I am a supplier to hotel’s so this article is largely based on the hospitality sector, but most of the points can be applied to any business.
Before I get into the ‘action plan’ for dealing with hotels or companies that have gone into administration, you need to know a little about the administration process.
Many people panic when they are doing business with a company and they hear that it has gone into administration, administration is very different to bankruptcy. Bankruptcy is when a company has no possible way of survival and everything is lost. Administration is a process of survival.
A company can be placed into administration by one of more companies that it owe’s money to. Typically in the hotel business, the two main culprits who place hotels into administration are banks (who are owed a large amount of money in a mortgage or overdraft) and the Inland Revenue who are maybe owed a large amount of cash in VAT or PAYE payments. A company may also place itself into administration if it thinks things have gone to far.
The company responsible for placing a company into administration, then appoints an Administrator.
The administer is a company specialist in this sort of thing, they act on behalf of the company owners, the people the company owes money to and the general running of the day to day business.
With hotels it is usually normal practice for the administrator to appoint a ‘hotel management company’ to do the day to day stuff which lets them concentrate on the future of the business. The original owner of the business’s involvement mainly depends on the how the administrator feels about how they have ran the business up to the point it went into administration. It is common enough for the administrators to pay the owner a salary to stay involved in the interim, in some cases the owner will not be allowed on the premises for any reason.
The company will not stay in administration for-ever but the time can vary from one month to 3 years (or more) dependent on the debt levels, current turnover and future plans.
There are a number of potential outcomes to administration.
1. Complete bankruptcy, the company has no future and is wound down.
2. Break up, in the case of a hotel, the property and land might be sold in chunks to developers. The fixtures and fittings sold at auction etc, this is common if the month to month business is simply un-viable moving forward. In hotel chains, it is common for the individual hotels to be sold off or the group to be split into smaller groups.
3. The company is sold to another company, this is generally the quickest way out of administrator where another company see’s a bargain and grabs the hotel for a cut down price.
4. The hotel can work it’s way out of administration and return to the original owners, this is also not un-common and a situation were the administrators gets the company running correctly again, cutting all dead weight, re-structuring the debt and sailing on.
5. Management buy-out. Not as common in today’s market but in times when credit is more freely available, management who were not previously owners can club together with the help of investors and banks to buy back the company.
So what do you do, if you supply a company that goes into administration.
The ‘Action Plan’
1. Firstly, you need to get to know your industry. Thankfully, I am well connected in the hotel industry so I hear about these things (in most case’s) before they go public, this means conversations can take place ahead of the news. Have you ever tried calling a business the day bad news is broken? It’s not a good idea.
2. You need to know the law and your rights as a supplier. You have a contract with BIG HOTEL LTD and on 21st May 2011, BIG HOTEL LTD goes into Administration, You are owed every single penny up until 21st May, thats not to say you will get paid that money but you are owed it.
3. You need to cut the credit to BIG HOTEL LTD, if you continue to supply credit to this company there is a good chance you won’t get paid because that company on paper does not trade anymore
4. Speak to the management, the administrators, your contacts, the doorman, the bank, the neighbours dogs, whoever you like. The point of this conversation is three fold, firstly that you are happy to continue to supply them, secondly to agree new terms (ie, reduced credit, a DD mandate, payment up front, whatever you are comfortable with) and thirdly to GET THE NEW COMPANY DETAILS.
The new company details will generally be BIG HOTEL (IN ADMINISTRATION) LTD with the same company registration number and all of your documents, invoices and agreements need to reflect this.
5. Set up a new agreement but be careful who sign’s it, it can be signed by the following people
a) BIG HOTEL (IN ADMINISTRATION) LTD, co-signed by the administrators
b) The administrators themselves
c) The new management company, appointed by the administrators.
6. You need to treat the debt owed to you by BIG HOTEL (IN ADMINISTRATION) LTD and BIG HOTEL LTD as two separate things, if you are like me, you will probably be well down the pecking order for getting paid but you might agree to settle the balance for less. The Government and the Banks will always get their money first, thats just the way it is.
7. Chill out, follow the process and be happy. It is in everyone’s best interest for the company to survive, do your part to make it happen!
