There are signs that the construction industry is slowly recovering

Around 130,000 in construction still on furlough

Peak number was over 700,000 in April

The number of people in construction still furloughed has fallen to less than 150,000, latest figures show.

In the period to 31 October, 130,700 people were still on furlough – down from the 204,400 using the initiative at the end of August.

Figures released by HMRC that in construction the peak of furlough was on 14 April – three weeks after the first lockdown was announced – when 723,600 were using it.

Overall, the number of people furloughed at the end of October was 2.4 million a reduction of 73% from the peak.

Furlough peaked at 8.9 million on 8 May, falling to 5.4 million at the end of July, 3.8 million at 31 August and 2.8 million by the end of September.

The sector with the highest proportion of furloughed staff was the accommodation and food services sector at 27% followed by arts, entertainment and recreation at 24%.

In all, 45% of employers in both the accommodation and food services sector and the arts, entertainment and recreation sector were using the furlough scheme at the end of October.

Lask week chancellor Rishi Sunak confirmed the furlough scheme will be extended by a month to the end of April next year.

Sunak said the government would continue to pay 80% of the wages of furloughed workers until the end of that month.

He also said government would extend its covid-19 business loan schemes until the end of March.

Source: Building


Early Christmas present for struggling businesses as insolvency protection measures extended

Struggling East Midlands businesses are being given an early Christmas present with the news that the Government is offering extra breathing space to deal with the impact of the coronavirus.

A raft of legal changes aimed at protecting businesses from insolvency during Covid-19 were due to expire this month, but these have now been extended to next spring.

The announcement has been welcomed by the Midlands branch of the insolvency trade body R3, as it should provide some flexibility for many struggling firms trying to make the most of an unpredictable pre-Christmas trading period. The organisation sounded a note of caution, however, about how and when the measures would be unwound.

Key updates include the continued suspension of statutory demands and winding up petitions until 31 March. Company AGMs will also be permitted to be held online until 31 March, enabling shareholders to examine company papers and vote on issues remotely.

R3 Midlands Chair Eddie Williams, a partner at Grant Thornton in the region, said: “Local businesses now have an extra three months largely free from the threat of creditor action, which means more time to try and get back on an even keel.

“The big question now for the Government is how to withdraw these support measures in 2021 in a way which doesn’t irreparably damage businesses weathering an unprecedented year of trading difficulties.

“One crucial step would be to ensure that HMRC takes an engaged and supportive approach to its role as a key creditor in most insolvencies. With its new preferential status, HMRC’s support as a creditor will be required to ensure that viable restructuring proposals can be agreed. This could save hundreds of jobs and businesses as our region adjusts to a post-COVID environment next year.

“In the meantime, R3 would urge anyone who is concerned about their company’s financial future to seek advice from a qualified professional as early as possible. Doing so will provide more options and time to make a considered decision about what’s best for their business.”

Source: Business East Midlands Link


UK Liquidators: Support for Tier 3 businesses in Newark and across Nottinghamshire

We face more tough times with the latest Covid restrictions, but there is support out there for struggling businesses.

Nottinghamshire has returned to Tier 3 - also known as the ‘Very High’ alert level.

The area has dealt with significant disruption over the course of this year, and as we approach Christmas, there seems to be no relief from the trading and financial pressures placed on the Nottinghamshire business community.

The government’s measures to combat the economic effects of coronavirus include the furlough scheme, which has been extended to March31. Although the government schemes continue to provide valuable support to local businesses, for some it will simply not be enough, and professional support may be needed.

So what does being in a Tier 3 area actually mean for businesses trying to find a way through this crisis?

THE IMPLICATIONS OF TIER 3 FOR BUSINESSES IN THE NEWARK AREA

Which businesses can open under Tier 3 restrictions?

• Non-essential shops
• Hairdressing, nail, and beauty salons
• Gyms, leisure, and sports venues (apart from dance and fitness classes)
• Wedding ceremonies can continue to take place with up to 15 people attending, but wedding receptions are banned

Which businesses have to remain closed in Tier 3?

