Bye Bye BHS and Austin Reed?
Discussion
walm said:
gumshoe this whole time you have been using the word "insolvent" to mean "negative book value" rather than the common usage which actually matters.
You have conflated "big loan", "illegal dividend" and "insolvency" together to imply that Green did something wrong.
You questioned the wisdom of HBOS in giving out that loan.
Good work on the back-pedalling, but no, I have been using the term insolvent to mean insolvent, as per the same statute that you refer to when you say "insolvent".You have conflated "big loan", "illegal dividend" and "insolvency" together to imply that Green did something wrong.
You questioned the wisdom of HBOS in giving out that loan.
Now you're saying your "common usage". Common to who? The courts? The law? They all understand insolvency as per IA1986, but you apparently do not accept that. I note also that you haven't answered the question of in what capacity have you dealt with insolvency, especially in a corporate setting?
walm said:
Here's what we do know:
1. PWC signed off on Taveta's annual reports despite the very obvious negative book value.
2. HMRC knew about it all.
3. HBOS got paid back (very easily).
4. None of this has anything to do with the BHS pension.
5. Arcadia is still a going concern.
You are technically correct that is it unusual to have a dividend with negative equity but I strongly suspect that the companies house docs aren't enough to tell us what has gone on at the holdco/group level.
For example, press reports at the time make reference to a £460m dividend declared the year before but not paid at the Arcadia level somewhere, but I haven't had time to dig out exactly where that happened!
If it was as simple as pointing at negative equity on the balance sheet, I am sure someone would have raised questions back in 2005 when it was front page news.
1) Enron's accounts were also signed off as being fine.1. PWC signed off on Taveta's annual reports despite the very obvious negative book value.
2. HMRC knew about it all.
3. HBOS got paid back (very easily).
4. None of this has anything to do with the BHS pension.
5. Arcadia is still a going concern.
You are technically correct that is it unusual to have a dividend with negative equity but I strongly suspect that the companies house docs aren't enough to tell us what has gone on at the holdco/group level.
For example, press reports at the time make reference to a £460m dividend declared the year before but not paid at the Arcadia level somewhere, but I haven't had time to dig out exactly where that happened!
If it was as simple as pointing at negative equity on the balance sheet, I am sure someone would have raised questions back in 2005 when it was front page news.
2) all the more intriguing!
3) When was it all paid off?
4) I didn't say it has I was responding to comments about PG's business activities in general
5) Arcadia was brought into the mix earlier by others.
As you have rightly pointed out, we don't know exactly the mechanism in place that has allowed this to happen. But what we do know is that CA1985 and CA2006 (which would not have applied at the time) do NOT allow for distributions from loans nor where there is not enough in the p&l (yes, yes including p&l reserves) to cover for that dividend. It would be considered ultra vires by HMRC.
So it begs the question, why was it not in this case?
Betfair had a dividend declared illegal by HMRC as they did not have sufficient p&l reserves.
On the surface it appears as though rules can be bent depending on who you are and who you might know.
No doubt he is an intelligent man, and that he has done well. But contrary to your cheerleaders comments, it isn't about lapping up media attention. It IS about knowing the details, and knowing that something is not particularly kosher in this.
I'm not posting on pistonheads to argue with people but with a genuine interest in the subject of this thread. I do accept on reflection some of my posts were less than courteous (eg to Europa1) and I've corrected that.
soad said:
techiedave said:
I honestly can say I haven't ventured into a branch of BHS in the last 5 years
They exist but just don't seem to have any relevance
I haven't been to one for over a decade. Shop for the oldies? They exist but just don't seem to have any relevance
gumshoe said:
walm said:
gumshoe this whole time you have been using the word "insolvent" to mean "negative book value" rather than the common usage which actually matters.
You have conflated "big loan", "illegal dividend" and "insolvency" together to imply that Green did something wrong.
You questioned the wisdom of HBOS in giving out that loan.
Good work on the back-pedalling, but no, I have been using the term insolvent to mean insolvent, as per the same statute that you refer to when you say "insolvent".You have conflated "big loan", "illegal dividend" and "insolvency" together to imply that Green did something wrong.
You questioned the wisdom of HBOS in giving out that loan.