This letter arrived in my maibox this morning, I must say as spam mail and nutcase hair-brained idea’s go…… this is actually pretty good!
Dear Mr Cameron,
Please find below our suggestion for fixing the UK ‘s economy.
Instead of giving billions of pounds to banks that will squander the money
on lavish parties and unearned bonuses, use the following plan.
Patriotic Retirement Plan:
There are about 10 million people over 50 in the work force. Pay them £1
million each severance for early retirement with the following stipulations:
1) They MUST retire – ten million job openings – unemployment fixed
2) They MUST buy a new British car. Ten million cars ordered – car Industry
3) They MUST either buy a house or pay off their mortgage – housing crisis
4) They MUST send their kids/grandkids to school/college/university – Crime
5) They MUST buy £100 WORTH of alcohol/tobacco a week…..and there’s your
money back in duty/tax etc
6) Instead of stuffing around with the carbon emissions trading schemes that
makes us pay for the major polluters, tell the greedy b***ards to reduce
their pollution emissions by 75% within 5 years or we shut them down.
It can’t get any easier than
And if more money is needed, have all members of parliament pay back their
falsely claimed expenses and second home allowances
If you think this would work, please forward to everyone you know.
If not, please disregard.
Grumpies of the World
More madness over the weekend, hundred’s of people had their travel plans distrubted because of a bomb left under a bridge in Newry on Friday, it took me close to 5 hours to get home from my office in Dublin. I don’t see how cutting off the main road between Belfast and Dublin can somehow work towards a United Ireland, surely if you wanted a united Ireland you would be encouraging cross border travel!
This morning hundreds of more people were delayed getting to work because of a hoax bomb on the M1. It won’t stop me living here, it won’t stop me doing business across the island, it won’t stop me raising my family in this wonderful country.
They must not win, we cannot allow them to win!
If you are stuck in traffic or your journey is delayed because of these people, don’t let it get you down, take some time to enjoy the scenery surrounding you, take some time to talk to the person stuck in the car next to you. Don’t let it get you down, don’t let it anger you because if you do, they win.
We need to stand united against these people, we need a United Ireland, that is an Ireland that is United in standing up against these people.
Watch this video Ruth has put together to learn more about how you can make your stand!
Send your photo to : email@example.com , about now is good!
Yer Man David Cameron, off coalition Government fame has been chatting about his BigSociety again,
Here are the bullet points from Wikipedia;
- Give communities more powers (localism and devolution)
- Encourage people to take an active role in their communities (volunteerism)
- Transfer power from central to local government
- Support co-ops, mutuals, charities and social enterprises
- Publish government data (open/transparent government)
It’s all a bit nuts if you ask me……………………. but it all makes sense. I like it! Society is made up of a random bunch of people and local matters, matter to local people. We all have different skill sets so why can’t we all give just a little bit back to society instead of taking all the time.
I have been doing charity work since I was 14, I started helping out with the Beaver Scouts, now (a few years later) i’m still scouting. I don’t actively run a Friday night group any more but I use the skills learnt in my paid employment to sit on scouting boards, executive committees and also run events. Don’t get me wrong, I love my paid employment but there is something satisfying about helping to educate kids through scouting. Some of my happiest times have been spent in the pissing rain at scout camp. Often I spend more time working for free, than working for money. So why can’t we all do it?
Because we (as a society) are a bunch of lazy, selfish, freeloading morons……. don’t believe me? What have you done today to make you feel proud (yeah)? If you can’t answer that, then you need to do something about it (now will be fine).
One of DC’s idea’s is to have a National Citizen Service, a sort of unpaid bunch of people (manly over 16 years olds) that can help out when the time arises. It’s a great idea, the UK is one of the only EU countries that does not have a civil defense service and I have seen the civil defense do great work in Ireland during the floods.
Northern Ireland is the only UK state that does not have a 4×4 response team, despite calls to set one up. During the Cockermouth floods in England, the 4×4 response team were as vital as the police and army were at getting people safe.
What can I do ? Give your time, like I said, everyone has something to offer and maybe just maybe if we all club together and do just one little thing, give just one thing back then we can make this world bearable for our children.