• Hotels, B&Bs, guest houses, and campsites

• Hospitality businesses, unless serving takeaway food and drink or offering delivery, drive-through, or click-and-collect services

• All indoor entertainment/tourist venues (including those located within an outdoor entertainment venue)

If Newark and the Nottingham area remain in Tier 3 over the Christmas period, these restrictions will stay in place.

Our team of licensed insolvency practitioners at UK Liquidators can provide reliable, professional advice for businesses in the area on how best to deal with the coronavirus restrictions.

There may be a number of appropriate rescue and recovery measures available to businesses experiencing financial decline due to the pandemic.

Here are just some of the ways the team at our Nottingham office can support your business at this time:

* Tailored insolvency advice: You may be able to enter a formal insolvency procedure, such as company administration or a CVA, protecting your business from creditor legal action and providing a clearer path through the crisis.

* HMRC Time to Pay: HMRC extended their Time to Pay scheme earlier in the year, and this provides up to 12 months’ additional time to pay your tax arrears. We can advise on your company’s eligibility for this scheme, and negotiate with the tax body on your behalf if required.

* Liquidation support and guidance: We can act as liquidators to close down your company in an orderly manner if no other options are viable, and also advise on whether you can claim redundancy pay as a director.

Source: NewarkAdvertiser


Treasury ‘cash grab’ could increase North East business insolvencies, warns R3 regional chair

A new law that comes into force on 1 December which will move HM Revenue & Customs higher up the creditor ladder could push more struggling North East businesses into insolvency.

That’s the warning from Alexandra Withers, regional chair of insolvency and restructuring trade body R3, in advance of the new Crown Preference rules coming into force.

And in the light of the economic crisis that’s been caused by the pandemic, she is calling on the government to make a last-minute reconsideration of its plans.

The rule change will enable HMRC to recover in priority to other unsecured creditors taxes such as PAYE, VAT and National Insurance which have either been paid to insolvent businesses by their customers or which are being held in respect of their employees.

This will mean HMRC will be repaid ahead of unsecured creditors such as suppliers, pension schemes and trade creditors in corporate insolvency procedures.

And Alexandra Withers, along with many other business finance and insolvency experts, believes this change will have a detrimental effect on an insolvent company’s other creditors and will effectively inflict financial distress on them.

She says: “Given that an insolvent company is unlikely to be able to repay all its debts, the lower a creditor is down the order of payment priority, the less of their money – if anything – they are likely to see back.

“The result of the Treasury being able to muscle its way to the front of the queue in this way is that smaller suppliers, who are usually unsecured creditors, will be likely to receive less through an insolvency process than they do now.”

A survey of R3’s members carried out last year showed that nearly four-in-five (78%) of respondents from the insolvency and restructuring profession feared the proposals would make it harder to rescue businesses, while financial services trade body UK Finance estimated the policy could hit lending by at least £1bn per year even before the coronavirus outbreak.

Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, continues: “Our view is that this short-sighted plan for a quick cash grab for the Treasury will cause long-term damage to the UK’s enterprise and business rescue culture, as well as impeding access to finance for North East firms at a time they need it most.

“It could damage over 15 years’ progress on building an enterprise culture, and comes during one of the most difficult periods facing regional businesses as they face the impact of a global pandemic, as well as the potential disruption of a possible no-deal Brexit.

“The Treasury needs the tax income generated by healthy, thriving businesses, a goal which we agree is important, but the new legislation is likely to result in tighter access to finance for businesses, and will probably lead to more business insolvencies, fewer growing businesses to generate tax receipts and higher redundancy pay-outs for the Government to cover.

“In the midst of such a bleak economic outlook, we are calling on the Government to look at the bigger picture and urgently re-consider introducing this policy.”

