Go Bust owing £900k then starting over !
Discussion
Reading in the London free papers, that a chef (Tom Aiken) has put his company into administration, only to open up trading immediately with a new company. He has left suppliers some £900,000 owed to them, which they'll never see.
I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
ish thing to do.toppstuff said:
Reading in the London free papers, that a chef (Tom Aiken) has put his company into administration, only to open up trading immediately with a new company. He has left suppliers some £900,000 owed to them, which they'll never see.
I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
Well the reason he probably went into administration is that he owed the money. I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
He has to make money somehow, or would you prefer he went on the doel.
I think the big issue, how the hell can a chef run up such debts?!!!
Pre pack finance.
Seen by many as a way to shed staff, cherry pick the best parts of their business, close and reopen within a week.
No morals business.
http://www.prepackfinance.co.uk/
Seen by many as a way to shed staff, cherry pick the best parts of their business, close and reopen within a week.
No morals business.
http://www.prepackfinance.co.uk/
Edited by Broccers on Monday 12th January 18:23
elster said:
toppstuff said:
Reading in the London free papers, that a chef (Tom Aiken) has put his company into administration, only to open up trading immediately with a new company. He has left suppliers some £900,000 owed to them, which they'll never see.
I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
Well the reason he probably went into administration is that he owed the money. I know this is legal, but to those out there who know about this stuff, I have some questions:
Why is it still allowed?
Has anyone suffered at this or done it themselves?
Just how common is it?
Reckon we are going to see a lot more of it sadly...
He has to make money somehow, or would you prefer he went on the doel.
I think the big issue, how the hell can a chef run up such debts?!!!
Poor form but happens all the time. Mate of mine is in the recovery business, and another local firm has gone under and re-emerged the next day as "xxx Recovery" instead of "xxx Rescue" and continued to service the original company's contracts with RAC / Green Flag / Britannia etc. Poor form on the part of the Phoenix company, but worse form on the part of the companies who are effectively the customers who by rights should have put the patches out to tender again.
toppstuff said:
How is it that a company which has been phoenixed can get banking services? Surely the banks are complicit in this if they provide banking services to the new company?
Hadn't thought of that. Presumably if the companies are not seeking to borrow / secure any debts against property or chattels that are already "in hock" to a bank, then getting a business account in a new name with a different director (usually the wife / aunt / dog of the original owner) is probably not that hard. toppstuff said:
I guess there is so much competition from suppliers,he will be able to find new ones.
Seems bad form to me.
Seems bad form to me.
He will just have to build up his credit with them like any other startup. Most likely this will mean payment up front for a while until the new business has some trading history.
The thing is, often there are perfectly salvagable business's lurking under an administration. Maybe second (or x) time round things will go better?
Limited liability business is the foundation stone of the capitalist system; without it, the world would not be as is.
MAM
There was an interesting series on C4 recently called the Ascent of Money, this was covered in one of the epsisodes.
Historically the rationale was that banks understand that very talented business people often fail at their 1st attempt, lessons learnt etc. so they factor in a number of bad debts and work on their basis that they will make their money (more money, even) when they are sucessful next time round - essentially taking a long-term view on that bankrupt making them £££ in interest, fees, services next time round, with as much as practical recovered by the receivers.
This is why the bankruptcy system evolved, otherwise these talented but maybe inexperienced/unlucky people would just go away/collapse under the weight of debt once they've failed once, meaning the surviving business people are either just the v.lucky ones or the truly brilliant, but there are fewer of them, earning less revenue for the bank
I agree this does seem to be abused somewhat these days, I've lost a fair bit of time and cash to pheonix'd companies and banks are obviously sailing closer and closer to the wind in terms of good/bad debt ratios since the last bust.
As they say - the bank never loses, the cost of this is rolled into their cost of doing business - i.e passed on to you & I
Historically the rationale was that banks understand that very talented business people often fail at their 1st attempt, lessons learnt etc. so they factor in a number of bad debts and work on their basis that they will make their money (more money, even) when they are sucessful next time round - essentially taking a long-term view on that bankrupt making them £££ in interest, fees, services next time round, with as much as practical recovered by the receivers.
This is why the bankruptcy system evolved, otherwise these talented but maybe inexperienced/unlucky people would just go away/collapse under the weight of debt once they've failed once, meaning the surviving business people are either just the v.lucky ones or the truly brilliant, but there are fewer of them, earning less revenue for the bank
I agree this does seem to be abused somewhat these days, I've lost a fair bit of time and cash to pheonix'd companies and banks are obviously sailing closer and closer to the wind in terms of good/bad debt ratios since the last bust.
As they say - the bank never loses, the cost of this is rolled into their cost of doing business - i.e passed on to you & I
Edited by SaTTaN on Monday 12th January 20:23
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