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| Business Rescue & Insolvency Newsletter | |||||||||||||||||||||||||||||||
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Insolvency Latest � Quarter 2, 2005
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When is a Fixed Charge not a Fixed Charge?
(When the House of Lords says so!) By now you will have heard that The Lords recently passed down a decision ending a long running dispute in the �Spectrum Plus� case, also known as the Brumark case, which decided that except in special circumstances, the banks do not have a fixed charge over book debts. This decision will have a major impact on banks and their customers but will also benefit employees and we briefly look at the impact of the decision on these two areas:
The loss of the fixed charge over debtors promotes the claims of preferential creditors, which includes employees, who may now rank ahead of a bank holding a fixed and floating charge debenture. Such employees may now be entitled to a greater dividend than previously thought and therefore if you have any clients owed money as an employee from a previous company failure, please contact us for further advice.
For many years directors have given personal guarantees in the expectation that if things go wrong, the bank will recover most if not all its money from debtors. This decision means that this may not now be the case and particularly in respect of company failures before 15 September 2003, where the Crown still has preferential status, the banks� shortfalls may be significant. If you have any clients who may be affected by this decision in relation to personal guarantees that they have given in the past, please contact us to discuss the position. |
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Car Hire Company Keeps Rolling
Cranfield Recovery was recently instructed to assist a business that operated a fleet of 236 motor vehicles which it hired out on both a long and short term basis. Its major customer was the United States Air Force (USAF). The company had significant debts and owed 30 finance companies some �1 million in respect of finance agreements on its motor vehicles fleet. Following our advice the company entered into administration and continued to trade for a short period whilst discussions were held with all the finance companies and other stakeholders, including USAF. The result was the formation of a new company, by the directors, which acquired the business and assets of the old company. The new company also took over the majority of the finance agreements which resulted in the finance companies avoiding significant losses through negative equity, the director being called upon under personal guarantees of some �600,000 and a reduction in the liabilities of the old company. As a result of the removal of the finance companies� liabilities from the old company, creditors can now expect to receive a dividend later this year. |
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Introducing the Cranfield Team
Louise Poole heads up the Cranfield Recovery personal insolvency team. Louise, aged 35, lives in Hatton and has been with the company for three years. Originally working on corporate insolvency, Louise is now leading a drive to win more personal business. She said: "We know that people with assets can get into financial trouble for various reasons. Often there is a solution which can be reached by using some of those assets to meet the demands of creditors. "Unfortunately, it is human nature to leave matters until a county court judgment has been issued or bankruptcy proceedings started, but there can often be a solution and that is where I am able to help." For more details of Cranfield Recovery services to individuals visit the website or contact Louise on 01926 450414.
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Cranfield Recovery employs 10 people and is based in Warwick. It was founded in 2001 and deals with all aspects of corporate, business and personal financial problems. Tony Mitchell is a Licensed Insolvency Practitioner, a fellow of the Association of Chartered Certified Accountants and a member of the Midland�s Regional Committee of the Association of Business Recovery Professionals. To subscribe or unsubscribe to this newsletter click here |
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Managing Director Tony Mitchell is the public face of Cranfield Recovery but behind the scenes there is a team of professionals and support staff who quietly but efficiently make sure that all matters are dealt with promptly and professionally.
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