Discretionary spending?

[ravelda]

I do think it is all to easy for companies like this to go into administration, wipe their debts and continue trading as if nothing had ever happened. Tom has made plenty of money for himself, but we are bearing the cost of this with no real recourse. Am tempted to take the team for a meal and leave without paying!

[Paul Reynard]

I do think it is all to easy for companies like this to go into administration, wipe their debts and continue trading as if nothing had ever happened.  Tom has made plenty of money for himself, but we are bearing the cost of this with no real recourse.  Am tempted to take the team for a meal and leave without paying!

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Unfortunately it's all legal and above board and they are often referred to as Phoenix (from the ashes) companies. You'll often see it in local shops and restaurants where a venture fails, goes into 'Administration' and then a friend or relative comes along, buys the stock/licence for a heavily knocked down price and then re-opens again under a new company name (with new director and company secretary), slightly different fittings but largely the same stock/business idea.

However if this business has indeed been bought by investors as a going concern then any creditors should not be left out of pocket - if you are kick and scream (especially threaten more negative media coverage) and you should get somewhere. Alternatively as you say go down (with fellow suppliers) have a meal, refuse to pay and say it's in liue of payment. If they argue ask for the police (and media of course) to come and have your unpaid invoices at the ready!

Edited October 20, 2008 by Paul Reynard (log)

[ravelda]

I do think it is all to easy for companies like this to go into administration, wipe their debts and continue trading as if nothing had ever happened.  Tom has made plenty of money for himself, but we are bearing the cost of this with no real recourse.  Am tempted to take the team for a meal and leave without paying!

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Unfortunately it's all legal and above board and they are often referred to as Phoenix (from the ashes) companies. You'll often see it in local shops and restaurants where a venture fails, goes into 'Administration' and then a friend or relative comes along, buys the stock/licence for a heavily knocked down price and then re-opens again under a new company name (with new director and company secretary), slightly different fittings but largely the same stock/business idea.

However if this business has indeed been bought by investors as a going concern then any creditors should not be left out of pocket - if you are kick and scream (especially threaten more negative media coverage) and you should get somewhere. Alternatively as you say go down (with fellow suppliers) have a meal, refuse to pay and say it's in liue of payment. If they argue ask for the police (and media of course) to come and have your unpaid invoices at the ready!

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Maybe I should buy all on eG a meal there with the debt!! lol

[food1]

If you go and take your team for a meal, then Do pay, even if it is fifty pence. Otherwise is can be treated as theft. I can imagine you must be feeling totally pi..ed off at the moment and some of these'uber chefs' do need to be brought down a peg or two. Totally crap behaviour on chef part, when he knows full well he can't pay his creditors. Hope you get it resolved one way or the other.

[ravelda]

Thanks food1!

[howardlong]

Well - the first failures are here - Tom Aikens into administration (we got the paperwork telling us we wont be paid for the months worth of supplies he has taken from us on Friday!)

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Almost didn't believe you at first but here's the evening standard take :

http://www.thisislondon.co.uk/standard/art...iers/article.do

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of course it's not true until it's in the evening standard

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This one's been bubbling for a couple of days now, although I only thought it was Tom's Kitchen that was affected until now. There have been reports of small independent local suppliers being owed tens of thousands. As restauranteurs are given qudos by the media and ourselves for their use of local seasonal produce, I fear this leaves those producers more vulnerable.

H

[Infrasonic]

I think the only moral way one can deal with receivership/insolvencies or liquidations is to make sure the small suppliers get paid if at all possible.

Certainly this is what I did years ago with a bankrupt sole trader that I took over and made into a LTD. The only people who got stiffed were the big breweries, and they all started supplying us almost immediately as they could see that the cashflow of the new business was fine.

Had to pay double rent for a year as well to clear the arrears on the lease

Edit; just to add that factoring (invoicing) might be worth looking at as a way of improving credit control for smaller set-ups. Depends on turnover and margins but worth looking into.

Edited October 21, 2008 by Infrasonic (log)

[erica graham]

Paying your small suppliers shouldalways be a priority. When we were flooded last year, we weren't sure if we were going to get through because the insurance was taking so long to come though, but we made sure our small farmers were paid. One 'phoned us in a panic saying that if we didn't pay them, then they wouldn't be able to pay the mortgage on the farm. There is always a responsibility when you deal with small suppliers and producers and yet they always seem to be the ones who get left up the creek.

I only hope that all of TA suppliers do get paid, and that the restaurant doesn't take the p*** by trying to order from them without first clearing the book debts.

