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Friday, April 15, 2011

Good news!

Sound advice saves jobs

Advice from Moorhead Savage has helped to save around 50 jobs in the Sheffield City Region in the first quarter of 2011.

Three companies working in hospitality, construction and manufacturing, approached us at the start of the New Year convinced that they were facing bankruptcy and closure.

But we were able to explain to them that steps could be taken that would save them from closure and their workforce for unemployment.

Last year Government figures suggested there were fewer smaller businesses going into liquidation but we knew than many were hanging on and hoping for good things at the start of 2011.When the better times failed to materialise, these companies approached us, fearing they were on the brink of closure, with a future that looked simply too bleak.

But in all three cases, the business owners didn’t have any awareness of the options that were available to help turn their businesses around.

The answer in all three cases was a Company Voluntary Arrangement (CVA), an insolvency procedure that allows a financially troubled company to reach a binding agreement with its creditors about payment of all, or part of, its debts over an agreed period of time.

It was good to be able to explain to all three companies that there are ways of keep a business going with the support of creditors.

A CVA can be the key to giving the best possible outcome for everybody involved because it is nearly always in the best interest of everybody, including creditors, if a business can continue to operate. If a company were simply to go down, the assets would probably not pay the creditors or make an meaningful impact on the debt. Even more importantly, by helping these companies to enter into CVAs, we were able to help safeguard 50 jobs which, in a climate like this, has to be the best news of all.

For advice on all financial problems call the team at Moorhead Savage on 01709 331 300.

Monday, April 4, 2011

Net property borrowing falls further

Homeowners' equity increases (but only because they are paying down debt)

UK homeowners repaid a record £7 billion in the final quarter of 2010 according to figures released today by the Bank of England. This is the eleventh quarter in a row that net property debts have decreased and the highest net repayment since records began in 1970.

It is likely that the reduction in debt is a result of more stringent lending policies by lenders who have been shaken by the banking meltdown in recent years. In addition a number of secured lenders have pulled out of the market all together as house prices  have plummeted, wiping out equity a d leaving many homeowners (and lenders) highly geared and dangerously exposed.
   
It seems clear that lax lending policies had a direct and devastating impact on the financial markets and the previous unsustainably high levels of lending have now been scaled back. But it also appears that consumers are not in a position to increase borrowing in order to take advantage of the lowest base rates in 315 years, which is an ominous development for high street spending and house prices in the coming months.

The challenge for banks is to ensure that the pendulum does not swing too far the other way, denying sensible levels of credit to responsible borrowers. A competitive market for sensible levels of credit is essential in a fully functioning free market economy, fostering enterprise and wealth creation. But anecdotal evidence suggests that the over-correction is in full swing.