrives.
Our free, initial consultation for directors and business owners gives them the chance to go through their situation in detail with an experienced, expert advisor.
They can then outline all the realistic options for the business – which might be even more comprehensive and effective than they thought would be available.
But they won’t know what they could do until they take the first step and get in touch with us.