Businesses in financial trouble

[mavhc]

Spooky, how come these businesses he takes billions from keep going bankrupt?

 

At least he's destroying the terrible fashion industry, and thus living up to his surname

[6Foot2]

Link: Zak Brown: McLaren boss says F1 needs big changes to survive [bBC news]

 

Formula 1 is "in a very fragile state" as a result of the coronavirus crisis and needs big changes to survive, McLaren boss Zak Brown says.

 

"This is potentially devastating to teams, and if [it is devastating] to enough teams - which doesn't have to mean more than two - then very threatening to F1 as a whole," he said.

 

Cost-saving plans will be discussed at a meeting of F1 bosses on Monday.

 

But the teams are divided over how best to safeguard the sport.

 

Brown, speaking in an exclusive interview with BBC Sport, believes the $175m (£143m) budget cap, scheduled to come into force in 2021, needs to be lowered significantly, or the sport risks a potential disaster.

 

"Could I see - through what is going on right now in the world if we don't tackle this situation head on very aggressively - two teams disappearing? Yeah," said Brown, the chief executive officer of McLaren Racing.

 

"In fact, I could see four teams disappearing if this isn't handled the right way.

 

"And then, given how long it takes to ramp up an F1 team, and given the economic and health crisis we are in right now, to think there would be people lined up to take over those teams like there has historically been... I don't think the timing could be worse from that standpoint.

 

"So I think F1 is in a very fragile state at the moment."...

[Arthur]

Link: Shopping centre giant Intu warns it could go bust [bBC News]

 

'Dogfight' looms as landlords start suing restaurants over unpaid rent

 

Some of Britain's biggest landlords have called in lawyers to claw back the rent that shops and restaurants have refused to pay during the lockdown, The Mail on Sunday can reveal.

 

Industry insiders said the number of rent disputes between commercial property landlords and tenants hit 200 this weekend.

 

Around two-thirds of these are understood to involve legal threats – such as taking tenant firms to court to freeze their bank accounts and having companies wound up.

 

One source said giant property owner Intu, which owns major shopping centres; Criterion Capital, which has a £2 billion portfolio across London and the South East; and Canary Wharf were all taking particularly hard-line stances.

 

The boss of the famous Quaglino's restaurant in St James's, London, last night said the disputes risked turning into 'dogfights'.

 

Estate agent Knight Frank estimated landlords received just a third of the £2.5 billion rents due at the end of March after emergency laws were passed to stop tenants being evicted from their premises before the end of June.

 

West London firm Atlas Property Letting & Services said in a letter to tenants that it would instruct solicitors to issue a winding-up petition unless they paid March rents by last Friday.

 

The letter added that the landlords had shown 'great flexibility', but if payment was not made the property owner risked breaching the terms of its own bank loans.

 

Property owner Criterion Capital, which owns the Trocadero Centre in London's West End, also threatened to take its tenants to court.

 

Its sister property firm, Golfrate, said companies would have to hand over extra fees to split the cost of upfront quarterly payments into less onerous monthly bills. It said a fee of 5 per cent of annual rents would cover 'increased workload and admin'.

[mavhc]

Shopping centres are a dead idea, only useful if it's raining and we need to walk from one end to the other

[localzuk]

See, that doesn't seem very wise of shopping centre owners - getting a bunch of your tenants wound up/forced to pay so they go bust means your shopping centre ends up empty, meaning more companies will leave as they lose footfall - who wants to visit an empty shopping centre?

[LeMarchand]

See, that doesn't seem very wise of shopping centre owners - getting a bunch of your tenants wound up/forced to pay so they go bust means your shopping centre ends up empty, meaning more companies will leave as they lose footfall - who wants to visit an empty shopping centre?

 

Yep, and having an empty centre because no-one can afford the rents (the way things were going before the crisis) doesn't make sense. Surely a few people on short-term leases paying a lower rent is better than nothing?

[Garacesh]

See, that doesn't seem very wise of shopping centre owners - getting a bunch of your tenants wound up/forced to pay so they go bust means your shopping centre ends up empty, meaning more companies will leave as they lose footfall - who wants to visit an empty shopping centre?

Unless they think "Get everyone gone, bump up the price, get new folks in, make more money!"

How realistic that is I couldn't say. But you get it with housing estates and stuff, I could imagine it happening in other industries.

[Arthur]

Debenhams to file for administration

 

Debenhams will file for administration after the coronavirus lockdown forced it to shut its shops across the UK.

 

It described the process as a "light touch" administration to protect it from legal action from creditors while its department stores are closed.

