Editor: John Arnold. E-mail jarnold@creditman.co.uk
Pat Williams. E-mail pwilliams@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 5 Issue 27
Dated: 15 July 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
UKUK INWARD INVESTMENT CONTINUES TO RISE
'A clear vote of confidence by the world's leading companies in Britain's economy and workforce ' say Ministers
A new rise in UK inward investment projects demonstrates international confidence in our economy and our standing as a world class centre for business, Trade and Industry Secretary Patricia Hewitt and Foreign Secretary Jack Straw said last week.
Speaking in London at the launch of the Invest-UK Annual Review of Operations 2001, Ms Hewitt said:
"The headline figure of 869 inward investment projects highlights the UK as Europe's top investment location. This is a clear vote of confidence by the world's leading companies in the skills and flexibility of the UK workforce and in the stability and competitiveness of our economy. Foreign inward investors created 71,488 new jobs in Britain last year.
"Our performance has been outstanding. But we can not be complacent in the face of a US technology sector downturn that has affected many global markets. We must be ready to meet the challenges of new technologies and new markets to ensure our success for the future.
"The nature of UK investment projects is changing to favour high quality, value added and technology driven projects in the IT, communications, biotech and R&D sectors. Projects like these offer the best possible opportunities for our workforce, our economy and our future."
Speaking in Washington DC, Mr Straw said:
"The US is the largest investor nation into the UK. We share a common language and stand as a key bridgehead for US companies into other European markets.
"The role for government in today's fast changing global economy is to provide the right business conditions to ensure that the UK remains the best location for investment in Europe.
"Invest-UK, its teams in Embassies, High Commissions and Consulates in key markets world-wide and its partner UK development agencies can be proud of their record of attracting increasing levels of high value investment to the UK, and of maintaining Britain's position as the country of first choice for those wishing to invest in Europe."
The Annual Review of Operations announced the following:
Copies of the Review are available in a downloadable format from the Invest UK web site http://www.invest.uk.com
MANUFACTURING CONFIDENCE PLUMMETS AS SERVICES LOSE GRIP ON GROWTH
UK firms suffered their worst period of economic activity for over two years last quarter, with recession closing in on manufacturing and the service sector losing its grip on growth, according to the latest quarterly survey from the British Chambers of Commerce, published on Thursday 12 July.
The survey, the largest and most detailed of its kind, covering 7751 UK firms employing over 800,000 staff, shows manufacturing industry edging closer to recession, with firms reporting shrinking home sales (+11 down to -1) and orders (+8 down to -5) over the last three months. The outlook remains bleak, with manufacturers reporting plummeting confidence in improving turnover (+50 down to +32) and profitability (+34 down to +24).
The survey also shows that the slowdown is now feeding through into the service sector, with UK sales growth slipping 5 points (+31 down to +26) and orders down 7 points (+26 down to +19), the lowest since mid 1999. While service firms' confidence remains high (+49 turnover, +37 profitability), price pressures in the sector have eased substantially (+32 down to +18).
Both sectors report stagnant export activity, with manufacturers showing growth unmoved since last quarter (+1), and service firms’ growth slowing on overseas sales (+9 down to +3) and orders (+8 down to +1).
David Lennan, Director General of the British Chambers of Commerce said:
"The shock waves of the global slowdown are reaching further and deeper into the UK economy than previously expected. With manufacturing confidence draining away, the wings of service sector growth clipped and price pressures on a downward trend, there exists both the scope and the need for a further cut in interest rates in August.
“Government must also recognise the role it must now play in supporting industry and the wider economy through these difficult times. Ministers must treat these new data as a warning that the productivity agenda needs less promise and more delivery.”
The survey also shows investment for both sectors at its slowest for two years. The percentage balance of manufacturers planning capital investment growth has fallen from +7 per cent last quarter to just +4, and this is marked particularly in larger firms (500+) where investment plans are being cut back substantially (+9 down to -15). Investment in training by both sectors has also fallen, slipping 8 points in manufacturing (+19 down to +11) and 6 points in services (+32 down to +26).
Employment activity in manufacturing also fell with the balance of firms reporting job losses last quarter (+6 down to -1) and meagre expectations for the next three months (+13 down to +2). Sixty two per cent of manufacturing firms in the survey experienced difficulties recruiting staff over the quarter, down from the 75 per cent reported for the previous quarter.
Service sector recruitment difficulties are also down, with 64 per cent reporting problems compared to 66 per cent in the previous quarter. Employment activity also fell (+18 down to +15) with the outlook for the next three months down slightly (+23 down to +22).
Expectations of rising prices for goods and services have eased considerably, across both sectors and in all sizes of firm save large manufacturing companies (employing 500+) where the indicator has increased from +4 to +15. The overall balance of manufacturers shows slower price growth (+14 down to +9) and the service sector reports a sharp fall (+32 down to +18).
Price pressures have also eased across most indicators, with pay settlements hitting fewer manufacturers (14 per cent down to 9 per cent) and service sector companies (32 per cent down to 28 per cent). Raw materials prices, though falling, remain the greatest pressure for manufacturers, affecting 44 per cent of respondents, down from 54 per cent last quarter.
