Congratulations to Hodgsons Senior Partner, David Mond, who has been awarded Personal Insolvency Practitioner of the Year 2012.

Now in their fifth successful year, the Insolvency and Rescue Awards are widely regarded by the industry as one of the most prestigious awards scheme in the insolvency and rescue sectors. The judging panel for the category of Personal Insolvency Practitioner of the Year will base their decision on the following criteria:

• Business building and commitment to clients
• Innovation and creativity
• Dedication to aiding the recovery process whenever possible and relevant

Here, Rikki Burton, Hodgsons Senior Manager talks about David and why he deserved the award.

“The achievements and contributions David Mond has made to the industry throughout his career are substantial.

David works tirelessly to help people in debt and this award reflects the hard work and dedication David puts into his job. In a recent interview with a local newspaper, David discussed his childhood and the inspiration which led to his decision of going into a career in insolvency and providing a “safe place” for people in debt.”

As one of the founder members of the Joint BBA/Insolvency Service IVA Standing Committee, David has assisted in successfully making the IVA process as smooth and certain as possible for people in debt whilst also being instrumental in drafting the IVA Protocol to ensure a level playing field across all.

Founding member and current Chairman of trade association the Debt Resolution Forum (DRF), David is a key driving force within of the debt solution industry.

Congratulations to David from all of us at Hodgsons.

Do you think today’s Budget will help small businesses?

The Chancellor offered little in the way of support for small businesses. The key small business announcement was in fact made on Tuesday with the government backed ‘credit easing’ National Loan Guarantee Scheme. However, only four banks have signed up to participate in offering low interest rate loans to small business. Do you think this is enough? Whilst the Banks are again urged to offer loans to small business, we frequently hear from business owners that Banks are not willing to lend.

There are several ways in which a small business can raise funds:

The more traditional method is to take out a loan with a Bank. On that loan, you pay interest. This is something that the Banks have been reluctant to offer in recent years. One potential way of successfully taking out a loan is to obtain a guaranteed loan, secured against an asset you own. However, with the current decline in house prices, this can prove difficult for many small business owners as the security may no longer be available with your property.

An alternative method, that is becoming increasingly common,  is to offer the Bank a personal guarantee against the loan. This provides the Bank with that comfort that you have personally guaranteed to repay the loan. If you are unable to provide a personal guarantee yourself, the bank may accept a personal guarantee from a family member.

Another possibility is to take out an agreed overdraft with your Bank.  This method can be more cost effective than taking out a loan from a Bank, provided you stay within your agreed overdraft.

The final way of raising finance through borrowing is by lending money from family or friends. This is often the least expensive option, as the interest rate is likely to be less than what a Bank would offer. However, be sure to pay the loan back in the agreed timescale, at the agreed interest rate, or you may find yourself in disputes with family members or close friends.

The methods outlined above are all forms of lending which create debt in the company. Therefore, before taking such a step, you should speak to an independent financial expert for further advice and information

There are of course other ways of raising funds for your small business that don’t create debt in the company. For example, if you obtain an investment from a venture capitalist, your ownership would be diluted, but you would have a debt.  Whilst you would have to share your profits with the investor, there may not be a requirement to repay the investment.

If you decided to set up a limited company, you may be able to get investments from family or friends and in return, offer them shares in the company.. This would again dilute your shareholding, but would not create debt in the company.

Whilst certain criteria would need to be met, subject to you being eligible, you may be able to receive a government grant or sponsorship. This form of funding is not repayable and is something you should consider.

Finally, if your cash flow is tight, there are other ways of obtaining finance such as invoice finance. This can take the form of invoice discounting or factoring and both can be beneficial to a business experiencing short term cash flow problems.

As you read this blog, you will no doubt be hearing different views on whether the Banks are lending money to small businesses. Whichever view is correct; there are a number of alternatives which you should consider if you require finance for a business.

If you wish to discuss your financing options in more detail, please do not hesitate to contact Hodgsons for further advice.

A recent R3 report indicated that bad management and incompetence was to blame for 57% of corporate insolvencies while nearly 40% of business could have been rescued if professional advice had been sought earlier.

With almost 60% of Insolvency Practitioners already believing that the UK Insolvency regime is overly forgiving towards directors who fail this is surely not going to change their opinions

It has been speculated that cost cutting at the Insolvency Service the agency of BIS that deals with company investigations and disqualifications will be as high as 40% of its annual budget. This is obviously going to lead to them focusing on the management of the ever increasing personal and corporate insolvency caseloads and moving away from the costly, time consuming investigation work. This will ultimately lead to many more directors who ought to be investigated and possibly disqualified falling through the net and allowing them the opportunity to repeat there mistakes and put further creditors and jobs at risk.

A possible solution to this problem may be to introduce stricter punishments for directors of failed companies such as a three strike your out policy.  For example if you have three company failures over your lifetime you are automatically debarred from being a director or being involved in the management of a company for 10 years. No investigation just a straight 10 year ban.

This might make directors take a tighter grip of there companies, identify any problems and look for solutions a lot sooner.

So if cost cutting is required to help reduce the government deficit then by increasing the penalties for directors who fall foul of the rules this may counter affect any potential loss of belief in the disqualification procedure and remind directors that they can’t get away with any mismanagement.

For those who have been following the battle for survival by Crystal Palace, it seems there is finally hope as the consortium trying to purchase the club, CPFC2010, agreed a buying price at the eleventh hour on their deadline date of 1st June.  And by 7th June – the deal was signed.

But the issue of Football Club Administrations keeps rearing it’s head and couldn’t be more relevant as football fever fills the nation during this year’s World Cup.

As a nation of avid football fans – our love for this sport and the Clubs who host it is like no other – they “Club” is considered family, and for family, most of us, would do anything.

So the question has to be asked, when a Club is threatened by Administration – what roles do / should the fans have?  Do they have a genuine right to  have a say in the future direction and lifeline of the Club?

In the case of Crystal Palace F.C they are due to vote on 25 June to agree or disagree whether the Club can enter into a CVA – Company Voluntary Arrangement.

In an interesting move some of the fans of the club will be able to vote at this meeting as they had prepaid for Season Tickets over the forthcoming seasons.

I personally think that this is a good strategy as the true fans of the club will get to have a say in what happens to the club going forward and may actually tip the vote in favour of the CVA.

With the controversy earlier this year with Manchester United’s F.C United and Red Knights, I wonder if it will be the fans who will be running the Clubs in the years to come?