 

Debenhams boss Stefaan Vansteenkiste said the circumstances of the decision were "unprecedented".

 

"We have taken this step to protect our business, our employees, and other important stakeholders," he said.

 

Mr Vansteenkiste said it will allow Debenhams "to resume trading from our stores when government restrictions are lifted".

 

However, he did not say how many of its 142 shops would reopen after the lockdown.

 

"We are striving to protect jobs and reopen as many Debenhams stores for trading as we can, as soon as this is possible," he said.

 

It will be the second time in a year that Debenhams has filed for administration. It has already closed 22 stores this year and plans to shut a further 28 in 2021.

 

The retailer said it is still trading online "normally" while its shops are closed.

 

It has furloughed the majority of its staff who are being paid under the government's coronavirus job retention scheme which pays 80% of a worker's salary up to £2,500 a month.

[Dos_Box]

That's really sad. I like the clothes from Debenhams.

[mikeprice]

I saw something about empty shops a while ago

 

Apparently the finances can work out so the landlord is actually better off with no tenant than with a tenant paying low rent - something to do with business rates and lease law

 

can;t remember the details but it was complicated but explained the number of empty shops on high streets when you would think the landlords would just reduce the rents to get someone in

[DrCheese]

https://www.bbc.co.uk/news/business-52285231

 

Now Oasis and Warehouse

[Arthur]

Cath Kidston to close all 60 UK stores with loss of 900 jobs

 

More than 900 jobs are to be axed with immediate effect at retro retail label Cath Kidston after the company said it was permanently closing all 60 of its UK stores under a rescue deal with its Hong Kong-based owner, Baring Private Equity Asia.

 

The vintage-inspired fashion label will continue trading online and via its wholesale and franchise businesses around the world, which includes more than 100 stores. A total of 908 staff will be made redundant

 

Thirty-two jobs will be saved under the rescue deal – known as a "pre-pack" – which involved putting Cath Kidston into administration under advisory firm Alvarez & Marsal and then re-emerging as a much smaller business.

 

Richard Fleming, at Alvarez & Marsal, said: "Like every retailer, Cath Kidston has faced significant challenges in recent years, including high rents and changing consumer behaviours. These challenges have been exacerbated by the outbreak of Covid-19, which has been impacting the business globally since the beginning of the year."

 

The company employed 941 people in the UK, 820 of whom were furloughed on 22 March under the government scheme.

[Norphy]

Hmm. Who would have thought that selling overpriced toot with one of three different prints on it wasn't a viable business model?

[Dos_Box]

If anyone is interested, Debenhams seems to be discounting most of their stock via their (still running) website. I picked up (okay, clicked on) some shorts down from £40 to £25.

Some good bargains to be had as I think they are taking this as an opportunity for the administrators to shift stock whilst they can - https://www.debenhams.com/

[paulkerton]

If anyone is interested, Debenhams seems to be discounting most of their stock via their (still running) website. I picked up (okay, clicked on) some shorts down from £40 to £25.

Some good bargains to be had as I think they are taking this as an opportunity for the administrators to shift stock whilst they can - https://www.debenhams.com/

 

Thank you very much for the headsup Dos_Box! 5 shirts and two ties for about a tenner each.

That's me sorted for when we return!

[FishCustard]

Hmm. Who would have thought that selling overpriced toot with one of three different prints on it wasn't a viable business model?

OH loves Cath Kidston - when I told her that she could pick up some cheap stuff if they go bump she was horrified that my first thought was "oooh cheapies!" not "oh no poor Cath Kidston".

[Protec]

I can remember when the Maplin store near me closed down. They were selling everything and I mean everything! They were selling the metal pegs, shelving, etc. They were even selling the cups presumably from the staff room. There was even a sheet of A4 with a picture of a cup and the price. All I bought there was a hot swap HDD bay for my computers 5.25" bay which was cheap. Edited April 24, 2020 by Protec

[bald_pig]

I can remember when the Maplin store near me closed down. They were selling everything and I mean everything! They were selling the metal pegs, shelving, etc. They were even selling the cups presumably from the staff room. There was even a sheet of A4 with a picture of a cup and the price. All I bought there was a hot swap HDD bay for my computers 5.25" bay which was cheap.

 

I bought my streamdeck. Everything else was still cheaper elsewhere!

[Protec]

Yeah, there were quite a few things that we still more expensive than other places even with Maplins "reduced" prices. There were a few actually cheap products there. A similar thing happened when Tesco Direct closed. When I went to my local Tesco store, there was a trolley (the type used by staff to transport stock) and the trolley was full of keyboards, mice, headphones, etc. There was also some brand new Corsair K63 keyboards for £20 each lol. I picked up a couple as I couldn't resist for that price and sold one of them on Ebay the next day for £70. I kept the other k63 and also kept a Logitech G213 that was on the trolley for £10. I think there must have been some sort of problem with the pricing that day!