Competition remains the main concern for service firms but at 36 per cent is 4 points lower than in the previous quarter. Interest rates and inflation are of least concern, but exchange rates have become more pressing according to 19 per cent of firms, up 4 points on last quarter.
The exchange rate tops manufacturers' list of concerns, with 58 per cent of firms citing this as their biggest problem, compared to 39 per cent last quarter. Concerns over competition remain high, at 48 per cent, though down slightly from 51 per cent last quarter.
CONFIDENCE STOPS FALLING BUT BUSINESS STILL BELOW NORMAL - SAYS FINANCIAL SERVICES SURVEY
After suffering its biggest fall for more than two years in the last survey, business confidence amongst financial services firms has stabilised, though business volumes have not risen.
That is the main finding of a quarterly survey of the financial services sector published last Monday by the CBI and PricewaterhouseCoopers.
Asked if they were more or less optimistic about the overall business situation, 25 per cent of respondents said they were more optimistic than three months ago while 22 per cent said they were less. The balance of plus three compares with minus 22 in March 2001 but is the same as recorded in September and December 2000.
Business volumes have unexpectedly stopped growing. A balance of plus 26 was recorded in March. In this survey the balance is minus two, well below the plus 27 that had been expected. There is, though, a marked contrast between sectors. Building societies and general insurers reported sharp rises in volumes while securities traders, fund managers, and banks reported significant falls over the past three months.
However, more firms expect business to rise over the next three months than expect it to fall. The balance is plus 20. Again the level of demand is the most likely constraint on business over the next year, a factor cited by 77 per cent of respondents. That is its highest level since September 1998. Level of demand was followed by domestic competition, mentioned as a limiting factor by 71 per cent.
Growth in profitability has eased in each of the last two surveys. In this one it became negative for the first time since June 1995. Over the next three months very little change is expected. Average costs are broadly unchanged after having declined for almost six years.
Overall employment in financial services rose over the past three months, though there had been expectations of a slight fall. Finance houses and life insurers experienced the strongest rises while there were no increases among banks, fund managers and securities traders. In financial services as a whole numbers are expected to increase at a similar rate over the next three months.
John Hitchins, Financial Services partner at PricewaterhouseCoopers said: "We've seen the business confidence of financial services firms stabilise this quarter, after slipping back earlier in the year. But, because overall profitability has seen its first decline for six years, it's clear this is a reflection of less turbulence in the market rather than an improvement in underlying fundamentals. Control of costs is a problem across almost the whole sector and the survey shows a slow down in investment intentions, particularly in IT."
In IT investment intentions have weakened since March. They are still positive but at the lowest level since December 1996.
Sudhir Junankar, CBI Associate Director of Economic Analysis, said: "Business confidence has levelled off after the downturn in the last survey, while the pause in the growth of business volumes is not expected to continue. But financial services companies seem less confident about longer term business prospects, with concerns about likely demand conditions at their highest levels for almost three years."
A balance of forty one per cent of financial services firms said the total value of their internet business had increased over the last three months. In March the figure was 39 per cent, meaning that internet business is spreading slightly more quickly, but 33 per cent of firms said it was not developing as quickly as they had expected.
More firms said the biggest barrier is a lack of understanding by customers and suppliers. In March that was mentioned by 50 per cent of respondents. In this survey the figure is 56 per cent. The other main barriers remain the speed at which the internet works and doubts about the security of data.
The number of firms launching online brands is virtually the same as in March. Twenty eight per cent said they had and 10 per cent said they were planning to. The number of firms who are web-enabling existing business activities has risen. In March 76 per cent said they were. In this survey the figure is 83 per cent.
The survey was conducted between 24 May and 13 June 2001. A total of 135 companies responded including banks, building societies, finance houses, securities traders, fund managers, commodity brokers, private equity firms, insurance companies and insurance brokers. For further information please visit www.pwcglobal.com/fsjune2001
INTRODUCTION
Under the banner "Striking the Banner" - a new approach debt management" the Scottish Parliament's Working Group charged with finding an alternative to poindings and warrant sales has now reported.
The Working Group was established by the Scottish Parliament's Justice Minister, Jim Wallace, following the Parliament's Bill to abolish poindings and warrant sales, with an alternative having to be found no later than 31st December 2002. The Group's challenge has been to find a workable but humane alternative to warrant sales whilst simultaneously safeguarding the legitimate interests of creditors who provide the range of goods and services; and upholding the "rule of law".
The Working Group's membership have included representatives from the Institute of Credit Management, politicians of different colours along with different advice agencies such as the Scottish Consumer Council and Money Advice (Scotland). Representatives from the Scottish National Party and the Scottish Socialist Party resigned as they felt the Group's remit was too narrow.
Since October 2000 the Working Group has met no less than 19 times with the pre-publication text of their report being posted on the Parliament's website on the afternoon of 6th July 2001.
(a) Daunting Task
At the outset it has to be said the Working Group were given a most daunting task. Having to find an alternative to the concept of the attachment of a debtor's moveable goods to a Court's Judgment was indeed difficult, bearing in mind that every legal system studied by the group had such a system in place. This in essence is what poindings and warrant sales are all about. Indeed, the report has not entirely abandoned this principle.
