BHS heading for administration as rescue deal fails

[grober]

 

[vijilants]

This is the same guy that was commisioned in the past by the government to investigate companies that do business on the UK who register companies offshore, and he was the biggest culprit and that also includes this own dodgy personal tax affairs.

Says it all !!!

 

[StuartK]

This is the same guy that was commisioned in the past by the government to investigate companies that do business on the UK who register companies offshore, and he was the biggest culprit and that also includes this own dodgy personal tax affairs.

Says it all !!!

Any person who claims they wouldn't try and legally reduce their tax burden is a liar

 

[vijilants]

Any person who claims they wouldn't try and legally reduce their tax burden is a liar

Yes that's true, but you generally find that this government / HMRC comes down on the one man band or the small limited companies like a ton of bricks, but prefers to ignore situation when it comes to the Philip Greens of this world,their large corporations, or any one else in the "club".

Then they get this guy to head up an investigation on tax avoidance / evasion ??

A typical example of this is the double taxation issues when it comes to offshore registration. Many many larger companies take advantage of this and get away with it, but the one man band Ltd company or smaller limited companies that were involved in this practice are being taken to the cleaners by the HMRC.

It is one rule for one set of people and another rule for others.

Hence the reason as to why this guy has up to now managed to get away with as much as he has.

 

[StuartK]

Yes that's true, but you generally find that this government / HMRC comes down on the one man band or the small limited companies like a ton of bricks, but prefers to ignore situation when it comes to the Philip Greens of this world,their large corporations, or any one else in the "club".

Then they get this guy to head up an investigation on tax avoidance / evasion ??

A typical example of this is the double taxation issues when it comes to offshore registration. Many many larger companies take advantage of this and get away with it, but the one man band Ltd company or smaller limited companies that were involved in this practice are being taken to the cleaners by the HMRC.

It is one rule for one set of people and another rule for others.

Hence the reason as to why this guy has up to now managed to get away with as much as he has.

Welcome to capitalism

 

[Deleted member 37751]

Lack of working capital kills the most profitable businesses. Lots of people simply don't understand this.

It was always the most common bit of advice I was given when I started out in business - always be able to cover your losses - and it has largely worked for me but, by the same token, it has held me back because to reach certain levels of business you need to scale to such a degree that there's no other way around it; you have to use someone else's money to expand.

I'm at that point now, just weighing up whether I stick or twist, and it's not an easy decision.

 

[StuartK]

It was always the most common bit of advice I was given when I started out in business - always be able to cover your losses - and it has largely worked for me but, by the same token, it has held me back because to reach certain levels of business you need to scale to such a degree that there's no other way around it; you have to use someone else's money to expand.

I'm at that point now, just weighing up whether I stick or twist, and it's not an easy decision.

You hit the nail on the head you need other people's money.

It is less painful when you lose it at least. Don't feel bad if it goes wrong. The lender knew the risk when he lent. There's always two sides.

 

[DSB SL AMG]

Great point, for me business is about taking calculated risks when possible and making great decisions based on experiences, nothing ventured nothing gained, of course sometimes you just need a big pair of B_ _ _s lol and you do of course need that special ingredient called 'luck'

It was always the most common bit of advice I was given when I started out in business - always be able to cover your losses - and it has largely worked for me but, by the same token, it has held me back because to reach certain levels of business you need to scale to such a degree that there's no other way around it; you have to use someone else's money to expand.

I'm at that point now, just weighing up whether I stick or twist, and it's not an easy decision.

 

[Red C220]

You hit the nail on the head you need other people's money.

It is less painful when you lose it at least. Don't feel bad if it goes wrong. The lender knew the risk when he lent. There's always two sides.

Just don't secure the lending on the family home via a limited company. If you have the equity in your property, remortgage and inject the cash into the company. Do anything possible to never give any bank a charge on your family home.

You'll find this a stumbling block if you're borrowing as a limited company. The banks will now require collateral or security for the loan which comfortably covers the value of the loan. The irony of which is if you had that capital or security available you wouldn't need a loan to start with.

This changes though once he money reached a certain level. Think of like this.

You owe a bank £30k, it's your problem, you owe a bank £30Million, it's their problem.

 

[Deleted member 6183]

This changes though once he money reached a certain level. Think of like this.

You owe a bank £30k, it's your problem, you owe a bank £30Million, it's their problem.

I have heard this many times over the years and, to some extent it's true, however it ignores the subject of security. If you owe the bank £30m and have assets of £50m it's very much your problem.

The bank would lend £30k without security, it would be very unlikely to lend £30m without suitable security.

 

[Red C220]

The bank would lend £30k without security, it would be very unlikely to lend £30m without suitable security.

Historically though that doesn't seem to have been the case. Or more accurately, the larger the number involved and the larger the company the less due diligence see to take place.

Wrekin Construction PLC is a perfect example:-

£11 million ruby among collapsed building firm Wreklin Construction's assets - Telegraph

 

[Deleted member 6183]

Historically though that doesn't seem to have been the case. Or more accurately, the larger the number involved and the larger the company the less due diligence see to take place.

Wrekin Construction PLC is a perfect example:-

£11 million ruby among collapsed building firm Wreklin Construction's assets - Telegraph

How are you interpreting that article?

I'm seeing it as the firm went through because the bank stopped lending because the firm ran out of assets (in the bank's eyes).

