Companies going bankrupt/into administration

snow hope · Post by **snow hope** » Wed Dec 28, 2011 12:02 am

There was a thread on this, but I can't seem to find it, so mods please feel free to merge this.

La Senza went into administration on the 23rd Dec.
Blacks Leisure
Barretts
Saab GB

and lots of rumours......

There is no doubt in my mind that 2012 will be the toughest year yet for business....

JavaScriptDonkey · Post by **JavaScriptDonkey** » Wed Dec 28, 2011 1:04 pm

Yep, firms seliing luxuries that no one actually needs are struggling.

Other firms are doing fine.

Isn't there something about the amount of debt that needs to be re-financed in 2012 being larger that the anticipated market for it? Something Peston said? Or was in the FT?

I think the botom line was that firms not reliant on debt or at least those which haven't been saddled with debt following a buy out are likely to survive but that those relaint on re-financing and which aren't aren't actually making any money are in trouble.

I think it's a good thing. Getting back to proper financial prudence is essential if we are to survive.

SleeperService · Post by **SleeperService** » Wed Dec 28, 2011 1:18 pm

JavaScriptDonkey wrote:Yep, firms seliing luxuries that no one actually needs are struggling.

Other firms are doing fine.

Isn't there something about the amount of debt that needs to be re-financed in 2012 being larger that the anticipated market for it? Something Peston said? Or was in the FT?

I think the botom line was that firms not reliant on debt or at least those which haven't been saddled with debt following a buy out are likely to survive but that those relaint on re-financing and which aren't aren't actually making any money are in trouble.

I think it's a good thing. Getting back to proper financial prudence is essential if we are to survive.

There are so many profit warnings being issued from retailers especially it's almost impossible to keep abreast of them. Debt is a huge factor but some businesses have seen turnover fall and used their reserves during the summer. Now they find they can't borrow money to keep going and head into administration.

IMHO it will be back to the old formula of selling consistently at an acceptable profit, taking a long term view and keeping borrowing as low as possible ideally zero. So I agree with you completely JSD.

Debt servicing has been covered in the FT several times recently. The sovereign debt market has expanded that many traditional business lenders have moved into government debt instead. Debt at 700%ish of GDP can't be covered for long without significant 'growth' God help us all when this bubble bursts.

Have a good 2012.

mobbsey · Post by **mobbsey** » Wed Dec 28, 2011 1:35 pm

This has been rumbling for six months -- http://www.bbc.co.uk/news/business-13957075

Although its more relevant to look at the contraction in existing operators as well as business failures --
http://www.bbc.co.uk/news/business-16338641

emordnilap · Post by **emordnilap** » Wed Dec 28, 2011 1:49 pm

snow hope wrote:There was a thread on this, but I can't seem to find it,

Perhaps this one.

Lord Beria3 · Post by **Lord Beria3** » Wed Dec 28, 2011 6:51 pm

Actually the high-end luxury market is doing fine thank you.

its the middle income geared companies which are going under which is part of the broader impoverishment of the middle classes.

There will always be a market by the very rich for high-quality products.

JavaScriptDonkey · Post by **JavaScriptDonkey** » Wed Dec 28, 2011 7:08 pm

Quite so but I was looking away from Ferrari and Cartier for a moment to focus on the subject at hand which is more like mass produced luxuries.

Lord Beria3 · Post by **Lord Beria3** » Wed Dec 28, 2011 8:03 pm

JavaScriptDonkey wrote:Quite so but I was looking away from Ferrari and Cartier for a moment to focus on the subject at hand which is more like mass produced luxuries.

Well on that note I agree with you.

Consumerism is dying... bring it on.

madibe · Post by **madibe** » Wed Dec 28, 2011 10:32 pm

I could be tempted to get drawn into this quite deeply. However, keeping it very brief perhaps this is more the reality:

Business (mostly retail) will have troubles if it constantly works in 'debt' - essentially this means that the businesses are working to pay interest and hence pay the banks and bankers.
Because of this, business has been overpriced due to needing a massive mark up to make any 'profit' (despite remaining in debt)..
The survivors will be the companies that can make a reasonable mark up and keep it... companies that are not too greedy, provide excellent customer service and sell items that customers want.

This does not mean the end of 'luxuries' - if it just comes down to lentils and firewood I will be most suprised. People always want a treat once the essentials of life are in the bag. It is just that how much customers are prepared to pay will change. This should be self-leveling once those in debt are taken out of the equation.

Of course, if lentils and firewood are all that everyone can do then we are indeed fecked.

Your comments?

biffvernon · Post by **biffvernon** » Wed Dec 28, 2011 11:09 pm

Time for an apposite movie:

http://www.youtube.com/watch?v=cl8ZHDQQY7I

mobbsey · Post by **mobbsey** » Thu Dec 29, 2011 4:18 am

maudibe wrote:then we are indeed fecked.

If "fecked" is a negative concept relating to the future viability of society, then are people who are "feckless" better equipped to avoid such problems?

mobbsey · Post by **mobbsey** » Thu Dec 29, 2011 4:25 am

biffvernon wrote:Time for an apposite movie:
http://www.youtube.com/watch?v=cl8ZHDQQY7I

Perhaps we need to launch a competition for the "world's prettiest doomstead"?

Our garden doesn't look that cute, but then again we don't have the climate of mid-California. Although the pre-packed plastic bag of compost was also a bit of an own goal.

I think what this misses is that retail isn't coming to an end, it's what retail outlets sell that's going to change -- more ingredients, less finished goods; and it's that expectation of involvement in the finished product which delivers the satisfaction of consumption, not the act of possession of the artefact.

RenewableCandy · Post by **RenewableCandy** » Thu Dec 29, 2011 11:24 pm

maudibe wrote: Business (mostly retail) will have troubles if it constantly works in 'debt' - essentially this means that the businesses are working to pay interest and hence pay the banks and bankers.

...and rent. There's been a lot of that "sell-and-leaseback" game being played on the High St by those PE firms who buy out chains of shops. It can all be found in the Book of Pesto. I think he's working on a sequel, where they throw out the money-changers

mobbsey · Post by **mobbsey** » Fri Dec 30, 2011 10:04 am

RenewableCandy wrote:It can all be found in the Book of Pesto.

Ah!, Pesto!

You know, the name fits; because a little bit of pesto can really spice up a meal but if you have too much it can easily become overpowering.

RenewableCandy · Post by **RenewableCandy** » Fri Dec 30, 2011 4:00 pm

Hawkins' Bizarre(sp). Load of grade Z tat and I'm glad to see the back of them.

PowerSwitch

Companies going bankrupt/into administration

Companies going bankrupt/into administration

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