Source: BDaily


Shock and devastation as Rochdale shopping centre closes permanently

Traders at the Wheatsheaf Shopping Centre, Rochdale, Greater Manchester, have been left devastated after the news broke that the centre will not reopen after lockdown.

The struggling centre had already been suffering after losing big brands Argos, New Look and Wilko's, Rymans, Brighthouse and Select in recent years, but the news has come as a shock to small businesses.

MCR Property Group, who manage the centre indicated that the pandemic has been the final nail in the coffin.

They said: "The ongoing coronavirus pandemic has expedited the migration from traditional shopping habits and the impacts on the retail sector have been significant.

"Since re-opening after lockdown in June 2020, footfall has been tracking at an average of 45% down year-on-year and this lockdown will impact these figures further.

"The financial viability of the centre is not sustainable."

Family run business Fizz Bombs have published a heartbreaking video on social media following the announcement.

The business is run by Lauren, Mark, with their four children.

In the video, Mark said: "The last 12 hours have shocked us beyond belief to be honest.

"It's inhumane and it's disgusting.

"There's nothing we can do.

"We will get through this - we are not going anywhere.

"What we've got works and we know it does.

"We have been asked to leave by December 1."

Mark is seen breaking down on the video.

He added: "To have the rug pulled out from under us...

"People are telling us it will be alright makes a difference.

"This year has been a struggle - not just with the business.

"We will get another shop but its going to take time."

Source: InYourArea


COFF UP High Street coffee chain Caffè Nero calls in restructuring experts to avoid store closures

CAFFE Nero is the latest high street chain to be forced into restructuring its business after profits were hit by the coronavirus pandemic.

The cafe, which operates 660 sites across the UK, has launched a Company Voluntary Arrangement (CVA) to restructure its business and avoid store closures and job losses.

A CVA is a procedure that allows companies to continue trading while allowing a proportion of its debts to be paid back over time.

The process involves agreeing with its creditors, including the landlords of its stores, ways to cut costs without the whole business going under.

It is "the best rescue tool for a company that is viable going forward but is burdened by historic debt", according to Company Rescue.

Caffe Nero is hoping to keep store closures and any related job losses to a minimum.

It's understood the company will look to redeploy any staff if any stores are forced to close.

Caffè Nero employs about 5,000 people and says it serves 135 million customers annually.

Gerry Ford, Caffè Nero's founder, said the second lockdown in England forced the company to act quickly after profits declined.

The company has suffered losses due to the new measures - including curbs on socialising and the Government's advice for people to work from home.

Mr Ford said: "We have expanded our coffee at home range, launched Click and Collect for the first time via our app and we have begun offering a delivery service through Uber Eats.

"However, with our dine-in facilities now closed for a second time, we have little option but to launch this CVA to safeguard the future of our business.”

FINANCIAL CHALLENGES
The founder added the coffee chain had been trading strongly before the Covid-19 pandemic.

But he explained: "Like so many businesses in the hospitality sector, the pandemic has decimated trading.

"And although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action."

Mr Ford, who founded Caffè Nero in 1997, has appointed leading accountants KPMG to advise on the CVA.

Will Wright, head of regional restructuring at KPMG, said: "Caffe Nero is an iconic brand on the UK’s high streets with a terrifically loyal customer base.

"However, like many others across the sector, the impact of measures introduced in response to the Covid-19 pandemic has been devastating."

The company hopes to get its finances in order, reduce its rent liabilities and exit loss-making stores.

Source: theSun


UK nightclub owner Deltic Group up for sale as bankruptcy looms

Lack of government help since Covid hit has ‘slowly choked us to death’, says boss Peter Marks

The UK’s largest nightclub operator, Deltic Group, is seeking a buyer as it fights to stave off bankruptcy after the seven-month closure of its venues during the pandemic drained the business of cash.

Its chief executive, Peter Marks, lashed out at the government for failing to offer more support to the nightclub industry, as he confirmed the sale plan.

