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ShedDweller

Anyone Else Noticed This .. Companies Being Liquidated

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It seems that for the last 15 years .. any company over a certain size has just been invicible .. just no way they can go bust .. a pre pack possibly but actual liquidation has been thought of as impossible ..

It always seemed to me that most of these companies were so indebted that the bank would rather extend more credit and thus have a hope of collecting (or just keeping alive) loans given already ..

Suddenly this week I hear of four companies all going bust in the same week .. offered for pre pack but I suspect that nobody can raise the cash .. so they are being liquidated and the assets sold ..

For me this is happy days ahead .. These were the companies that would undercut everyone else and appered to be operating at a constant loss forceing the rest of us to specialise to survive .. so after 15 years of falling prices we may have an envioroment where there is something close to the profit of 15 or 20 years ago ..

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It seems that for the last 15 years .. any company over a certain size has just been invicible .. just no way they can go bust .. a pre pack possibly but actual liquidation has been thought of as impossible ..

It always seemed to me that most of these companies were so indebted that the bank would rather extend more credit and thus have a hope of collecting (or just keeping alive) loans given already ..

Suddenly this week I hear of four companies all going bust in the same week .. offered for pre pack but I suspect that nobody can raise the cash .. so they are being liquidated and the assets sold ..

For me this is happy days ahead .. These were the companies that would undercut everyone else and appered to be operating at a constant loss forceing the rest of us to specialise to survive .. so after 15 years of falling prices we may have an envioroment where there is something close to the profit of 15 or 20 years ago ..

Good to hear that the markets might start working properly again. "Free" credit doesn't just ruin housing markets. As you have pointed out, it destroys honest businesses.

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In brief, bad money drives out good.

Though I'm unconvinced by your observation. Where's Woolworths?

My guess would be they owed money too too many people .. and (as I understand it) in Retail it's all down to credit Guarantees for suppliers ..

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In brief, bad money drives out good.

Though I'm unconvinced by your observation. Where's Woolworths?

It's an anomaly because they were able to secure a huge loan on the stock sitting on their shelves (which itself would have been supplied on at least 60 days credit).

It's not that common, as inventory's not usually seen as an easily realisable asset like property, and this made an outright liquidation closing down sale more attractive for those lenders than the alternatives.

Edit to add: I would say there are still plenty of less viable businesses than Woolies still somehow opening their doors everyday.

Edited by Soon Not a Chain Retailer

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It seems that for the last 15 years .. any company over a certain size has just been invicible .. just no way they can go bust .. a pre pack possibly but actual liquidation has been thought of as impossible ..

It always seemed to me that most of these companies were so indebted that the bank would rather extend more credit and thus have a hope of collecting (or just keeping alive) loans given already ..

Suddenly this week I hear of four companies all going bust in the same week .. offered for pre pack but I suspect that nobody can raise the cash .. so they are being liquidated and the assets sold ..

For me this is happy days ahead .. These were the companies that would undercut everyone else and appered to be operating at a constant loss forceing the rest of us to specialise to survive .. so after 15 years of falling prices we may have an envioroment where there is something close to the profit of 15 or 20 years ago ..

This is the scandal of it. With demand weak I've had to compete with pumped up private equity run businesses that have gone into administration, pre-pack or otherwise, during administration they can dump unprofitable branches and strong-arm landlords into accepting favourable lease re-gears. You're then left competing with a business that wasn't viable but, instead of dying, it's still there and now paying no rent whilst flogging off stock it's just picked up for 10p in the pound.

You're right it has been changing recently. I've had two big-ish suppliers go recently with lots of, normally, valued blue-chip retailer listngs. Everyone assumed there'd be a trade sale or private equity play and they've both ended up with everything being auctioned off, dirt cheap, after no buyer could be found.

I've got 60 trailers of gear for the January sale in next week which should help offset the Vat hike. :lol:

I get the feeling that the money's not out there all of a sudden.

Edited by Soon Not a Chain Retailer

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In brief, bad money drives out good.

Though I'm unconvinced by your observation. Where's Woolworths?

I think I started the downfall of Woolies. I was about 13 years old and I was that mad that somebody nicked the lights on my bike that I went on a rampage at Woolies. I can't remember what I actually stole but I remember making three or four trips. Mostly batteries as I recall. Makes me shake thinking of it-me old Dad would have literally killed me had I been caught.

