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ICSM Credit welcomes extended furlough ‘but it’s no substitute for normal business’ - plus it’s no shoe in for Clarks, another haulier goes bust and eyebrows raised over stationer’s demise

The backdrop to the chancellor’s extension of the furlough scheme couldn’t be worse. Sainsbury’s, Argos and John Lewis have all shed thousands of jobs this month already while businesses have been shutting their doors due to the lockdown.

Sunak’s extension

Ian Carrotte of ICSM Credit has welcomed the change of heart by the Government to extend the furlough scheme until the end of March 2021.

He said: “It’s good but is no substitute for allowing most businesses to get back to a near normal under the three tier system. At least that meant most of the country could operate but with the lockdowns so many firms lose money due to a lower turnover or are closed.

“The stop start system of lockdowns only supresses the virus rather than killing it so there is no end in sight.”

Speaking on BBC Radio 4’s PM programme this week Derek Cribb of the Association of Independent Professionals and the Self-Employed said the furlough scheme and other grants left around one million workers with no support.

Another criticism is that HM Revenue and Customs has suggested that up to 10% of the money delivered by the scheme to mid-August - some £3.5bn - may have been paid out in fraud or error.

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No shoe in

ICSM Credit has reported on a number of high street stores that have got into trouble including Clarks Shoes who have been negotiating a CVA to survive.

The family firm based in Somerset and founded in 1825 has negotiated a CVA with creditors but the Clark family could lose control of the stores.

The Daily Mail reported this week that the family hadveto sell much of its 84% stake to private equity firm Lion Rock in the deal.

They said: “The Hong Kong firm will inject £100million to keep its 320 stores afloat. The sale is reliant on landlords voting for swingeing rent cuts next month as part of a company voluntary agreement (CVA). At the same time all 4,000 shop staff roles up are for consultation, with 900 jobs lost earlier in the year.  Losses widened to £82.9million in the year to February 2019, up from a £31million loss in 2018. Sales slid 6 per cent to £1.4billion as Clarks sold 20m pairs of shoes, 2m fewer than the year before.”

Ian Carrotte of ICSM said the CVA would mean moving 60 stores to zero rent with the remaining 260 to shift to turnover-based rents. He said the whole deal was still up for grabs as the terms were very harsh with some creditors unhappy with the terms.

Logistic firm collapses

The Yorkshire based haulier Reader Haulage has been liquidated. Motor Transport’s Chris Tindall said: “ Reader Haulage, the East Yorkshire general, bulk and abnormal loads specialist, has closed its doors in a managed wind-down after 48 years of business. The company, part of the Reader Group, had been steadily reducing its fleet from 15 HGVs and 20 trailers until it surrendered its standard international licence to the office of the traffic commissioner earlier this year. The remaining group divisions, vehicle maintenance and bulk discharge systems unit Reader Services and warehousing side Reader Storage, continue trading.”

Eyebrows raised at CVA

ICSM Credit has heard that eyebrows were raised over the pre-pack for the South Wales stationers The COS Group Limited.

Members have reported that the firm had been working with the administration outfit Menzies since June this year before going into administration at the end of the summer. The upshot was a buy out by Office Essentials who acquired the assets of the collapsed business.

The main issue with creditors who were owed thousands of pounds was the timing of the association with Menzies LLP accountancy firm of London. In the weeks leading up the administration creditors have told ICSM Credit that COS Group made a series of orders from suppliers when they believe the firm must have known they were on the brink of collapse and so the goods would not be paid for.

ICSM Credit’s Ian Carrotte said it was no surprise eyebrows were raised as it was not unusual in business - but it was something that was extremely unfair on suppliers as they usually did not get paid.

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