One of the biggest gripes people complain to me about is the price of a pint of beer and I’m sick of it.
People fail to understand that a 2.5% VAT increase on the top of a pint or 1p on a pint at the budget doesn’t simply mean a 2.5% (or 1p if we are talking about the budget) increase in the cost they pay in the bar.
The hospitality trade has to pay 2.5% vat on every single thing needed to provide you with that pint of beer, heat, light, barware, rent, cleaning products, the list is endless.
A 1p cost on the pint of beer at the budget, is 1p on the barrel price, not the actual price you pay.
In real terms,
A 2.5% increase in VAT results in a 10p rise in the price of a pint
A 1p increase in the cost of a pint at the budget, results in 5p-6p on the price you pay
Last year, in Northern Ireland the average price of a pint of beer was £3.00 and the average profit per pint was reduced to an all time low of 13p………. still think you are being ripped off?
Many pubs and hotels have done their upmost to absorb recent increase’s but with the disastrous weather in Q4, the hospitality trade in Northern Ireland was hit hard. Hotels and bars have had to apply price rises or risk their business failing.
Speaking on this, Colin Neil, Chief Exec of ‘Pubs of Ulster’ The trade body says.
“Unfortunately this is another instance where pubs fair worse than supermarkets, which still retain the margins to absorb the VAT increase whilst selling alcohol below cost. We hope that the coalition government’s plans to introduce minimum pricing in England and Wale and the upcoming consultation on a minimum price for alcohol in Northern Ireland will lead to an end to the pub industry being unfortunately penalised with disproportionate taxes. However current proposals to not go far enough and we call upon the Assembly to lead the way and set an effective minimum price for alcohol in Northern Ireland.”
If you want to see your local bar continue to be there for you in the future, pay a fair price for alcohol and please, please stop crying about the cost of beer……… no one is making you drink it!
Last year, David Cameron’s coalition Government announced controversial plans to sell the nations forests and free up some cash for our failing country. It was wrong. It was wrong because there was no immediate plans as to who would buy them or what would be done with them.
Today, David Cameron’s Government U-turned this plan. Environment Secretary Caroline Spelman told MPs the Government had “got this one wrong”, as she announced the current consultation was being halted.
Speaking on this, Labour’s leader Ed Miliband MP said
“Virtually every person in the country could see selling off our forests was a foolish and short-sighted policy but they went ahead regardless. Now they are panicked into a retreat hours after Mr Cameron said they would carry on with their consultation.”
Ed Miliband is also wrong.
Selling off the nations forests can only be a good thing……… if done right.
Let look at the facts for a second,
Government owned forests, both public and private are a burden on the public purse and what do they actually provide us? A nice place to take our kids and dogs when the sun is shinning and a habitat for wildlife to flourish.
OK, so the later of my point is worth keeping them for but who says for the later to happen, they have to be state owned? When people talk about selling off the forests, they automatically think of hungry fat cats swopping in and building concrete jungles but it doesn’t have to be that way.
With the correct model, more forests could be open to the public, enjoyed by all and be …….. er profitable? Sure, lets think about it, even in public forests, most of the woodland is actually shut to the public due to our fancy pants health and safety laws, it just would not be safe for the average punter to be rambling about it.
Let’s get a forest and use all of it for the good of society. What am I talking about here? well how a forest that contains
1. Land for public’s and rambling (ok we have that already, i’ll move on)
2. Houses that are eco-friendly and built from the timber actually grown in the forest, that would be a nice place to live
3. Eco-office’s, again built from the timber in the forest and powered from power generated from woodchippings from the forest, what a great place to live
4. Let farmers use the land to….. er farm
5. What about a school in a forest? I’d love to send my Daughters there, what a great place to learn
6. A hotel ! built again eco-friendly. What a super place to holiday
6. An adventure centre, Scout den, watersports centre, farm shops, cafe’s on the river, research centres, theaters you name it.
I’m talking about a sustainible, profitible venture that doesn’t cost the Governement (utimately us) a penny. It can be done, with the right guidlines and objectives in place it should be done.
A forest for all…….. lets do it!