(b) Separating Consumer from Commercial Debt
What the Working Group have done, in fact, is to differentiate debt into commercial and consumer. Whilst a special application will have to be made to the court for a "Compulsory Sale Order", in the case of consumer debt this will not be granted as of right with a number of debtor protection steps being in place before such an order is granted. These "stoppers" will ensure that before any sale order is granted debtors are given access to debt counselling and better information about court procedures. Commercial debtors will not be given such safeguards.
However, commercial debt will proceed under a fast track process the details of which will still need to be "fleshed out".
(c) No Loopholes
The Working Group were of the opinion that compulsory sale of a debtor's assets should still be available. This obviously has disappointed some of the more radical members of the Scottish Parliament, including Tommy Sheridan, the MSP who introduced the Bill to abolish poindings and warrant sales in the first place.
However, the compulsory sale of a debtor's assets will be operated in an entirely different fashion to the current warrant sale procedure where currently sales are granted almost as of right on the creditor's request.
The Working Group did consider whether the ultimate sanction of asset sale should be avoided but they considered to do so would leave a loophole in the law for the minority of unscrupulous debtors who had the means to pay their debts but simply refused to do so. The Group looked at other legal systems, both internationally and within the European Union and concluded there was no other alternative other that civil imprisonment should asset disposal be entirely abolished. Civil imprisonment was deemed by the Group to be entirely unacceptable and incompatible in a modern Scotland.
(d) Multiple debt
The Working Group's report also emphasised the importance of creating an environment in which the problems of multiple debt can be addressed. The intention here is to benefit both creditor and debtor. Put simply if it is not worthwhile taking enforcement action against the debtor this will benefit the creditor as no money will be wasted in trying to recover the irrecoverable. Debtors will benefit because they will not be pushed into making payments to the more "tempestuous creditor" who will benefit from debt arrangement schemes should it be possible for instalment arrangements to be made. Here the Group have genuinely tried to find a "win/win" solution to the thorny issue of multiple debt and may, in fact, have found it.
(e) Access to debtor's financial circumstances
The Working Group considered whether creditors should be given access to a debtor's financial circumstances at an early stage of debt recovery proceedings. If so, creditors could evaluate whether court action should be taken in the first place and, if so, how enforcement should be targeted. Because of difficulties, including data protection and human rights, this was rejected. However, what has been recommended is an alternative means by which information about a debtor's circumstances can be delivered.
Basically what has been devised is a scheme whereby early on in the court process the debtor will be able to voluntarily make a declaration to the court as to his or her asset position with the option of a third party, such as a money advisor, assisting the debtor with this task.
(f) Debtor's declaration
If the debtor's declaration were made parties could sensibly agree debt repayment terms which would result in enforcement being unnecessary.
It is accepted a scheme of voluntary declaration could be subject to abuse by under declaration, however, the Working Group are of the opinion the scope for this will be reduced because these declarations will be made with the assistance of a money advisor.
Nevertheless, where a creditor considers a voluntary declaration is incorrect he will be able to have it verified and where there is sufficient evidence the court may appoint an advisor.
(g) More debtor advice
In addition, the advice concept will be incorporated into the enforcement process. Enforcement can be halted to enable a debt advisor to negotiate payment terms with the creditor.
And in situations of multiple debts, the Working Group wish to see the introduction of a "National Statutory Debt Arrangement Scheme". Money advisors will be given power to assist debtors to enter in arrangements with all of a debtor's creditors and such an arrangement, once formally approved, will act a block on enforcement.
(h) Enforcement to be a last resort
To ensure enforcement action will be used genuinely as a last resort it will mean the creditor's right to dispose of a debtor's assets will not be granted as of right. There will be a requirement for creditors to make a specific application to the court for sale of a debtor's goods. This will be known as a "Compulsory Sale Order". Procedures will be introduced enabling debtors to afford themselves of debt advice and only after this has been exhausted will the court decide whether there are grounds for granting an application.
In summary the Report's recommendations are as follows:-
CONCLUSION
It must be emphasised that what has been produced is a report by the Working Group to the Scottish Executive (Scottish Government).
The Executive are not obliged to accept its findings although Justice Minister, Jim Wallace, has welcomed its finding as have a number of advice organisations. Indeed Jim Wallace is reported to have said "He is minded to implement the approach being recommended". This will be subject to responses to the public consultation will be launched shortly. It may be that during this process much of the detail will be infilled.
The Scottish liberal democrats have welcomed the proposals as "the most comprehensive and liberal system of debt collection in Europe".
Tommy Sheridan, the Scottish Socialist MSP, whose private members bill abolished poindings and warrant sales castigated the proposals as being a "fraud and a disgrace". Only time will tell after the consultation process how the Scottish Parliament will deal with the issue.
(a) A debtor's charter
Undoubtedly some creditors will say that this report is a "debtor's charter". This is because of the availability of the enforcement stoppers and plethora of advice to which debtors will be able to avail themselves throughout the enforcement process.
However, the preferred view is that the recommendations are "debtor focused". By focusing on the debtor and the information which can be gathered about his financial circumstances creditors will be able to establish if the debtor is worth pursuing and whether enforcement is a viable option.