Now you're saying your "common usage". Common to who? The courts? The law? They all understand insolvency as per IA1986, but you apparently do not accept that. I note also that you haven't answered the question of in what capacity have you dealt with insolvency, especially in a corporate setting?
You know perfectly well what the common meaning of insolvent is. Stop being obtuse.
I made no reference to statutes, just what every (non accountant) understands as the most relevant and important meaning of it, rather than the utterly irrelevant accountant's version that ties to the laughable non-real-world measure of book value.
As your comments show, book value is something accountants do get very excited about but in the real world it is a joke (other than the very minor exception of banks, whose accounting leaves even more to be desired than most industries!).
Now and again some idiot will ask me about ROE but it is entirely irrelevant (outside banks) to anyone doing proper business analysis which is what we should be talking about.
I have to admit that I knew I would get in trouble for mentioning that one of the Big 4 accountancies signed off - they haven't covered themselves in glory.
Although, in their defence, Enron was an incredibly complex web of businesses selling very hard to value energy contracts which is somewhat different to chains of shops selling clothes and other tat.
I am not really here to argue 24/7 either so let me try and summarise on where we appear to agree...
1. Yes, you win. On the obscure accountant's version of "insolvency" that no one really cares about, Taveta had negative equity in 2005, making the payment of the dividend odd.
2. The HBOS loan was covered no problem. In the common usage of insolvent, Taveta was perfectly capable of paying its debts, as it did.
3. All of the above detail from our many posts is really about Arcadia, nothing to do with BHS standalone.
4. The connection between the £1.2bn div payment and the BHS pension is extremely limited.
Frankly, point 4 is probably the most important.
The press insist on implying that SPG took money out of BHS and hence somehow caused a £571m hole in the pension.
That simply isn't true.
He took that £1.2bn out of ARCADIA, not BHS standalone.
And at least according to the BBC, the pension fund was in £3.4m SURPLUS in 2008.
So it appears absolutely IMPOSSIBLE to me that the £1.2bn from 2005 has even the remotest connection to the current £571m deficit.
Do you agree?
RottenIcons said:
Absolutely.
For the largest part these deficits are novational and based on a rather dodgy projection formula, so it is not what it appears.
I assume you mean notional, rather than novational...For the largest part these deficits are novational and based on a rather dodgy projection formula, so it is not what it appears.
However, while there are a number of assumptions required, suggesting that they are based on 'dodgy projection formula' demonstrates a significant lack of understanding.
How else to measure the cost of liabilities except by reference to the value of assets that would be needed to fund those liabilities...
RottenIcons said:
Novational; the PPF system is in effect simply an insurance based liability and the £571m is what the insurers considers missing if Insurance policies replaced the existing investments, some of which will be the ongoing BHS business which is effectively dead, so that will always have a novational loss attached to it. So to some extent a goodly part of the loss is down to the loss of a projected income which has gone as the business has folded.
1) not true - the deficit is based on current liabilities and current assets I.e. It doesn't take into account future sponsor's contributions.2) the pension scheme will not (should not) have investments in the BHS business.
RottenIcons said:
The dodgy projections; this is all about interest rates and it is literally no different to reading tea leaves, feeling the bumps on someone's head or buying a chrystal ball and giving yourself a big up as a forecaster. At the moment we've enjoyed/endured a period of astoundingly low interest rates, it means that to keep paying out the monthly Pension liabilities there is little or no growth of the capital sum, so when projections are made the picture is very grim, but it does rely on very low rates of return for a continued period.
You are wrong again - the cost of the liabilities is the cost of buying low risk assets to match those liabilities. Those price of those assets represents the full term structure of interest rates, not just the current low BoE rate.RottenIcons said:
Aside:- The reason for this falsely low interest rate (it really is a false figure) is due to that awful period when the BoE used an internal Financial Vehicle to conjure up the money for the Quantitive easing fiasco (it is an ongoing fiasco, which like PFI will come back to tear a chunk out of our arris's later) By using fiat money through a further body within the BoE we are left with a payback requirement that relies entirely on the base rate being fiddled to as low as possible, to avoid the vehicle acquiring 'a life of it's own' because although the money is/was virtual it did flow into accounts, peoples accounts, or rather business accounts, in real terms this fantasy money accounts for about 20% of the cash in every business account with a positive balance, and the vehicle is charging interest on that money, the fiat money is fake, the interest is not, 80% of the interest charged is real money taken out of the daily cash flow of various money types. In effect there is real money paying the interest on fake money. it is a formula for financial ruin and ruin is inevitable. The problem is the run-off or more properly up-flow of money to the vehicle. On paper the money is spirited away, but the reality is that it creates right at the heart of our finances a deflationary spiral, it's there right now. We see prices staying the same on manufactured goods, grown or live goods growing in cost and service costs (banks etc) growing like topsy, we all see the latter in the price of everything that the state does and charges for. This model is the worst sort of solution for our woes post 2007/8, why we did it is another matter and it shames us all.
