No-one cares about the employees ?

Discussion in 'Insolvency' started by Talay, Dec 23, 2019.

  1. Talay

    Talay UKBF Big Shot Free Member

    3,832 800
    A company in my area of business announced that they were closing the doors a few weeks ago and their retail branch network would close.

    I spoke to the the people involved outside the company directors, who I know, and there were around 100 people who would lose their jobs. Did the NDA, got the information, queries and some responses back and forth etc.

    I could have saved at least 75% of the retail network, possibly 100%, plus about 60% to 70% of the jobs, keeping all stores open and trading. But I was thwarted.

    All anyone wanted to do was to strip the assets from the retail stores and crystallise any value, which would be less than £2k to £5k per store. Then, even if you had bought the assets, you have no right of being able to use the stores as no effort was being made to continue trading or to facilitate trade by contacting the various landlords, who are not going to be paid their rent on 25th December. I could have made that payment.

    But what is really pissing me off is not that I felt I could make decent profits from the retail chain but that all these people have lost their jobs and no-one cares, except me. Christmas is ruined in up to 100 households and yet with just some forethought, it could all have been resolved.

    Even worse, the taxpayer, that is me and you, is now going to be forced to pay notice and redundancy to these people, because the company cannot. That is up to £1,000,000 which would have been saved if I had taken over.

    Does anyone have any experience of this type of thing as I would like to be better prepared if a similar situation arises next time.

    However, I think everyone has been done over and the taxpayer landed with a huge and unnecessary bill and if there was a way to complain, I think someone should. But to who ?
    Posted: Dec 23, 2019 By: Talay Member since: Mar 12, 2012
  2. The Byre

    The Byre UKBF Legend Full Member

    9,962 4,049
    It is all part of the short-term thinking and narcissistic behavior in business that seems to be all-pervasive nowadays.

    Allowing businesses to fail has become far too easy - deliberate or just avoidable failure when combined with a failure to pay debts and wages - ought (IMO) be made a criminal offense.

    Spongebob plan? Nah - debtors' prison!

    Just reading half the posts in this forum tells one why we have reached this lamentable state - total numpties who have not the slightest clue as to how to do the most fundamental things in business are allowed to start a business and run up debts and other major obligations and when it fails (as fail it must!) they are allowed to walk away and just shrug their shoulders and start the whole thing all over again!
    Posted: Dec 23, 2019 By: The Byre Member since: Aug 13, 2013
  3. Mr D

    Mr D UKBF Legend Free Member

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    How were you thwarted?
    Posted: Dec 23, 2019 By: Mr D Member since: Feb 12, 2017
  4. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Presumably you negotiated with the administrator
    Posted: Dec 23, 2019 By: Chris Ashdown Member since: Dec 7, 2003
  5. NickGrogan

    NickGrogan UKBF Ace Full Member

    2,472 592
    Did they turn down your offer? Presumably, the administrator thought it was insufficient. Perhaps you need to increase your offer.
    Posted: Dec 23, 2019 By: NickGrogan Member since: Nov 15, 2012
  6. Clinton

    Clinton UKBF Big Shot Full Member

    4,939 2,103
    I found negotiating with them a mug's game. They're largely a bunch of as*holes. I'm happy to deal with any kind of accountant except the pratts operating in this area.

    But with respect jobs etc., yes, nobody gives a damn. All efforts are directed into protecting the interests of the creditors. What will make the most money for the creditors in the shortest amount of time with the least effort (for the administrator)?

    Legally speaking, their job is to protect creditors' interests. But actually, above all that, it's about how the administrator can make a nice packet.

    Nobody cares about the jobs, or the customers who may still have another 11 months left on their warranty, or the skill base that's being lost when the employees are dispersed ....none of that matters. And the way the law is worded doesn't help.
    Posted: Dec 23, 2019 By: Clinton Member since: Jan 17, 2010
  7. John Hemming

    John Hemming UKBF Regular Full Member

    257 32
    Buying a company out of administration is a bit of a challenge to do successfully. (I mean successfully in the long term). However, it is always the administrator you need to talk to. If you are talking to the directors they may already have a favoured bidder and are, therefore, unlikely to introduce you to the administrator.
    Posted: Dec 23, 2019 By: John Hemming Member since: May 23, 2019
  8. MBE2017

    MBE2017 UKBF Ace Free Member

    1,787 611
    Have to agree, succeeding in business is hard at the best of times, but so many only start to ask some basic questions once they have started. Questions like who are my customers, do I offer credit, should I get an accountant, when should I ask to be paid etc. This forum is full of such threads.

    I disagree that you should not be able to try again, few will succeed on their first attempt. I do think failure should cost and hurt the owner and Phoenix packages should be outlawed.

    Only from personal experience but I find the majority of successful small companies tend to be down to initial luck much of the time, the art is surviving once the real problems start to hit, normally 5-10 years after starting out.
    Posted: Dec 23, 2019 By: MBE2017 Member since: Feb 16, 2017
  9. Mr D

    Mr D UKBF Legend Free Member

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    Failure does cost and hurt the owner.
    Some more than others.

    Trying again can at least avoid the same mistakes. A whole load of new ones wait to be found instead!
    Posted: Dec 23, 2019 By: Mr D Member since: Feb 12, 2017
  10. Talay

    Talay UKBF Big Shot Free Member

    3,832 800
    It wasn't about an offer, or conditions or anything like that, it was a simply impossible task.