(b) The key to successful debt recovery
The key to successful debt recovery is accurate debtor information and the Working Group's support goes a long way in unlocking how this information may be accessed both through Money Advisors and, if necessary, court intervention.
This is what creditors have been asking for years. Many thought it was a forlorn hope - never to materialise.
If adopted the report will go a long way to achieving this goal with creditor's being able to separate the wheat from the chaff.
As far as debtors are concerned, those who genuinely cannot pay their debts will be insulated from asset removal with realistic proposals being implemented to pay their debts and debt arrangement schemes being put in place for those having multiple debts.
This is good news for the debtor, as no longer should they have to turn to alternative means to finance the more rigorous creditor. Creditors should be pleased with this too as it will avoid them in sometimes expensive Sheriff Officer's fees where recovery was a waste of time in the first place.
(c) Financial resources
Obviously significant financial resources will have to be put in place to account for additional court time in dealing with the various applications which will be made and the cost of supporting a very worthwhile money advice service. Well, that is what Scottish devolution is all about!
Perhaps there should be mention of the Sheriff Officers whose role, it would seem, will be somewhat curtailed. No longer will they be conducting poindings certainly for domestic debt and asset removals will be rare indeed. Also Sheriff Officers may be unhappy the Working Group have said "Careful consideration should also be given as to whether the separate roles currently undertaken by Sheriff Officers in relation to debt collection and enforcement of court decisions are compatible and should be performed by the same people."
Stephen Cowan
Yuill & Kyle
Debt Recovery Lawyers,Scotland
Tele 0141 332 7107
scowan@yuill-kyle.co.uk
www.debtscotland.com
AWARENESS OF DATA PROTECTION RIGHTS AT HIGHEST LEVEL EVER, INFORMATION COMMISSIONER ANNOUNCES
Nearly three-quarters of all adults in Great Britain are concerned about the amount of personal details being stored electronically by companies and organisations, the Information Commissioner revealed last week.
Research conducted on behalf of the Information Commissioner, and published with her Annual Report today, reveals 96% of individuals rate their rights to personal privacy as important or very important and that 73% of adults are either "very concerned" or "quite concerned" about the amount of personal information being held by organisations. Women are more concerned than men, and those aged over 45 are more concerned than younger people.
In 1991/92 members of the public complained about alleged breaches of data protection rules on 1,747 occasions - in 2000/01 that figure had risen to 8,875.
Elizabeth France, Information Commissioner, said on publication of the report: "Our workload is higher than ever before. This is consistent with our annual tracking research showing data subjects' awareness of their rights also at its highest level ever. Furthermore extensive media interest shows that the Act provides a set of rights which are of increasing value in modern society."
Other developments and issues highlighted in the report include:
Making modern government work - The Government has a target of delivering 100% of services electronically by 2005. Setting and meeting data protection standards is a key component.
Elizabeth France said: "I will continue to work with the e-Envoy's office and the Cabinet Office to develop standards. In the area of on-line authentication and identification in particular there is still much work to be done."
Improving data quality - Any system of data matching that brings together information on individuals from different sources relies heavily on the quality of the data it receives.
Elizabeth France said: "Data quality has always been a problem with credit reference systems. Along with the practice of using third party data under which family members' information is automatically linked, poor data quality has been at the root of the majority of complaints received."
One area where the consequences of poor data quality can be particularly serious is the Police National Computer. Problems with accuracy and timeliness of records have been identified in two independent reports. The situation is becoming critical due to the establishment of the Criminal Records Bureau, which will issue criminal record certificates to employers. There is a real risk that details of actual convictions may not appear on certificates and that successful appeals may not be taken into account. Work to attempt to rectify matters is underway. The Commissioner will be keeping this matter under close scrutiny.
Cybercrime - Developments in communications, particularly the Internet and mobile phones, have provided new opportunities for criminals.
Elizabeth France said: "Not surprisingly, law enforcement agencies want the ability to access these communications for surveillance, for example tracking individuals' movements via their mobile phone. This access must be limited to cases where the need justifies the privacy intrusion."
Cybercrime does not recognise national borders. International cooperation inevitably involves the exchange of personal information. In the UK, the EU and in an increasing number of countries throughout the rest of the world, this personal information is protected by data protection law. It is essential that if other countries wish to be party to the exchange of personal information in the context of tackling cybercrime, they should accept obligations to handle the personal data they receive in accordance with recognised data protection standards.
Employee/employer code of practice - Several issues have arisen in the course of the Commissioner's work on the code of practice on the use of personal data in employer/employee relationships.
Monitoring of employees, in particular the monitoring of their e-mails and internet access, has drawn much comment.
Elizabeth France said: "Any monitoring must address the specific risks that an employer faces, it must be a proportionate response to those risks, conducted with no more intrusion than necessary, and employers must be open with their employees about its existence. I recognise the need to translate these requirements into standards that are realistic, easily understood, and practical."
Promoting publication schemes - The Freedom of Information Act is expected to be implemented in stages across the public sector from 2002 to 2005. The public will have the right to access information held by all public bodies. The Commissioner will be issuing guidance and working with public authorities to help them understand and meet their new obligations.