"There's nothing so dangerous as a man that knows a little who thinks he knows a lot'...Edited by RottenIcons on Tuesday 26th April 12:11
gumshoe said:
The confusion appears to be yours. On what level have you dealt with insolvency? There is as you say cashflow insolvency (123(1) of IA1986) but there are other measures of insolvency. And what's more pertinent here is the discussion surrounding PG's behaviour and his liability in law.
The insolvency test that would assist an action against PG on a personal level would be (i.e. clawback) would be the balance sheet test under section 123(2).
Negative balance sheet net assets still amounts to insolvency, in UK law.
You are correct, however, that you can continue to trade so long as you're able to service the debts (and with a realistic proposition that the company wasn't on a guaranteed path to further indebtedness to other creditors etc). That does not mean the company is not insolvent. But I never said to the contrary?
Two things are relevant here outside of the faffing about argue on things that are not relevant:
1) Was the dividend paid legal?
2) Did it cause the company to be insolvent (let's say under ANY measure of the insolvency Act 1986 which is the relevant legislation as it is a UK company)?
Can you just answer those two and then your cheerleaders can give us their input? lol
TBH Gumshoe, your first post isn't very clear - you refer to Green paying a dividend and then to 'the company' being insolvent.The insolvency test that would assist an action against PG on a personal level would be (i.e. clawback) would be the balance sheet test under section 123(2).
Negative balance sheet net assets still amounts to insolvency, in UK law.
You are correct, however, that you can continue to trade so long as you're able to service the debts (and with a realistic proposition that the company wasn't on a guaranteed path to further indebtedness to other creditors etc). That does not mean the company is not insolvent. But I never said to the contrary?
Two things are relevant here outside of the faffing about argue on things that are not relevant:
1) Was the dividend paid legal?
2) Did it cause the company to be insolvent (let's say under ANY measure of the insolvency Act 1986 which is the relevant legislation as it is a UK company)?
Can you just answer those two and then your cheerleaders can give us their input? lol
Given we are discussing BHS, it is isn't clear whether you were referring to BHS or Arcadia (or its ultimate parent co) as being insolvemt.
Sidicks, the information in my post is garnered from the PPF's own letters of incorporation and the included letters of business activity from 2005 and the yearly roster of changed activities that are available on their own web site. It's dressed up prettily I grant you but that is what this is all about. In your last part to me I can only reply thus; I am not in the mire of high finance in my everyday life (I am glad of that) but again the BoE is quite open about the IV used, it's name is known, the fact there is a Rothschild and the Windsor family as beneficiaries has leaked out in the USA and is hidden here in the UK. Confer by looking up the connections on 'standard' google and see that at the bottom of the pages it tells you openly that certain info has been withheld from you for your own good, then go to an unfettered Google (getting harder by the day) search again and you get some info that was denied you previously.
Edit, the word is Novational, not notional. The entire ethos of the PPF is novational in nature, that is it's modus operandi, the replacement of contracts to pensioners by their own specified vehicle.
Edit, the word is Novational, not notional. The entire ethos of the PPF is novational in nature, that is it's modus operandi, the replacement of contracts to pensioners by their own specified vehicle.
