ICSM News in Brief: HMCR gets tough on burger chain; Twitter could go bust; leaflet boss banned; and footballer John Barnes survives bankruptcy (for now)

By Harry Mottram: The old saying goes that if you owe the bank a million pounds you are in trouble but if you own the bank a billion pounds then the bank is in trouble. And saying could be true of x formerly known as Twitter. Could the social media go bust? Well yes. In the meantime scores of firms in the UK go under every week – and at ICSM we chart those losses which are the highest number of insolvencies in 13 years and before that the Credit Crunch of 2008. And with a climate in which firms are going bust it appears some solvent companies are implying they have cash flow problems in order to spin out paying their bills and even their tax bills.

Honest Burger and HMRC

The Times have reported that the taxman has run out of patience with Honest Burger and applied for a winding up order to force the burger chain to pay their tax liabilities. Ian Carrotte of ICSM said the tactic by the Inland revenue was about embarrassing the firm into paying up as they had according to reports been playing for time. He said: “It appears HMRC ran out of patience and filed the court to wind up the burger chain knowing they would settle quickly – and that their credit rating would be affected as well – another form of leverage.”

According to Robert Moore of Company Rescue Honest Burgers had just raised £3m via crowdfund capital raise last month, and it was the knowledge that they knew they could pay that prompted the nuclear option. Moore reported: “The company now employs 700 people across its 40 sites.  The company says it has now paid the outstanding tax and the petition has been withdrawn.”

X or bust

With the social media giant X, formerly known as Twitter, losing around 50% of its adverting within the last few months and along with them thousands of subscribers there is a potential Elon Musk’s mouthpiece could go bust. It is technically insolvent since it owes – depending on which figures you use – several billion dollars. Elon Musk the owner could bail it our but he needs the cash for his other projects and has admitted it could be declared bankrupt since it is losing millions every year. Advertisers and subscribers have fled due to the relaxing of the rules of ‘free speech’ which has seen all types of extremists sounding off and neo-Nazi comments alongside the likes of Disney – who pulled out. The foul language and fake news has seen ordinary subscribers quit for the likes of Mastadon leaving Musk’s business in crisis.  If it did go bust it is likely the banks and lenders would take charge and probably seek a new CEO who didn’t upset advertisers, cheese off subscribers and doesn’t change the logo and name without any reason.

Junked male

The print industry publication Print Week has reported on a leaflet firm’s boss being barred over covid loan irregularities by the Insolvency Service. Jo Francis reported: “Pape Djibril Diouf set up Diouf Door To Door Leafleting Ltd in September 2019. On 8 December 2020 the company applied for a £15,000 Bounce Back Loan (BBL) from Starling Bank on the back of overstated turnover of £200,000. Subsequently, the business also received a further £30,000 BBL on 20 December.”

The Insolvency Service report stated: “Financial accounts for year ending 30 September 2020 show that the actual turnover was £3,210 and Mr Diouf has provided no evidence or explanation supporting the estimated turnover figure he provided in the BBL application.”

Jo Francis reported: “Between 14 December and 17 December 2020 payments totalling £13,600 were made from the company’s bank account, and on 22 December 2020 payments totalling £26,500 were made from the same account. Diouf failed to provide any evidence that these payments provided economic benefit to the business. He has been disqualified from acting as a director for 11 years due to his conduct. The ban came into force on 4 December. Diouf Door To Door Leafleting Ltd had total liabilities of £45,914 when it was liquidated, of which £45,214 relates to the BBLs.”

Football flops

The English football player who scored a memorable goal in Brazil against the World Champions has narrowly escaped being made bankrupt when a petition lodged by tax officials against former Liverpool and England footballer John Barnes has been dismissed. However, he still faces bankruptcy with another winding up order being planned from the liquidators of John Barnes Media Ltd who are owed cash by the footballer turned TV sports pundit.

Ex-England footballer John Barnes may be safe for the moment, but it follows a long list of football stars who face being wiped out financially for one simple business activity: settling with the taxman.

The BBC reported that Judge Mark Mullen was told by HM Revenue & Customs (HMRC) officials a debt had been paid by Barnes at a specialist court hearing in London. The judge was also told the star owed money to another creditor who planned to file a separate bankruptcy petition. He said he would reconsider the new claim on 22 January. Barnes, 60, did not attend the Insolvency and Companies Court hearing and was not represented by a lawyer. He had been the sole director of the company, which went into liquidation earlier this year. Judge Catherine Burton was told by an official from HMRC that Barnes owed £238,000. Barnes played for Watford, Liverpool and Newcastle and won 79 England caps between 1983 and 1995 and was head coach at Celtic after ending his playing career.

Wes Brown of Manchester United, Sunderland and Blackburn was declared bankrupt earlier this year after the taxman filed a petition against him for unpaid tax – despite his £50,000 a week earnings. The taxman also pulled the plug on Paul Gascoigne who owed HMCR £42,000 in 2016 while Maradona owed the Italian Government back taxes when he left Napoli. Others like Paul Merson of Arsenal, Everton’s Royston Drente and David James of Manchester City simply blew their cash on wine, women and gambling – and ended up penniless and having to start all over again – and get a proper job.

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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