Elizabeth France stated: "Publication schemes will encourage public authorities to release information automatically and to make disclosure a natural part of their working routine. We are currently consulting on draft criteria for the approval of publication schemes, a methodology for drawing up schemes and our own scheme. These are available on our website. Comments are welcome before 21 September".
Devolution - A short-term project began towards the end of the year aimed at assessing the implications of devolution for the Commissioner's work, and to make initial recommendations as to whether offices should be established in each of Scotland, Northern Ireland and Wales.
The Commissioner currently operates out of one office, which is located in Wilmslow. She has now decided in principle to establish an office in each of the three devolved administrations: Scotland, Northern Ireland and Wales. The office in Wilmslow will remain her headquarters.
Elizabeth France commented: "The decision reflects a wish to respond positively and realistically to the new constitutional arrangements. Two other factors influenced the decision. Our office has to grow as we take on freedom of information responsibilities over the next five years. We also have a welcome #5 million to spend on our IT infrastructure in the next two years."
Other information on the Information Commissioner is available on the main website: www.dataprotection.gov.uk
Since 30 January 2001 the Office of the Data Protection Commissioner is known as the Information Commissioner's Office. It continues to enforce the Data Protection Act 1998 and is also responsible for Freedom of Information.
Thousands of current and discharged bankrupts stand to lose their pensions as the result of an appeal withdrawn from the House of Lords.
John Dennison, a discharged bankrupt, has withdrawn an appeal petition from the House of Lords in a landmark case relating to the rights of creditors. The original Court of Appeal ruling in Krasner v Dennison, in favour of the trustee, means Gerald Krasner of Bartfield & Co Chartered Accountants, can now seize pension funds for the benefit of creditors.
The case sets a precedent and will concern thousands of individuals whose bankruptcies occurred between December 1986 and May 2000.
Mr Krasner, Senior Insolvency Partner at Bartfield & Co states: "The case has been followed with great interest by the insolvency profession. Now that the appeal has been withdrawn insolvency practitioners who were awaiting the outcome are now able to proceed with claims against current and former bankrupts."
"The next stage will be to prepare a test case challenging insurance companies that put in place forfeiture clauses, causing assets from pensions to revert to them, as opposed to creditors, if a policy-holder becomes bankrupt."
The precedent setting Krasner v Dennison case affects those who had been made bankrupt before May 29 2000, when government legislation protecting a bankrupt's pension came into effect, and since December 29 1986 when new insolvency legislation was introduced.
For further information, please contact
Tim Grundon 0207 251 1500 Smith Grundon & Partners
Octavia Goredema 0207 251 1500 Smith Grundon & Partners
Bartfield & Co is a firm of accountants and insolvency practitioners founded in 1927. One of the few remaining independent practices in Leeds, the firm was started by Isaac Bartfield and has serviced family firms and fellow professionals throughout Yorkshire from the outset.
Further afield, Bartfield has earned a national reputation for its insolvency work and is one of the country's leading exponents of company rescue using voluntary arrangements, led by Gerald Krasner, a well known figure in insolvency circles.
Krasner (Trustee in Bankruptcy) v Dennison confirmed the decision in Re Landau that a bankrupt's personal pension vests in his Trustee in Bankruptcy and can be used to pay off creditors. On 23 November 2000 the House of Lords granted leave of appeal in the case of Krasner (Trustee in Bankruptcy) v Dennison. On April 6 2000 the Court of Appeal ruled in favour of Gerald Krasner of Bartfield & Co Chartered Accountants in Krasner (Trustee in Bankruptcy) v Dennison. The decision that pensions should be treated as a realisable asset means that trustees would be entitled to seize the pensions of bankrupts in order to pay off creditors.
This decision only affects Retirement Annuity Pensions or Personal Pensions and not Occupational Pension Schemes.
OMEGA LEGAL SERVICES (UK) LIMITED WOUND UP ON DTI PETITION
On 26 June 2001 Omega Legal Services (UK) Limited (reg no 03253812) was wound-up in the High Court of Justice on the petition of the Secretary of State for Trade and Industry presented in the public interest on 27 April 2001. The petition followed enquiries by the Companies Investigation Branch of the DTI under the provisions of s447 of the Companies Act 1985.
The DTI enquiries identified that:
Omega Legal Services (UK) Limited was incorporated on 24 September 1996 and traded as a debt recovery agency in Liverpool. Just after the DTI enquiry ended the company went into voluntary liquidation.
The Official Receiver is now liquidator of the company and is responsible for investigating the circumstances of the company's failure and the conduct of its directors in relation to the company's affairs. In appropriate cases the Official Receiver can take disqualification proceedings or refer matters for prosecution.
The Secretary of State also petitioned to wind-up Omega Legal Services (Worldwide) Limited (reg no 04127741) but that application was not successful and the petition was dismissed.
The registered office of Omega Legal Services (UK) Limited is HLB Kidsons, Devonshire House, 36 George Street, Manchester M1 4HA and traded from Anson House, 25 Anson Street, Liverpool L3 5NY.
The petition was presented under s124A of the Insolvency Act 1986.
All public enquiries concerning the affairs of Omega Legal Services (UK) Limited should be made to the Official Receiver at the following address -
The Official Receiver
The Insolvency Service
2nd Floor
Cunard Building
Pierhead
Liverpool L3 1DS
REDUNDANCIES ANNOUNCED AT UNITED ENGINEERING FORGINGS
Following a two week consultation period with union representatives and employees, administrators from KPMG have announced 98 redundancies at United Engineering Forgings (UEF).