Edited by RottenIcons on Thursday 28th April 11:18
RottenIcons said:
Sidicks, the information in my post is garnered from the PPF's own letters of incorporation and the included letters of business activity from 2005 and the yearly roster of changed activities that are available on their own web site. It's dressed up prettily I grant you but that is what this is all about. In your last part to me I can only reply thus; I am not in the mire of high finance in my everyday life (I am glad of that) but again the BoE is quite open about the IV used, it's name is known, the fact there is a Rothschild and the Windsor family as beneficiaries has leaked out in the USA and is hidden here in the UK. Confer by looking up the connections on 'standard' google and see that at the bottom of the pages it tells you openly that certain info has been withheld from you for your own good, then go to an unfettered Google (getting harder by the day) search again and you get some info that was denied you previously.
Reading something and understanding something are two entirely different things.And much of what you have stated is categorically wrong.
Interesting piece on Philip Green in the Times today.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
BlackLabel said:
Interesting piece on Philip Green in the Times today.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
If any of that is true I won't be that surprised. Uber rich guy in being a complete douche bag shocker. Thats almost the type of person you have to be.http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
Otispunkmeyer said:
BlackLabel said:
Interesting piece on Philip Green in the Times today.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
If any of that is true I won't be that surprised. Uber rich guy in being a complete douche bag shocker. Thats almost the type of person you have to be.http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
We don't need his like in business.
tuffer said:
soad said:
techiedave said:
I honestly can say I haven't ventured into a branch of BHS in the last 5 years
They exist but just don't seem to have any relevance
I haven't been to one for over a decade. Shop for the oldies? They exist but just don't seem to have any relevance
I just think some are irrelevant. BHS I used to go into their lighting section which I thought was great but then things change........
The clothes are just too old for me.
M&S I will look at from time to time.
Two questions if anyone could answer?
How did it go from generating £300million profit a few years ago as walm states to losing money;
and why was the pension deficit £140 million in 2014, £160 million in 2015, and is somehow now £575million?
http://www.independent.co.uk/news/business/news/bh...
How did it go from generating £300million profit a few years ago as walm states to losing money;
and why was the pension deficit £140 million in 2014, £160 million in 2015, and is somehow now £575million?
http://www.independent.co.uk/news/business/news/bh...
CoolHands said:
Two questions if anyone could answer?
How did it go from generating £300million profit a few years ago as walm states to losing money;
and why was the pension deficit £140 million in 2014, £160 million in 2015, and is somehow now £575million?
http://www.independent.co.uk/news/business/news/bh...
Hasn't made £300m profit per annum in the last 15 years. Profit was made between 2001 and 2005. In fact since 2006 it has made a loss per annum of around £50m to £75m so its been a basket case for years only supported by PG and Arcadia. Inadequate pension contributions as a result. The reporting in the media on the deficit has been disgraceful. There a number of ways to measure the deficit and the tri annual valuation in 2015 had it around £250m not changing much from 2012. The oft quoted £571m is based on an Insurance buy out figure and not comparable in any way. Hope that helps. How did it go from generating £300million profit a few years ago as walm states to losing money;
and why was the pension deficit £140 million in 2014, £160 million in 2015, and is somehow now £575million?
http://www.independent.co.uk/news/business/news/bh...
RottenIcons said:
Otispunkmeyer said:
BlackLabel said:
Interesting piece on Philip Green in the Times today.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
If any of that is true I won't be that surprised. Uber rich guy in being a complete douche bag shocker. Thats almost the type of person you have to be.http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
We don't need his like in business.
The line in one article about reporters from rival publications gifting articles their editors would not print was telling; a reminder, if one were needed, that powerful individuals can and do control the media, and the news we get through the media is but no means independent.
BlackLabel said:
Interesting piece on Philip Green in the Times today.
http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
Seems devoid of anything other than 'Green yelled at me a lot and called me names'. A bit light on evidence of illegal pilfering of the pension fnd.http://www.thetimes.co.uk/article/my-battle-with-t...
http://www.johnralfe.com/public/My_battle_with_the... <--------non paywall link.
chimster said:
johnfm said:
Seems devoid of anything other than 'Green yelled at me a lot and called me names'. A bit light on evidence of illegal pilfering of the pension fnd.
Pilfering? Not possible. Inadequate funding support? A different story..Slightly OT but the gradual decline of Austin Reed saddens me because my grandfather worked for him in the interwar period, first in the flagship store on Regent Street and then setting up and running the Hull branch. In his time at least they were a good employer. I have a picture of him from this era, suited and booted on the deck of the QM sailing to New York.
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