ICSM Credit News: Home Secretary intervenes over BooHoo’s suppliers scandal; Coventry bus company goes bust; airline’s creditors vote on survival package

ICSM Credit News: Home Secretary intervenes over BooHoo’s suppliers scandal; Coventry bus company goes bust; airline’s creditors vote on survival package

As the furlough scheme comes to an end this autumn more firms are expected to fail as their safety net is removed. Now a survey has revealed how the scheme has been abused. The Daily Mail reported that 63% of furloughed employees broke the rules and a third of those were compelled to work by their bosses. The Government report involving 9,000 people has led to HM Revenue & Customs investigating 8,000 tip-offs to its fraud hotline alone.

Ian Carrotte of ICSM Credit said: “The furlough scheme has been flawed since its inception and this report shows many SMEs and the self-employed who were unable to access the Chancellor’s packages and continued working as best they could have been subsidising companies who have abused furloughing.”

BooHoo slammed by Priti Patel

ICSM Credit’s Ian Carrotte has welcomed the intervention of the home secretary in the scandal that has rocked the UK fast fashion world over low wages and poor work practices.

“Priti Patel has made it plain to the owners of the fashion firm BooHoo that they have not treated their workers and suppliers properly,” he said, “paying below the minimal wage is illegal but the way BooHoo have cut off their suppliers and put the blame on them shows a callous attitude which will leave firms with unpaid invoices.”

In a letter to Boohoo CEO John Lyttle, Priti Patel wrote: “I am concerned that your response to recent reports of labour exploitation in your supply chains appears to be focused on terminating contracts with suppliers found to have breached your code of conduct, rather than on protecting vulnerable workers. I would expect Boohoo to work with its suppliers to ensure that workers are protected and remediated. It is now more important than ever before that businesses step up and take responsibility for conditions in their supply chain.”

The Manchester-based fashion firm had been exposed by the Sunday Times for paying workers as little as £3.50 an hour and refusing to let them leave their Leicester factories when unwell even when they had contracted Covid-19. The firm announced they would build a so-called model factory and end their relationship with their suppliers and set up a review process. However sceptics have suggested they were evading their responsibilities, pretending to address criticisms and have failed to pay suppliers and staff caught up in the scandal.

Coventry-based bus company enters administration

Business Report have reported on the demise of a bus company forced into administration by the lack of trade caused by Covid-19.

They reported: “Coventry-based bus operator Travel de Courcey has entered administration, after COVID-19 saw a huge decline in passenger numbers. The company, the Midlands’ largest privately-owned bus and coach company, has appointed Matt Hardy of Poppleton & Appleby as administrator. The family-run company was founded 48 years ago by Mike de Courcey and employed around 180 staff. It operates services across the wider Coventry area, including routes to hospitals, schools, Coventry’s Ricoh Arena and the NEC."

Ian Carrotte of ICSM Credit said it hadn’t help that the Government had actively discouraged people from using public transport during the shut-down. He said: “It comes as no surprise that the air industry, train firms and bus companies are near to collapse. In Sweden the authorities simply told passengers to observe their Covid-19 guidelines but didn’t tell people to stop using public transport.”

Travel de Courcey’s administrator Matt Hardy said: “Travel de Courcey is far from alone in this sector in suffering financial hardship and we will be working to salvage what we can from what is a very sad situation. We are expecting interest in certain strands of the company.”

Creditors vote on airline’s survival

Virgin Atlantic’s creditors have voted to approve a £1.2bn bailout for the struggling firm hit by the collapse in air travel business.

Sir Richard Branson is the major shareholder of the company that plans to close its Gatwick airport base and is cutting 3,550 jobs as the airline struggles to survive having previously said it would run out of cash next month. It will now need approval from the High Court in London on September 2.  In a statement the company said: “Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99% support from trade creditors who voted in favour of the plan.”

Creditors were asked to accept 20% less than they are owed, and for the repayments to be rescheduled over a longer period with the alternative liquidation in September.

Ian Carrotte said the airline’s creditors were given no alternative in reality but to agree to the deal. He said: "It was a case of Hobson's Choice."

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk


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