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I think I started the downfall of Woolies. I was about 13 years old and I was that mad that somebody nicked the lights on my bike that I went on a rampage at Woolies. I can't remember what I actually stole but I remember making three or four trips. Mostly batteries as I recall. Makes me shake thinking of it-me old Dad would have literally killed me had I been caught.

Lots of good kids have moments of madness like this and then look back and think - what the hell was I doing?

You can relieve yourself of one burden though. Its safe to say that your rampage didn't bring down Woolies. They did that all by themselves.

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This is the scandal of it. With demand weak I've had to compete with pumped up private equity run businesses that have gone into administration, pre-pack or otherwise, during administration they can dump unprofitable branches and strong-arm landlords into accepting favourable lease re-gears. You're then left competing with a business that wasn't viable but, instead of dying, it's still there and now paying no rent whilst flogging off stock it's just picked up for 10p in the pound.

You're right it has been changing recently. I've had two big-ish suppliers go recently with lots of, normally, valued blue-chip retailer listngs. Everyone assumed there'd be a trade sale or private equity play and they've both ended up with everything being auctioned off, dirt cheap, after no buyer could be found.

I've got 60 trailers of gear for the January sale in next week which should help offset the Vat hike. :lol:

I get the feeling that the money's not out there all of a sudden.

Always sensible and a great insiders view of the retail market (well least I assume so because every time you talk about the reatil market is makes a hell of a lot of sense to me). Some of the big auction houses / insolvency clearance houses were laying off not so long ago and comlaining of slowing business. Maybe not any longer.

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What no-one seems to have cottoned on to is that Woolworths was closed down by its lenders and that its lenders (Barclays, Bank of Ireland, GMAC, and others) lost nothing on the deal. They got all their money back. This is why businesses apparently less viable than Woolies survive. If the BOE pulled the support away, no business would fail until the banks decided to come in and close them. Thats why the BOE will never pull its current support away from the economy and exactly why paper money has a limited future.

It's an anomaly because they were able to secure a huge loan on the stock sitting on their shelves (which itself would have been supplied on at least 60 days credit).

It's not that common, as inventory's not usually seen as an easily realisable asset like property, and this made an outright liquidation closing down sale more attractive for those lenders than the alternatives.

Edit to add: I would say there are still plenty of less viable businesses than Woolies still somehow opening their doors everyday.

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i've just seen 5p this week. I think the money is still there

it's still there and now paying no rent whilst flogging off stock it's just picked up for 10p in the pound.

Edited by fallingbuzzard

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Always sensible and a great insiders view of the retail market (well least I assume so because every time you talk about the reatil market is makes a hell of a lot of sense to me). Some of the big auction houses / insolvency clearance houses were laying off not so long ago and comlaining of slowing business. Maybe not any longer.

What's tending to be the case now is that with the general zirp and fiscal stimulus thing the businesses have been limping along and scraping by for the last 18 months+.

Now when they are finally going under the inventory is very run down and a lot has been sold off piece-meal to pay each month's wage bill. This means a leaner time for the disposal outfits as there's less to sell off.

Consequently, it's in such disarray it would be a push to describe it as a going concern and therefore any purchaser would have to inject serious wedge to get it back firing on all cylinders. In many cases the buyer would need to stand the fixed costs while stock started flowing back in again from the Far East.

There is an interesting knock-on too. One insolvent supplier's landlord has also gone bust, as a result of having no tenant, and they had only recently bought the freehold investment. The supplier had an Experian rating for 2007/8/9 as low risk, and this is not unusual with firms that are suddenly succumbing.

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What no-one seems to have cottoned on to is that Woolworths was closed down by its lenders and that its lenders (Barclays, Bank of Ireland, GMAC, and others) lost nothing on the deal. They got all their money back. This is why businesses apparently less viable than Woolies survive. If the BOE pulled the support away, no business would fail until the banks decided to come in and close them. Thats why the BOE will never pull its current support away from the economy and exactly why paper money has a limited future.

Ultimate reason was probably that Barclays had not been bailed out, Mandelson and Vadera persistently tried to lean on Barclays not to pull the plug. I'm pretty confident if it'd had its money from Peter Cummings at HBOS, like most other over-leveraged basket case, it'd still be here now.