UK nightclub owner Deltic Group up for sale as bankruptcy looms

Nightclubs are among the very few businesses unable to reopen at all since Covid-19 hit the UK; Marks said the government’s failure to offer more support had “slowly choked us to death”.

In an effort to ensure its survival, Deltic has already cut 1,000 staff – about half its headcount – and has repurposed parts of its clubs as bars, allowing it to reopen 10% of total floor space.

But Marks said this was bringing in £80,000 a month, compared with the £1m that the company is burning through, leaving it facing running out of cash by December.

Marks said he was looking at every option to secure the survival of the business, which runs 53 clubs, including Pryzm in Birmingham and Eden in Newcastle and Manchester.

The options could include a company voluntary arrangement (CVA) – a form of insolvency that typically involves site closures and an agreement from creditors to cut rents or fees.

But Marks, who told the Guardian in August that the company could not survive without more state support, said he was also exploring a sale.

“We have to look at every option going and part of that is to see what other capital is out there to get the business through this,” he told the Financial Times, which first reported the story.

Michael Kill, chief executive of trade body the Night Time Industries Association, said: “As the weeks and days go on we’re going to see more and more of this happening.

“People within the business will be concerned about their future and it epitomises the concern in our sector, whose businesses have been restricted for a long time without considered and proportionate support.

“For many companies, we’ve missed the boat. Now we’re starting to lose businesses and the government needs to act at pace to stem this loss.

“Our night-time economy will slip away if we’re not careful.”

Source: The Guardian


KPMG puts UK restructuring unit up for sale

KPMG has put its UK restructuring practice up for sale and held talks with private equity firms ahead of a possible auction before the end of the year, according to people familiar with the matter.

A cash injection would help the Big Four firm, with its finances having suffered during the pandemic. KPMG also faces a potentially large fine over its audit work for Carillion, the collapsed outsourcing group, as well as a £250m negligence lawsuit brought by the company’s administrators.

Two people close to the restructuring practice said KPMG had spoken to interested buyers in recent weeks. One person said the firm had hired Melanie Richards, formerly deputy chair of KPMG who retired in September, to lead a sale process.

KPMG said: “We can confirm we are exploring options for our restructuring business. However, we have made no decisions over any eventual outcomes at this stage and will not comment further at this time.”

A person with direct knowledge of the situation described several discussions between senior KPMG partners and private equity firms in recent weeks. The person said the firm was “speaking to different players ahead of an auction”.

A second person, who works at a private equity firm, said his firm was aware of a sale process.

A third person close to KPMG said the “decision to sell [restructuring] was taken weeks ago”.

However, KPMG added: “We have not spoken to PE houses or their advisers in relation to this matter.”*

Restructuring is a significant fee-earning operation at KPMG. The practice has recently advised on the insolvency of travel operator Thomas Cook and at Intu Properties. It has 22 partners and 475 staff.

The plans come two years after KPMG rejected interest from buyout firm Permira in acquiring its restructuring division. A number of the unit’s senior partners, including Mark Raddan, global head of turnround, and Blair Nimmo, UK head of restructuring, have been part of plans to move the division outside KPMG since the Permira approach, two people close to the matter said.

A sale would end conflicts of interest that have made it increasingly difficult for KPMG’s restructuring partners to take on new clients.

Rival firm Deloitte put its restructuring practice up for sale last month following concerns among its senior executives that it had become too difficult to manage conflicts of interest. However, the plans were swiftly vetoed by the firm’s global business, which said a sale could have an adverse impact on the rest of the group.

The Big Four accounting firms have come under growing pressure to manage conflicts of interest after a series of corporate failures and accounting scandals called into question the quality of their audits and the independence of their advice.

Last year the Financial Reporting Council, which supervises the audit profession, introduced a “radical” update to its ethical standards for audit firms. It tightened the rules on what services the industry could provide to listed companies and financial institutions in an effort to strengthen auditor independence.

Source: Financial Times