ICSM News in Brief: Boohoo's non-ethics; ex-Premiership footballer's eatery in debt; Bankman-Fried found guilty; banking insolvency worries; and Britishvolt buyer fails to pay staff
By Harry Mottram: with the Eurozone on the brink of recession, war in Ukraine and Gaza, the Chancellor threatening an austerity budget the last thing business needed was JP Morgan warning the world could be about to see a global recession. But that’s what the USA Wall Street giant Jamie Dimon is saying as he weighs up the problems mounting up for Joe Biden’s administration and Governments in general according a report in the Mail’s This Is Money. He said: “'Here in the US we continue to have a strong economy... But these geopolitical matters are very serious – arguably the most serious since 1938.” The Sunday Times reported Black Rock’s CEO Larry Fink as saying: “'Rising fear creates a withdrawal from consumption or spending more. So fear creates recessions in the long run, and if we continue to have rising fear, the probability of a European recession grows and the probability of a US recession grows.”
Insolvency on the menu
Former Premiership footballer Danny Drinkwater has been reported to be in debt to the tune of more than three-quarters of a million pounds. The player who was part of Leicesters’s title winning side but quit after injury when at Chelsea became a restaurateur. The Mail and The Sun have both reported on his ill-fated decision to go into hospitality as his Manchester-based restaurant called FoodWell went bust last year owing £2 million pounds to suppliers and the taxman. His latest venture Firefly restaurant in which he has a 70% share is £1.1m in debt. Ian Carrotte of ICSM said to run any eatery is a highly skilled business where experience and training count – and very different from being paid well to play football.
Crypto prison
It has been billed as the largest scam in the history of Ponzie schemes – when Sam Bankman-Fried’s crypto-currency exchange FTX went bankrupt, Alameda owed the firm $8bn. It’s the highest amount owed in a fraud case in the USA or anywhere else for that matter and now the founder Bankman-Fried has been found guilty of fraud in America and awaits a sentence that is likely to be a length spell in prison. After a month-long trial in New York the jury delivered its verdict after less than five hours of deliberations despite the one-time billionaire taking to the stand to defend himself. Ian Carrotte of ICSM has consistently warned the self-employed and small businesses not to be tempted by investing in crypto-currencies as their value is volatile. He said it should be treated like a bet on the Grand National – only bet what you can afford to lose.
Bank worries
2023 will be seen as the year when banking had another massive wobble after not one, not two but several major banks effectively went bust. First it was Silicon Valley Bank, then Signature Bank and then First Republic Bank, and also in the USA Heartland Tri-State Bank and Citizens Bank this month. In Europe Credit Suisse also hit the rocks as investors pulled out their cash in the summer with UBS Group taking over the collapsed bank. Metro Bank in the UK appeared to be in serious trouble when it negotiated a rescue deal with investors following a near collapse in it share price in October. None of these problems quite match the drama of the Credit Crunch in 2008 and its aftermath when scores of banks in the USA went bust and in the UK Northern Rock collapsed.
Flat e-batteries
The brave new world of electric cars replacing traditional four stroke petrol engines and diesels seems more of an aspiration than a reality as the practicalities of a switch to e-cars emerge. Rishi Sunak has pushed back the ban on new fossil powered motors by five years to 2035 much to the relief of business and private owners alike. And the one item e-cars can’t do without is batteries – and there hangs a tale. Britishvolt was heralded as the saviour of the UK e-car industry with a huge factory in the North East – but not a single brick was laid by the firm before it went bust and was sold to Aussie firm Recharge Industries in January. They have been reported to have failed to pay up the full £8.57m according to EY leaving more than £2m outstanding. The knock-on effect is they haven’t been paying the staff – and no doubt some suppliers – for the last four months.
Boohoo Booho
The clothing firm Boohoo is up to its old tricks again – screwing suppliers. BBC’s Panorama programme has exposed the Manchester based fast fashion company in breaking a promise to treat supplies ethically after past scandals. In 2020 the firm promised to abide by acceptable trading rules after it forced workers supplying garments to work in sweat shop conditions and on below minimum wages. An investigation found the allegations of malpractice to be true and the rag trade company announced it’s so-called ‘Agenda for Change.’ A fat lot of good that was as they have been exposed by undercover reporter Emma Louther. The BBC investigation revealed that Boohoo put pressure on suppliers to drive prices down - even after orders had been agreed even demanding 10% discounts on prices already signe off. Ian Carrotte of ICSM said it was a disgusting practice as it undermined trust in transactions and meant suppliers would be trading at a loss – which only had one result. He said: “So much for ethics.”
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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
