Around this time in 2015, the International Monetary Fund’s Global Stability report questioned whether there was a sustainable recovery. The economic world being hooked on ultra-low borrowing costs.

Cheap money created to rescue the developed economies since 2008. Seems to have created inflated asset bubbles and due to low borrowing costs companies and countries have been encouraged to load up on debt. Emerging markets (India and Brazil) are in trouble.

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We were recently instructed to advise a business in financial difficulty. It was clearly insolvent and under pressure from creditors, however, there appeared to be value in the core business, built up over 50 years of trading.

The incumbent management had belief in the business as well as years of investment of time and money and expressed an immediate interest in acquiring it. Given the nature of the business and working capital requirements, we advised that a marketing exercise be undertaken, with the health warning to management that we were likely to receive some real interest in it. We marketed the business and, unsurprisingly, received good initial interest. However, whilst the business itself was good, the inherent liability attached to a very loyal workforce meant that the TUPE obligations caused most to fall away. However, one party stuck it out and we awaited an offer.

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The pound has tumbled. FTSE 100 crashed. Prime Minister resigned. The headlines facing many of us this morning were not necessarily welcome ones. It may come as a surprise, given we are a firm of insolvency practitioners, that most of us here were unpleasantly shocked by this morning’s news!

The setbacks for all sorts of business types in the coming months are obvious, with the financial services and property industries expected to be some of the hardest hit in the first instance. However, I believe it is important not to underestimate the power of the media and the impact of uncertainty on our economy, and there is certainly room for some positivity in the midst of this.

1. Interest rates are unlikely to rise in the foreseeable future.
Whilst low interest rates are not necessarily always a positive, it looks as if they are set to stay where they are for the time being, potentially even taking a further dive as the Bank of England battens down the hatches in order to minimise the economic impact at home of our departure from the EU. A rise in interest rates in a period of economic turmoil such as this could be the catalyst that tips many businesses over the brink of insolvency, resulting in jobs losses and costing both creditors and shareholders. Continued low rates should ease cash flow issues and allow reasonable credit terms to persist, giving many businesses a chance to whether the storm and plan comprehensively for the future. Adaptation to the changes ahead will be the key to survival.

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The BHS Story Chapter 1

Bargain hunting in the retail sector - who’d ever buy into a CVA?

The demise of BHS and the recent announcement that the administrators will be closing all the shops sees yet another major retailer follow Woolies et al in disappearing from our high streets.

As the death of yet another beleaguered retail chain plays out in the press, the BHS story highlights many of the contemporary issues that UK businesses face and I’ll be covering a few of these in a series of articles.

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In 2014 Teresa Graham published the results of her independent review commissioned by the Government into the perceived misuse of the administration regime where a “pre-packaged” sale of a company’s business occurs immediately on appointment of an Administrator.

Known as a “Pre-Pack” the word has moved into common parlance in the corporate world and in the press, as some high profile cases brought the procedure into the public eye.

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