UEF, the largest independent forging business in the UK, went into administration on Tuesday June 12 with Myles Halley, the joint administrator from KPMG in Birmingham, stating that redundancies would be inevitable.
The redundancies have been split across three of UEF's sites. Sixty-six jobs have been cut at the Kidderminster site, 28 at Bromsgrove and 4 at Lincoln.
In addition, following discussions which the administrators were legally obliged to undertake, it has been announced that the company pension scheme has had to be wound up. The high cost of making members of the scheme redundant would have placed a huge strain on the scheme funds, to the detriment of the remaining younger members. The independent scheme trustee therefore suggested that the scheme be wound up before job losses were announced, thus protecting the contributions of all scheme members.
PERSONAL INSOLVENCY IN BRITAIN
Last year, 114 Britons became personally insolvent every working day.
The vast majority of these unfortunates are small business people, usually self-employed. Some are directors of failed businesses. A growing number are ordinary consumers with personal financial problems. However, unlike the USA, where ordinary consumer bankruptcy accounts for the majority of individual insolvencies, in Britain personal insolvency is still mostly a problem for small business people. Commercial causes accounted for 63% of cases in R3's current personal insolvency survey.
R3 has been conducting research into the causes and outcomes of insolvency for individuals since 1991. The results of R3's most recent survey can be viewed online at www.r3.org.uk/8th
WHY DO PEOPLE BECOME INSOLVENT?
R3's current research shows that around a third of personal insolvencies are principally due to domestic causes and two-thirds relate to the failure of a business. These proportions have changed little in recent years. If anything, domestic causes are becoming more common.
The most common cause of "domestic' personal insolvencies is mismanagement of personal finance (particularly credit cards, which account for more than a fifth of personal insolvencies in this area).
GOVERNMENT ACTIVITIES
Opportunity for all - white paper on enterprise, skills and innovation
On 13 February the Department of Trade & Industry and the Department for Education and Employment unveiled a white paper aimed at making the UK economy more entrepreneurial, with focus on changing existing insolvency law along the following lines:
Bankruptcy - A Fresh Start - consultation paper
The Department of Trade and Industry published this consultation paper on 7 April 2000 as part of its move to reform personal insolvency law. R3 formally responded to some of the practical considerations raised and held a symposium to discuss the proposals, which included:
PROCEDURES
Both bankruptcy and the IVA (individual voluntary arrangement) are procedures for private individuals who can no longer pay their debts. An individual becomes insolvent if her or she is unable to discharge his or her debts as they fall due.
Bankruptcy
Bankruptcy is sometimes the only solution for a private person in financial crisis. Bankruptcy makes it impossible to be director of a company and makes it more difficult for the business person to keep the support of creditors for future business. Bankruptcy enables bankrupts to draw a line under all the debts owed and is appropriate for people with few assets to distribute to help pay off the debt.
Any assets which are available, such as property, fall under the control of a trustee. The trustee is then responsible for realising the assets and paying off creditors in order of priority. However, bankruptcy typically gives poor returns to creditors. The bankrupt is allowed to keep furniture and other basic domestic equipment and in some circumstances a car. They can also keep materials required for carrying on their trade, which can include use of a computer. All other property however, including the matrimonial home, must be realised - although the law allows, for the benefit of the bankrupt's family, a twelve-month breathing period before the sale.
Bankrupts are currently discharged after 3 years, or two years in smaller cases. During this period prior to discharge, the bankrupt is prevented from acting as a director of a company, carrying on a business under any other name or incurring credit of £250 or more without disclosing his status. He is also prevented from sitting in either House of Parliament being elected to a local government body.
Individual Voluntary Arrangements (IVAs)
The IVA is excellent for a self-employed person or owner of an unincorporated business, as it allows the business to continue trading without the stigma and restrictions of bankruptcy, given above.
Individual voluntary arrangements (IVAs) are a form of rescue procedure for individuals facing financial crisis. The procedure is extremely flexible and its exact nature varies from case to case depending on the terms of the proposal.
The IVA's benefits are:
By entering into an IVA with the agreement of at least 75%, in value, of the creditors who vote at a creditors' meeting, the debtor can order his affairs in a way which benefits his creditors but would not be possible under bankruptcy. For example, by an orderly disposition of assets, introduction of third party funds, contributions from future earnings or debt rescheduling. A supervisor, who must be a licensed insolvency practitioner, oversees the agreement, which is binding on those creditors who had notice of and were entitled to vote at the meeting.
IVAs are very useful and effective procedures in the right circumstances - they keep hundreds of self-employed people in business every year. The procedure, introduced in the I986 Insolvency Act, now accounts for one in six personal insolvencies.
