Insolvency system favours investors

chewmylegoff

Graham_Devon wrote: »

Theres a lot to this story. But, Better Capital appeared to know that they were trading while insolvent. They even state so in their statement to the committee.

So they were basically allowing suppliers to supply them with goods knowing full well the suppliers would not get paid. Same for staff working over that period. The actual employees of city link got paid, but most delivery drivers were self employed contractors, and therefore not employees.

It goes back to the asset stripping Better Capital and other companies like them carry out to cover themselves.

If the directors of City Link have made a statement to a parliamentary committee that they were knowingly trading whilst insolvent then the parliamentary committee should be reporting them to the insolvency service and asking the IS to carry out an investigation into the apparent criminal offence that has been admitted. I rather doubt that such an offence has been admitted but I haven't looked at the statement made so...

antrobus

Graham_Devon wrote: »

Theres a lot to this story. But, Better Capital appeared to know that they were trading while insolvent. They even state so in their statement to the committee.

So they were basically allowing suppliers to supply them with goods knowing full well the suppliers would not get paid. Same for staff working over that period. The actual employees of city link got paid, but most delivery drivers were self employed contractors, and therefore not employees. ...

Better Capital were not trading. City Link were trading.

Graham_Devon wrote: »

...It goes back to the asset stripping Better Capital and other companies like them carry out to cover themselves.

What assets did Better Capital strip out of City Link?

Jason74

Loughton_Monkey wrote: »

Chaired by a Leftie.



There is nothing wrong with interpreting information that confirms one's preconceptions, when one's preconceptions are correct.

My preconceptions are always correct.

Except when they're not. Which is most of the time.

Loughton_Monkey

wotsthat wrote: »

....I assume the answer to the question 'have you read it?' in terms of the report, however, is no.

Of course he didn't read it!

The report sets out accurately what they 'found' and what they 'recommend'. But the Chairman (a leftie) always gets the opportunity for the sound-bite which the BBC will happily quote.

This is clearly an "Anti Business" piece. Labour is extremely "Anti Business". It appeals greatly to confirmed Labour Voters, like Graham. He undoubtedly would have preferred City Link to go bust in April 2013 with proper 'consultation' rather than at least try to save it, giving the employees an extra 18 months or so of livelihood.

MFW_ASAP

Oh dear, another massive thread where Graham fails to comprehend a simple financial concept and the rest of the board tries to explain it to him with increasingly frustrated posts.

Today must be Monday.

wotsthat

MFW_ASAP wrote: »

Oh dear, another massive thread where Graham fails to comprehend a simple financial concept and the rest of the board tries to explain it to him with increasingly frustrated posts.

Today must be Monday.

He's accused City Link of trading whilst insolvent and misappropriating assets based on no evidence whatsoever and not reading a report he whole heartedly agrees with.

Then again he did decide to vote Labour instead of UKIP after a visitation from the Angel Gabriel during Newsnight.

At least this stuff doesn't show up in google.

stator

wotsthat wrote: »

If a company goes bust the employees are first in line when the assets get shared out.

Unless the assets have secure loans against them, that just happen to be owned by the parent company. Wonder how that happened? Seems the parent company have been preparing for this insolvency since the day they took over the company. The tax payer picks up the tab for redundancy pay. If the company had gone bust the last time the assets of the company could have been used to cover some of the liabilities, including redundancy pay.

wotsthat

stator wrote: »

Unless the assets have secure loans against them, that just happen to be owned by the parent company. Wonder how that happened? Seems the parent company have been preparing for this insolvency since the day they took over the company. The tax payer picks up the tab for redundancy pay. If the company had gone bust the last time the assets of the company could have been used to cover some of the liabilities, including redundancy pay.

Not really preparing for insolvency - just common sense. If you lend a basket case £40m then you want to mitigate the downside.

Maybe it prolonged the agony but the employees didn't lose a penny, got a couple of extra years and the parent company lost around half of their 'secured loan.

The taxpayer's on the hook for some pocket change but they'll be on the hook for a lot more if secured loans are no longer seen as a valid investment route although the report doesn't suggest how the system should be changed.

I think we're nearing an election so investors are now on the naughty list along with bankers and tax avoiders.

ging84

simple answer is they need to deal with the issue of companies hiring armies of contractors.
The fact that most of the drivers were not employees should be something which ring alarm bells to anyone who knows about it, but it currently is fairly ordinary. For many businesses even large ones, to have almost exclusively contractors with a tiny % of direct staff, is not unusual.

stator

wotsthat wrote: »

Maybe it prolonged the agony but the employees didn't lose a penny, got a couple of extra years

Unless they were technically sub-contractors, in which case they may have lost thousands. That's one of the points raised in the article the OP posted. Many companies are forcing people onto sub-contractor type contracts, which give no redundancy pay. It's certainly worth taking a look at.