ICSM Credit News: Estate agent in turmoil, pressure on FCA to act on £235m fraud; and more firms enter administration due to the Covid-19 economic crisis
If there is one thing that concerns home owners it is the price of their property. Since it is the single largest investment many people make in a lifetime whether prices are rising or falling is the subject of much discussion. During 2020 the market has lurched up and down. Lockdowns prevent any real activity for obvious reasons while many people with time on their hands at home or are working from their spare bedroom have either tended to look to move out of town or do up their existing property. A cut in stamp duty has helped but the jury is out on the long term effects of those duel questions – the Brexit effect and the Covid-19 effect.
Estate agent in turmoil
One of the country’s largest chains of estate agents is experiencing massive concerns over its long term viability sparked by the problems of 2020. Countrywide is supplied by thousands of companies, from sign-makers to computer firms and employs around 10,000 staff across its 850 or so High Street outlets. Shareholder nerves were tested this week when they rejected a £90m cash injection from private equity group Alchemy Partners and by the resignation of the chairman peter Long.
The rescue bid floundered when rivals Connells put in a bid to buy the chain with a much-reduced valuation of the business sending shares into a fall.
Ian Carrotte of ICSM Credit said: “There are major problems with Countrywide and I would advise all suppliers to be very cautious as it has all the hallmarks of a company in trouble.
“As we have seen in the past no company is big enough or famous enough to fail so be very cautious in allowing credit.”
Fraud case
Lucy White of the Daily Mail has reported on the fall-out of one the worst corporate fraud cases in recent years. London Capital & Finance promised high returns on savings sucking in thousands of investors only to shut down the scheme without paying the promised returns but retaining the investors’ cash.
The journalist wrote: “The City watchdog is under pressure to publish a long-awaited review into its handling of the London Capital & Finance (LCF) savings scandal. The Financial Conduct Authority (FCA), which has been slammed by LCF victims for failing to act on warnings about the collapsed firm, was finally handed a copy of Dame Elizabeth Gloster's independent review on Monday.
“But the 11,600 victims who have lost around £237million are still waiting to see Gloster's findings, as the FCA will now read the report, write its own report on the findings, and finally send both documents to the Treasury for publication. LCF tumbled into administration in January 2019, after selling 'minibonds' to thousands of savers. They were promised high returns for low risk, as LCF said it would lend their money to businesses which needed the money to grow.
“But investors were left high and dry when the firm collapsed, and it turned out that their money had been funnelled to a small number of borrowers. Thirteen people connected to LCF are now being sued for £178million in connection with an alleged fraud, after it was claimed that savers' cash was used to buy horses, a helicopter and a lifetime membership to a Mayfair private members' club.”
She wrote that Gloster, a former Court of Appeal judge, was initially due to report in July but had to push the deadline back after the FCA revealed heaps more evidence.
Ian Carrotte said many of the victims had lost their life savings and taken cash out of their business to invest in the scheme were much poorer as a result. He said: “If an investment scheme seems too good to be true then it probably is.”
Logistics company seeks CVA
Trade publication Motor Transport have covered the story of the logistics outfit Brian Yeardley Continental who are seeking a CVA after suffering a £12m loss due to pandemic.
The trade journal said: “Brian Yeardley Continental is proposing to issue a company voluntary arrangement after its events transport division, Brian Yeardley, suffered the ‘devastating’ loss of £12m due to the Covid-19 pandemic. The West Yorkshire-based haulier has appointed partners Charles King and Hunter Kelly of EY to oversee the process.”
Building firm enters administration
Goodwin’s Construction Services Group of Manchester has entered administration caused by the Covid-19 crisis drying up cash flow.
The company was founded in 2014 and originally known as Goodwin Construction Group, was part of the Goodwin Group working on projects across the North West of England.
The firm has appointed Yasmin Bhikha, John Lowe, and Anthony Collier of FRP Advisory as joint administrators. The Goodwin Group is unaffected however but 30 members of staff have been made redundant so far.
John Lowe said: “Goodwin’s Construction Services was a strong business but, unfortunately, the challenges facing the business left it with no option other than to appoint administrators as it was unable to generate the cashflow to remain solvent. Our priority is now to support those employees affected and we will be working closely with the redundancy payments service to do so.”
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