Archive for March, 2016

BHS A way back or not?


Is there any way back for the BHS chain?  There is an interesting question to address here and rides on the back of an online conversation I had on a related matter yesterday.

The most eye catching element of this story is that the majority of BHS’s landlords have agreed to rent reductions of up to 75%. This is quite a concession and clearly a selection of the present commercial property market. Mt memory may be faulty but I am sure that when Woolworths and MFI collapsed a few years back the idea of rent reductions was out of the question. Times have possibly changed.

BHS is not a striking brand and its difficult to see where they fit into a crowded market. It is hard to identify exactly what is their strength although that may well be more of a reflection of my ignorance. I was also surprised to see that they still have over 150 stores.

Many credit managers and lenders around the country will be wondering what the next step will be. I understand that most suppliers are demanding payment upfront and surely Credit insurance is now impossible to obtain. This precipitates the vicious circle that has brought down many a retailer whereby the lack of available cash drains the very resources that the business needs to survive. Its Woolworths all over again

But aside from the currents status, what view should  a lender have taken on BHS before the current CVA. This brings me back to my conversation.

I was told that financial services are being “deskilled” and that decisions will be made on data by computers that “can be located anywhere”. This was effectively a claim that bankers were soon too be made redundant

So tell me which computer is going to be able to look at the “dated and dowdy” BHS brand and take the decision that this is a business fading fast? Which computer is going to be able to take a view of the future of high street retailing in relation to specific brands? How is a computer going to make a human judgement on the very people running BHS?

All these are very significant factors. Lending simply on past balance sheets is risible. lending is about future prospects not solely about analysing the past

And does BHS have a future?






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Nothing else to say


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Pre pack administration”pool”

The “pool” of “experts” appointed to review pre pack administrations has been announced

Aside from industry insiders, I would doubt very much if the identity of the panel is of a great deal of interest. To my mind its very existence is a step in the right direction but there is a caveat

See the last line of the copied para below. The key word is Voluntary.

I will leave you to decide whether a voluntary presiding board will be effective or not in preventing the the worst excesses of pre pack administrations


he government has revealed the members of a pool of independent experts who will review pre-pack business insolvencies – when the business is sold to a connected party.

After months of speculation, the Department for Business, Innovation and Skills (BIS) finally announced the 20 individuals who will now review applications for a pre-pack sale of an insolvent business, and give recommendations.

Directors or connected parties hoping to purchase a business out of administration, through a pre-pack sale, will now submit an application to the pool.
The application will be voluntary but connected parties will be made aware of the pool by an insolvency practitioner.

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CBI slams brexit

According to this survey the CBI, with the assistance of PWC have claimed that 1million job would disappear after brexit.

As someone who is very undecided about whether to stay or go, I am naturally drawn to any arguments put forward either way. At the same time there are two points always worth considering.

What results would those who commissioned the survey wish to see?

How does this compare with previous speculations?

To explain the second point, we were told that not entering the euro would cost us “thousands of jobs” and hinder investment. This was a line promoted strongly by the cr manufacturers in particular who then went onto increase investment at a pretty rapid rate

The first point is very much answerable by the CBI’s stance and most probably that of PWC too

In its report for the CBI, accountancy firm PwC examined what would happen if Britain signed a free trade agreement with the EU within five years of an exit vote or decided to conduct business as a member of the World Trade Organisation. In that instance, it said negotiations could “prove more difficult and prolonged”.
The firm forecast that if Britain voted to stay in the EU, the average annual GDP growth between 2016 and 2020 would be 2.3%.
This compares with 1.5% economic expansion under a Free Trade Agreement (FTA) and 0.9% if the UK struck a deal as a WTO member, PwC said.

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Underwriter hell. Another example

Last week a invoice financing underwriter asked a question regarding my clients financials. The question was as follows. In essence

Why is my client taking so LITTLE out of the business?

He also wanted to know how he and his family are supporting themselves etc etc etc

I conveyed a two word response.

There were other excessive demands too and naturally I have quickly moved this onto other lenders. A pity because up until this point this looked like a good match.

But the key here is not the immediate. The fact is that with 40 plus lenders in the market there is often a situation whereby you are seeking reasons to differentiate and the posing of frankly irrelevant and unnecessarily probing personal questions is the perfect antidote

Clearly if a business owner is taking a lot out of a business then there is a question to be posed but not too little. His wife’s income stream or whether they are lottery winners is none of the lenders business

None whatsoever




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Noisy keyboards. Please…


One of the perils of the shared workspace is other people. Now that may sound a little unsociable but there are quirks which can annoy even the most laid back of us and one of these is the noisy keyboard

Those of us with Apple Macs will not be tolerant of course because the Mac keyboards are nearly silent but why is it at those with clapped out old cheap laptops seem to have to hammer the keyboard as if they are letting the world know they are typing something REALLY IMPORTANT such as the treaty of Versailles perhaps?



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Facebook and Tax


As widely reported, last week Facebook agreed to pay more corporation tax in the UK. After the widely criticised tax arrangement with Google, this has been presented as a positive result but for many it will also been seen as an example of a corporation effectively taking the line that they are “doing you a favour”. This naturally does not sit well with your average tax paying voter.

The truth of the matter is that corporations can very easily shift profits around the globe under any number of pretexts to avoid tax liabilities. The only counter to this would be a worldwide harmonised corporation tax which is completely impossible to comprehend or envisage. When the EU cannot even prevent economically collapsed states such as Ireland maintaining its tax haven status then the limitations are clear.

That may well be more of a reflection of the eternal haplessness of the EU but the key question here is one of fairness and responsibility. The worlds corporations should be aware that their is a simmering resentment towards their behaviour and this is beginning to manifest itself politically. A good example of this is the rise of Bernie Sanders as a contender for the Democrat leadership in the US. In many respects the same could be said for Donald Trump. Beyond the US, we see similar trends in France and even the UK.

Neither presidential candidate would  have stood a chance in times past but there is clearly an wave of anti establishment anger. The corporations and their blithe attitude towards taxation are rightly or wrongly seen as part of a cosy elite which is under increasing attack.

Personally I do not buy into quasi conspiracy theories about “elites”  but the Googles and Starbucks of this world should be careful. When voters are angry when the economy is growing then there is a problem. And when they are looking towards extremists such as Trump and Sanders they should be concerned

The last thing any of these corporations would wish for is protectionism and a sliding economy. Although it is inconceivable at this precise moment it is not impossible to envisage a scenario when a far left or far right protectionist or simply anti capitalist leader does take charge in one or more significant economies.

If the worlds corporations wish to see liberal free market global economies continue to grow and prosper then they need to take a good look at themselves and consider that they have a part to play in ensuring that the most successful economic system of all is represented by fairness and responsibility.



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