For further information, please contact Smith Grundon & Partners:
Bella Pagan, tel. 0207 251 1500 or email bella.pagan@smithgrundon.co.uk
Octavia Goredema, tel. 0207 251 1500 or email octavia.goredema@smithgrundon.co.uk
R3 provides a range of publications, including company and personal insolvency surveys, advisory booklets and their quarterly industry magazine. These can be viewed on www.r3.org.uk
*** FORTHCOMING CREDITORS MEETINGS ***
For detailed information on all the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.com/cgi-bin/gazette/liq/nots.pl
TW LW TW LW
USA 1.40 1.41 Canada 2.15 2.14
Austria 22.71 22.02 Portugal 330.91 335.46
France 10.82 10.97 Belgium 66.58 67.50
Finland 9.81 9.94 Italy 3196.01 3240.00
Germany 3.22 3.27 Sweden 15.35 15.50
Holland 3.63 3.68 Switzerland 2.50 2.54
Spain 274.63 278.42 Ireland 1.29 1.31
Australia 2.80 2.77 Denmark 12.28 12.46
Hong Kong 11.99 11.05 Euro 1.65 1.67
Africa Com 11.67 11.36 Saudi Arabia 5.28 5.31
India 66.48 66.85 Malaysia 5.35 5.38
Singapore 2.58 2.58 Norway 13.15 13.33
Japan 175.31 175.96
TW This week LW Last week.
The European Commission raided Mobile-phone Companies in Britain and Germany as part of an investigation into price-fixing on international charges in both countries.
Compaq Computer, the world's second-biggest PC maker, gave a warning that profits in its latest quarter would be down sharply. America's economic slowdown has intensified competition, and troubles have spread to Europe. A report from Merrill Lynch suggested further gloom; companies are spending less on IT and delaying upgrades.
Microsoft is to allow PC makers more freedom to change the Windows desktop. The software giant's move follows an appeals court ruling criticising its Windows monopoly; it may thereby hope to improve its negotiating position in settlement talks over the government's antitrust suit.
Webvan, an American online grocer once valued at $8.7 billion, said that it would close with the loss of 2,000 jobs. The company had slowed its losses by abandoning extravagant expansion plans, but could not do enough to offset a rapid decline in orders.
Real Madrid paid a record EURO77m ($66m) for Zinedine Zidane, a French international. The Spanish football club financed the deal and paid off debts by selling its training complex in Madrid's business district.
FTSE International, the British stockmarket indexer, launched FTSE4GOOD, a set of stockmarket indices for socially responsible investment. Many of Britain's top companies failed to make the grade.
Source - The Economist
H P Bulmer, the cidermaker, announced pre-tax profits of 21.5 million pounds, after exceptional credit, on turnover of 526.6 million, for the year ending 27th April 2001. Earnings per share stand at 21.7p.
Inter Link Foods announced pre-tax profits of 1.66 million pounds, on turnover of 18.7 million, for the year ending 30th April 2001. Earnings per share stand at 21.2p on increased capital.
International Greetings announced pre-tax profits of 10.5 million pounds, on turnover of 95.3 million, for the year ending 31st March 2001. Earnings per share stand at 17.9p.
Pace Micro Technology announced pre-tax profits of 38.1 million pounds, after exceptional charge, on turnover of 523.6 million, for the year ending 2nd June 2001. Earnings per share stand at 12.7p on increased capital.
Stanley Leisure, the betting and casino group, announced pre-tax profits of 25.1 million pounds, on turnover of 611.7 million, for the year ending 29th April 2001. Earnings per share stand at 14.2p.
MERGER NEWS
The Secretary of State for Trade and Industry has decided, on the information at present before him, and in accordance with the recommendation of the Director General of Fair Trading, not to refer the following merger/s to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973:Proposed acquisition by BBC Worldwide Limited of Chivers Communications plc
Acquisition by Bass PLC of Posthouse Hotels
Completed acquisition between SMG plc of 29.5% Shareholding in Scottish Radio Holdings plc
Completed merger by bioMerieux SA of the worldwide in vitro diagnostics business of Akzo Nobel NV
PATRICIA HEWITT ACCEPTS CC CONCLUSIONS ON LLOYDS/ABBEY MERGER
Patricia Hewitt, Secretary of State for Trade and Industry, has decided not to permit the proposed acquisition by Lloyds TSB Group plc (Lloyds TSB) of Abbey National plc (Abbey). Ms Hewitt accepted the findings and recommendations of the Competition Commission and the advice of the Director General of Fair Trading, both published last week, that the merger may be expected to operate against the public interest.
Ms Hewitt said :
"I accept the unanimous conclusions of the CC, endorsed by the DGFT, that the merger would be against the public interest and should be prohibited. This is because it would reduce competition in the markets for personal current accounts and banking services for small and medium sized enterprises, with the adverse effects in both markets of higher prices to customers and reduced innovation. The CC considered a range of behavioural and structural remedies but concluded that such steps would not be effective and that prohibiting the merger was the only remedy capable of fully addressing the adverse effects. I have asked the DGFT to seek suitable undertakings from Lloyds TSB to effect the prohibition of the merger".
The Commission noted that personal current accounts (PCAs) were the core product in personal banking. The merger would increase the share of the PCA market held by the four leading banks (Barclays, HSBC, Lloyds TSB and RBS/NatWest - the "big four") from 72 to 77 per cent. Within that Lloyds TSB, already the market leader, would increase its share from 22 to 27 per cent. The merger would also remove one of the main sources of competition to the big four.