    To make it work, I would have had to effectively take over some or all of the existing company, to avoid having to renegotiate with landlords for licences to occupy or to assign the leases etc.

    It would have been easy but the timelines were so tight and controlled by those in charge of the administration that it could not be done and as soon as the shops closed, the employees were already looking for alternative employment.

    Buying the assets, the contents of the shops if you will, is meaningless. I could have found myself with masses of "things" and no retail outlets, making their value less than zero.

    A pre packaged administration could have worked but that wasn't in anyone apart from my interests.

    Critically, no-one seems to thin the UK government isn't a huge creditor as they are facing £1m in payouts whereas I'd have pushed that down by 60/70% or so.

    I think the directors acted poorly and not in the best interests of their employees, as did the administrators. I think they should be able to be challenged.
    Posted: Dec 23, 2019 By: Talay Member since: Mar 12, 2012
  11. Mr D

    Mr D UKBF Legend Free Member

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    Enough companies do it such that it is not impossible. May be difficult, may be beyond what you can achieve in the timeframe. But not impossible to all.
    By the sound of it no one capable of taking over did so.

    The directors would have to be working in the best interests of the creditors. Doing that and also working in the best interests of the employees would be impossible. Conflict of interests.
    So they do their duty. Best interests of the creditors is what?
    Spend money? Not spend money? Get as much cash as possible for the parts of the business?

    The employees would not start looking for alternatives the moment the shops closed, that's far too late.
    They would start looking the moment they could on hearing the company is going into administration. Seen that happen with friends and family members way too often.
    Posted: Dec 24, 2019 By: Mr D Member since: Feb 12, 2017

    JEREMY HAWKE UKBF Legend Full Member

    5,012 1,674
    Sometimes when a business goes bang and you have an intreast it is best to forget any ideas of buying from the administrators .
    Some years ago a competitor went bust and I spoke to the administrators with a few to buying the customer base.
    This was a lesson for me as they wanted stupid money for something that may not even have a payback.
    Two of their dejected subbies came on with me and gave me the customer list. Me and my sales helper went out and got the business in .
    I know you can't do this with footfall retail but it nothing is worth anything once it goes busy

    Sadly as far as people go Nobody cares about anybody anymore it is becoming a nasty place ! and it is going to get worse
    It looks like you have to be the Wolf everyday now or you are going to get chewed up
    Very very sad
    Posted: Dec 24, 2019 By: JEREMY HAWKE Member since: Mar 4, 2008
  13. Talay

    Talay UKBF Big Shot Free Member

    3,832 800
    The administrators finally admitted that someone could buy the assets and not have any right to trade. What use is that ?

    An idea was to go to the landlords and see if we could step in that way but that option has vanished as the employees will be scattered to the 4 corners of the globe and trade will have gotten used to going elsewhere.

    Fine for a single operator to breathe life into a store again and possible for nationals with unlimited pockets but for small regional players, we can't throw £500k over 10 years on the fire and hope we get staff and hope we get trade on a single shop. That is £10m on 20 units.
    Posted: Dec 24, 2019 By: Talay Member since: Mar 12, 2012
  14. Mr D

    Mr D UKBF Legend Free Member

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    So from administrators and directors point of view the best way of dealing is to sell off where they can.
    Working in the best interests of creditors.
    Posted: Dec 24, 2019 By: Mr D Member since: Feb 12, 2017
  15. Porky

    Porky UKBF Regular Full Member

    195 79
    I’m obviously not close enough to know the full background to this specific deal but I did complete one where my bid for assets and goodwill was lower than one the IP had on the table BUT my bid included taking ALL employees into new Coy under TUPE. So my bid was higher taking that into account. The other offers were from asset strippers not interested in the staff.

    It sounds like because your bid was not clearcut ie you were not taking 100% of the staff over it was maybe perceived that other offers were greater? It’s the job of the IP to always recover the best price, there are a number of court cases bouncing around where it’s alleged that assets were undersold so I’m fairly confident you were outbid, if not and you can prove it they may have a case to answer for?
    Posted: Dec 27, 2019 By: Porky Member since: Dec 27, 2019

    JEREMY HAWKE UKBF Legend Full Member

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    Yes but often in the best interest of the directors as the administrator knows who is putting food on their table
    Back to the original question the answer is The employees are always at the bottom of the list
    Posted: Dec 27, 2019 By: JEREMY HAWKE Member since: Mar 4, 2008
  17. Mr D

    Mr D UKBF Legend Free Member

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    Because 'in the best interests of the employees' would be diametrically opposed to any one else's interests.
    Hence its not used.

    If in the best interests of the directors - surely the creditors can take action then?
    Posted: Dec 27, 2019 By: Mr D Member since: Feb 12, 2017
  18. Paul Norman

    Paul Norman UKBF Ace Free Member

    2,691 822
    I have no slick answer to the OP's fair question.

    However, I concur that buying a business in which administrators are involved is usually far more frustrating that buying a going concern from its owners. I have, in fact, only managed it once - usually it all falls apart about 10 minutes into the first conversation.

    The one time I did proceed to completion required some VERY robust explanations from myself and our legal team about how matters were going to proceed.

    We did succeed, however, and in this case around 90 jobs were secured. And therein starts a whole new chapter of surprises!
    Posted: Dec 27, 2019 By: Paul Norman Member since: Apr 8, 2010