[mavhc]

Every non mask/soap making company.

[Arthur]

I guess Aria's only options are to switch holding companies (again) or to declare bankruptcy?

 

Aria Technology loses Court of Appeal bid over £750k VAT dispute

 

The Court of Appeal has thrown out Aria Technology's efforts to squeeze out of a £300k tax bill after HMRC found £750k of the firm's input tax was not creditable*. Top judges have ordered the company to pay the UK tax collector's legal bills in the case.

 

The ruling marks the third consecutive loss in court for the company over its efforts to avoid paying its full VAT bill.

 

ATL used to be the corporate entity behind the aria.co.uk PC component reseller website, now operated by Velo Systems Ltd, another of sole ATL director and shareholder Aria Taheri's companies. Taheri has always denied that his company took part in fraud. He also denies the FTT's finding that he personally knew or ought to have known of the fraud.

 

ATL's latest filed accounts, readable on Companies House, show that it had just one employee in the year to 31 January 2019 and one employee in the previous year.

 

What is MTIC fraud?

VAT carousel fraud, formally known as MTIC fraud, is a complex scam that relies on goods being sold across EU countries’ borders. Goods legally imported free of VAT are then resold in a long chain, often entirely paper-based, of small companies before being exported again. Each sale in the chain incurs VAT which is charged by each company in the chain to the next one along. At the point of export the last link in the chain, or carousel, can reclaim the VAT from the government; VAT is payable only on domestic sales.

 

The scam works by one of the middle links in the chain not paying the collected VAT to the government. The last business in the chain then reclaims the (unpaid) VAT from the government, with both dodgy links then disappearing without trace. To help disguise the scam from anti-fraud investigators, criminals sometimes use legitimate businesses as part of their chains, duping greedy salesmen by making purchase and onward sale offers that usually involve banking a reasonable margin in return for little commercial effort.

 

A fuller explanation and analysis of VAT carousel fraud can be read read here on The Register.

[localzuk]

I guess Aria's only options are to switch holding companies (again) or to declare bankruptcy?

Aria Technology loses Court of Appeal bid over £750k VAT dispute

Aria isn't part of ATL, so this shouldn't affect the trading company that I can see? As Velo isn't affected by the ruling. It'll bankrupt ATL though.

 

This all kinda proves that "holding companies" are a bit of a scam anyway.

[caffrey]

National holidays has gone, no more mystery (misery) weekends for me ☹️

 

https://nationalholidays.com/

[Arthur]

Hertz files for bankruptcy protection

 

Hertz, which started with a fleet of a dozen Ford Model T’s a century ago and became one of the world’s largest car rental companies, filed for bankruptcy protection on Friday after falling victim to its mountain of debt.

 

The coronavirus pandemic has devastated Hertz by grounding business travelers and tourists, making it impossible for the company to continue paying its lenders. A sharp drop in used car prices has also decreased the value of its fleet.

 

“They were doing quite well, but when you turn off the revenues and you own all these cars and all of a sudden the cars are worth less it’s a very tough business,” said John Healy, an analyst and managing director with Northcoast Research in Cleveland.

 

Hertz said late Friday that it would use more than $1 billion in cash on hand to keep its business running while it proceeds with the bankruptcy process.

 

[...]

 

The bankruptcy filing excludes operations in Australia, Europe and New Zealand as well as the company’s franchisee locations. Hertz also said that it had sought aid from the federal government, but that funding for its industry “did not become available.”

 

Though it had piled up $17 billion in debt, Hertz, which also owns the Dollar and Thrifty brands, was reporting healthy sales at the start 2020. The company’s revenue rose 6 percent in January and February.

 

[...]

 

The company’s march to bankruptcy began in late April when it missed a payment on a lease for some of its fleet, which includes about 667,000 cars, sport utility vehicles and other vehicles worldwide. It persuaded lenders to give it until midnight on Friday to put together a financial plan that they could accept. But in a filing this month, Hertz acknowledged the enormity of the task.

 

“If our business does not recover quickly and we are unable to successfully restructure our substantial indebtedness, obtain further waivers or forbearance or raise additional capital, there is substantial doubt that we will be able to continue as a going concern,” the company said.

 

$17 billion in debt is insane.

Edited May 23, 2020 by Arthur

[caffrey]

Knock on effects of covid are going to be huge - the next few months are going to be brutal I guess