 

[grober]

There seems to be some confusion here. Folks are citing examples where legitimate hard working business ventures fail and enter bankrupcy due to circumstances beyond their control due to cash flow problems. Let's be clear nothing vaguely resembling this went on at BHS which enquiry evidence would indicate was an asset stripping exercise followed by a sale to a known bankrupt with no retail experience in a bid to distance the previous owner from any concomitant liability.

 

[lisa110rry]

Historically though that doesn't seem to have been the case. Or more accurately, the larger the number involved and the larger the company the less due diligence see to take place.

Wrekin Construction PLC is a perfect example:-

£11 million ruby among collapsed building firm Wreklin Construction's assets - Telegraph

Ahhh...Wrekin Construction. An interesting story of deception it would appear.

 

[Red C220]

How are you interpreting that article?

I'm seeing it as the firm went through because the bank stopped lending because the firm ran out of assets (in the bank's eyes).

Their balance sheet was propped up buy a Rubi that the firm owned that had a valuation certificated of circa £11 Million.

The reality was it was worth maybe £200K at best, but realistically less than that (EDIT:- the administrators later sold it for £8K). No one at the bank bothered to check if it was real or even existed but they lent 7 figures against it.

Lack of due diligence.

Wrekin Construction directors banned after gem valuation forgery - BBC News

Do a google search for "The Gem of Tanzania".

 

[Deleted member 6183]

Their balance sheet was propped up buy a Rubi that the firm owned that had a valuation certificated of circa £11 Million.

The reality was it was worth maybe £200K at best, but realistically less than that (EDIT:- the administrators later sold it for £8K). No one at the bank bothered to check if it was real or even existed but they lent 7 figures against it.

Lack of due diligence.

Wrekin Construction directors banned after gem valuation forgery - BBC News

Do a google search for "The Gem of Tanzania".

Or, in other words, victim of fraud by forgery.

Let's say I intercepted a valuation report on a property (only worth £500k) during a mortgage application and inflated the value to £1m which allowed me to borrow £750k against it. Would that be lack of due diligence or fraud?

 

[Red C220]

Or, in other words, victim of fraud by forgery.

Let's say I intercepted a valuation report on a property (only worth £500k) during a mortgage application and inflated the value to £1m which allowed me to borrow £750k against it. Would that be lack of due diligence or fraud?

Both.

Lets say as a bank you were asked to lend say £5 Million to a company whose entire assets comprise an enormous gemstone of world record breaking size that no one had ever heard of. You'd have at least asked to have seen it and maybe checked the valuation? Would you? Or would you just have accepted a piece of paper from someone no one had ever heard of valuing a world record breaking gem stone that also no one had ever heard of?

Fraud, then lack of due diligence to uncover the fraud.

As the numbers get bigger this seems to be more common. BHS takeover had a "Sniff test" from Goldman Sachs, who basically said they we'rent really interested as the deal was too small, so didn't bother to look at it.

It seems on the face of it, the BHS takeover for £1 was just a vast mess on which no one seemed to do any due diligence whatsoever so it could be offloaded for £1 after most of it's value had made it's way to Mrs Greens Monaco banks accounts.

Give the man a knighthood, he's done so much for retail in this country.

Bent from top to bottom, the larger the transactions the more bent it becomes. It is what it is. The only real surprise at all is that we all still act surprised when it happens time and time again.

 

[StuartK]

Historically though that doesn't seem to have been the case. Or more accurately, the larger the number involved and the larger the company the less due diligence see to take place.

Wrekin Construction PLC is a perfect example:-

£11 million ruby among collapsed building firm Wreklin Construction's assets - Telegraph

Interesting article and two of the banned directors are still directors according to companies house of many other companies

 

[Deleted member 6183]

my knowledge of gemstones begins and ends with the purchase of my wife's engagement ring 25 years ago, however, it's a little hypercritical to accuse the bank of failing to conduct due diligence when an independent valuation from an, apparently, legitimate source was produced.

As Grober says this has, maybe, strayed a little far from the initial content and as I have no axe to grind i'll comment no further.

 

[parkman1]

I am glad to see that MP's are looking at taking away Greens' knighthood. At the very least he was seriously irresponsible, if not fraudulent, in selling BHS to Chappell.

I am pretty sure that he knew the financial situation in BHS, he knew that the pension fund had a black hole, and having dug out a couple of million pounds, which he gave to his wife, who I would suspect of also knowing the financial situation, he then walks away from his employee's and responsibilities.

To say that the problems didn't happen while it was under his management is pure baloney, the pension hole didn't happen overnight. I would be more likely to believe that money was taken out of the fund, as in the case of Robert Maxwell - wikipedia quotes " including his fraudulent misappropriation of the Mirror Group pension fund.".

Let's put it this way, the MP's review of the case has said that they don't believe Greens' explanation at all. Their interpretation would appear to say that the Green family had made BHS a basket-case, and just unloaded off to Chappell, because he was mug enough to buy it.

Chappell, in turn, almost certainly stripped the company of any value that was left, and the employee's were shafted as per usual.

The thing that really gets up my nose is that no-one at the top, who almost certainly knew the financial situation, never gets jailed.

If Green didn't know the situation then he was an idiot, and shouldn't be running a business in the first place.

parkman