You're right, every time something goes under the media concludes its business model was no good and hadn't kept pace with the times. This doesn't explain how a load of other non-businesses, with even worse models, continue to inexplicably lurch on.

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Spot on. And in the meatime, the Bank of England crowds out private sector investment. Lessons of the 30s are not learned

Ultimate reason was probably that Barclays had not been bailed out, Mandelson and Vadera persistently tried to lean on Barclays not to pull the plug. I'm pretty confident if it'd had its money from Peter Cummings at HBOS, like most other over-leveraged basket case, it'd still be here now.

You're right, every time something goes under the media concludes its business model was no good and hadn't kept pace with the times. This doesn't explain how a load of other non-businesses, with even worse models, continue to inexplicably lurch on.

Edited by fallingbuzzard

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It's an anomaly because they were able to secure a huge loan on the stock sitting on their shelves (which itself would have been supplied on at least 60 days credit).

It's not that common, as inventory's not usually seen as an easily realisable asset like property, and this made an outright liquidation closing down sale more attractive for those lenders than the alternatives.

Edit to add: I would say there are still plenty of less viable businesses than Woolies still somehow opening their doors everyday.

I hear you. A distant competitor went for a pre-pack back to the owners a year or so ago, same business just no debt.

Still, they bust it once and I'm sure they'll do it again. Probably better than someone competent picking it up!

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I hear you. A distant competitor went for a pre-pack back to the owners a year or so ago, same business just no debt.

Still, they bust it once and I'm sure they'll do it again. Probably better than someone competent picking it up!

The problem with this is that the "intent" of the insolvency laws is good, but the current practice of some criminals USE the procedure as part of the business plan. This is technically criminal...but there is no way to post evidence to a court.

I feel a slight amendment to the law to ensure that only "arms length" parties can buy the carcass. "interested" parties should NOT be able to escape their debts through a maze of Ltd Company Shells..

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\What's tending to be the case now is that with the general zirp and fiscal stimulus thing the businesses have been limping along and scraping by for the last 18 months+.

Now when they are finally going under the inventory is very run down and a lot has been sold off piece-meal to pay each month's wage bill. This means a leaner time for the disposal outfits as there's less to sell off.

Consequently, it's in such disarray it would be a push to describe it as a going concern and therefore any purchaser would have to inject serious wedge to get it back firing on all cylinders. In many cases the buyer would need to stand the fixed costs while stock started flowing back in again from the Far East.

There is an interesting knock-on too. One insolvent supplier's landlord has also gone bust, as a result of having no tenant, and they had only recently bought the freehold investment. The supplier had an Experian rating for 2007/8/9 as low risk, and this is not unusual with firms that are suddenly succumbing.

Hi SoonNoaChainRetailer,

Can I ask you what happen to those who go on prepack? Do their suppliers still supply them on credit after the prepack? Is there any downside at all for those who go prepack?

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Hi SoonNoaChainRetailer,

Can I ask you what happen to those who go on prepack? Do their suppliers still supply them on credit after the prepack?

If they have any sense - no

tim

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Hi SoonNoaChainRetailer,

Can I ask you what happen to those who go on prepack? Do their suppliers still supply them on credit after the prepack? Is there any downside at all for those who go prepack?

I've seen it go both ways; sometimes they get the pariah treatment, can't get credit, factor their debts and their crap business model just gets worse. Other times they can find new suppliers etc and it goes properly.

Either way, the same peole should not be allowed to start again after escaping their obligations.

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What no-one seems to have cottoned on to is that Woolworths was closed down by its lenders and that its lenders (Barclays, Bank of Ireland, GMAC, and others) lost nothing on the deal. They got all their money back. This is why businesses apparently less viable than Woolies survive. If the BOE pulled the support away, no business would fail until the banks decided to come in and close them. Thats why the BOE will never pull its current support away from the economy and exactly why paper money has a limited future.

What most people don't realise is that when Barclays pulled the plug and got it's money back. They had a penalty clause in the contract (with Woolworths) which meant they received an extra few million on top, because Woolies paid the money back early!

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Can we have a Soon Not a Chain Retailer forum, all to itself? Or maybe a blog - I'd like to see more decent UK blogs on the mess we're in.

That is a very good idea .. :) Seriously one of the best contributers here ..

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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