The Commission concluded that that it was important for competition that there are well-established rivals to the big four banks because:
The merger would remove one of the main sources of competition to the big four. The Commission considered that Abbey National was an important force for competition in the PCA market, regardless of whether the proposed merger between Bank of Scotland and Halifax proceeded. It concluded that the acquisition of Abbey National by Lloyds TSB could be expected to lead to higher prices and a loss of innovation.
In SME banking, the Commission concluded that the market was highly concentrated, and dominated by the big four. The Commission noted that Abbey National was only a recent entrant to this market, but considered that its brand name, national network of branches and presence in personal and some business markets made it one of the very few players outside the big four able to compete in the SME market.
The Commission accepted that the merger would yield some efficiency savings. However, it did not consider that these would be passed on to consumers in reduced prices. It also concluded that the merger would harm consumer choice, with the possible loss of existing Abbey National products.
The Commission considered a number of possible remedies for the adverse effects it had identified. These included the divestment of existing Lloyds TSB or Abbey National businesses, including Cheltenham and Gloucester and Cahoot; the divestment of large numbers of bank branches including their customer base; undertakings regarding the terms of individual products to be offered by the merged group; and steps to improve customer information. It concluded that such steps would not be effective and raised practical problems of implementation, and that prohibiting the merger was the only remedy capable of fully addressing the adverse effects.
The Director General of Fair Trading agreed with the CC's conclusions and recommendations, and Ms Hewitt's decision is in accordance with his advice.
The continued rise of the multi-channel digital economy has highlighted the importance to businesses of having information continuously available as customers become more demanding.
Increasingly, customers increasingly expect businesses to be there for them 24-7 and this is presenting business leaders with a whole new raft of challenges. Figures have shown that IT failures account for nearly 60% of all business interruptions. While these interruptions can carry heavy financial implications, the real cost of down-time is lost customers.
As customers have come to expect more in terms of service availability from e-businesses, the demands on business continuity and disaster recovery contingency plans are becoming greater. There is however a widening gap between business and market requirements for ever shortening recovery times and the ability of traditional approaches to deliver these new requirements.
Rick Cudworth, Head of Information Risk Management at KPMG in Birmingham, believes that the subject of information availability needs to be high on every business agenda. "Without the right information at the right time, in the hands of the right people - which ultimately means your customers - it will be more than your reputation at stake. Lost customers lead to short-term lost revenue and long-term lower profitability. This will have a direct impact on shareholder value."
"Technology failures are having a more immediate impact on businesses nowadays, meaning that business leaders must strive to deliver continuous information to their partners, suppliers and customers. In the 21st century, information availability is already a key performance indicator. You need to know you are delivering a consistent and reliable service across all your customer channels, be they internet, call centre or people facing."
According to Cudworth, the answer lies in establishing an end-to-end (E2E) approach to ensure high availability. The reason for this is that technology issues cannot be blamed for all service interruptions. In fact, a decent proportion of all information availability problems can be traced back to people or process problems. "An E2E approach to this issue looks at the people and processes involved as well as the technology. It focuses on the customer service goals of the organisation and embeds service level management, availability and recoverability into the day to day operation of IT and business services."
"Any E2E approach needs to consider reducing the complexity of the system's technologies, investing in resilient high availability solutions at all points and avoiding single points of failure. IT management practices need to be reinforced across all technologies and E2E availability management tools need to be deployed. Finally, E2E real-time service monitoring and reporting systems need to be built with predictive capabilities for all critical business services. This will ensure the customer experience across all technology dependent channels always meets business goals."
In the digital economy, the customer takes on greater significance than ever before. With customers able to switch loyalties more easily, one company's loss is quickly another one's gain. The implications are greater when you consider that the costs of acquiring a new on-line customer are only made good once that customer is engaged in multiple transactions. Businesses which are able to retain customers for the longer term are typically more profitable than those that do not.
Unplanned downtime is estimated to have cost business worldwide some $1.6 trillion in lost revenues alone during the year 2000. Average hourly losses range from $108,000 for airline reservation businesses up to over $7m for broking operations. This means that an airline reservations business which has information availability of 99.5% could still incur approximate annual losses of $4.75m. In other words, system downtime of less than two days in total per year represents a significant financial cost, having a direct impact on the bottom line.
Cudworth continued: "The obvious costs of down-time necessitate a change of mindset for business leaders. The shift from reactive recovery plans to proactive prevention strategies equates to ensuring system availability 99.999% of the time as opposed to being satisfied with being able to recover crashed systems within 48 hours. Ensuring E2E availability throughout an organisation is the next step forward."
"In practice, achieving true E2E availability is extremely challenging. However, achieving it could be the springboard for even greater strategic exploitation of information in the future. By combining guaranteed availability with strategic use of information, organisations will develop insight into their customers' preferences and needs and thereby improve customer loyalty and build incremental revenues."
Wednesday, Thursday and Friday 24th to 26th October 2001 International Credit Exhibition & Conference The Westin Stamford, Singapore http://www.internationalcredit001.com Mailto:info@internationalcredit001.com If you have an event coming up which is credit management related and you would like us to make an entry in the Diary section please e-mail the details to jarnold@creditman.co.uk
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