[howardlong]

Paying your small suppliers shouldalways be a priority.

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Like it or not, it's HMRC that's right up there at the front of the queue I'm afraid.

H

Edited October 21, 2008 by howardlong (log)

[Gary Marshall]

anyway some good news, i was in akbars york last night and they were on target to do about 400 covers! (and my mate who was also there the night before said it was equally as busy then too, (their lamb chops are historic btw))

and my local had its busiest ever saturday night last week.

[Tim Hayward]

anyway some good news, i was in akbars york last night and they were on target to do about 400 covers! (and my mate who was also there the night before said it was equally as busy then too, (their lamb chops are historic btw))

and my local had its busiest ever saturday night last week.

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My local, Market, seems consistently packed and, local rumour has it, turned away Gordon Ramsay and entourage last week as they had no room to fit him in. Huzzah!

[Infrasonic]

Paying your small suppliers shouldalways be a priority.

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Like it or not, it's HMRC that's right up there at the front of the queue I'm afraid.

H

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Behind the banks, and of course at number one the insolvency practitioner.

[Infrasonic]

anyway some good news, i was in akbars york last night and they were on target to do about 400 covers! (and my mate who was also there the night before said it was equally as busy then too, (their lamb chops are historic btw))

and my local had its busiest ever saturday night last week.

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My local, Market, seems consistently packed and, local rumour has it, turned away Gordon Ramsay and entourage last week as they had no room to fit him in. Huzzah!

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Probably thought Gordo was a poor credit risk and likely to do a runner...

Edited October 22, 2008 by Infrasonic (log)

[naebody]

Apologies if this is a silly question, but why on earth don't suppliers take out credit insurance?

[Infrasonic]

Apologies if this is a silly question, but why on earth don't suppliers take out credit insurance?

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I wonder what the premiums would be like currently...

[naebody]

I wonder what the premiums would be like currently...

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... justifiable?

[ravelda]

We have insurance but unfortunately not all clients are covered (restaurants are not notorius for having good accounts filed!), it is bloody expensive and it does not cover all debt

[Infrasonic]

We have insurance but unfortunately not all clients are covered (restaurants are not notorius for having good accounts filed!), it is bloody expensive and it does not cover all debt

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Ever looked at factoring?

[Gary Marshall]

i don't think factoring/invoice discounting etc is a 'good look' for a business, you end up giving away precious margin to advertise the fact your cashflow is sh*t and you're probably undercapitalised.

a few of our suppliers used them when we had the pub, i expect they won't survive the downturn, if you can't get paid in the good times, what hope have you in the bad?

[ravelda]

We have insurance but unfortunately not all clients are covered (restaurants are not notorius for having good accounts filed!), it is bloody expensive and it does not cover all debt

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Ever looked at factoring?

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We invoice discount - unfortunately this does not protect all your debts! The bank wont insure all customers, you then have the issue of aged debt, etc, etc! The only benefit to factoring (which we are considering) is that the bank then chases your debt for you. Still doesn't protect you though!

Edited October 22, 2008 by ravelda (log)

[food1]

I do think we all need to keep things in perspective at the moment and not be totally influenced by the media whipping everything up. Sure things are hard, theres no denying it, but listening to some you would think England is shutting down to make way for the 'four headless horseman of the appocolipsy'!

[Infrasonic]

i don't think factoring/invoice discounting etc is a 'good look' for a business, you end up giving away precious margin to advertise the fact your cashflow is sh*t and you're probably undercapitalised.

a few of our  suppliers used them when we had the pub, i expect they won't survive the downturn, if you can't get paid in the good times, what hope have you in the bad?

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Gary, I've never used it partly for the reasons you give...but...I was thinking that in the current climate it might make people think a bit more about who they stiff for money if they know a bank or other big business is behind the debt. Certainly the credit rating will plummet making COD the only viable alternative for supplies.

As for undercapitalisation, I would have thought that is going to an issue for any business that can't rely on pure cashflow to see them through at the moment.

Refinancing isn't exactly the banks favourite word lately.

Although Gordon is promising that the banks will be lent on to keep the money flowing to small business, we'll have to see how that translates in the real world...

[ravelda]

I do think we all need to keep things in perspective at the moment and not be totally influenced by the media whipping everything up. Sure things are hard, theres no denying it, but listening to some you would think England is shutting down to make way for the 'four headless horseman of the appocolipsy'!

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I don't think anyone is implying the appocolipse is coming, but for sure this is an unprecedented time and businesses both good and bad are being severly afffected. Life will of course go on, business will return and those damaged will pick up the pieces and carry on.

It is, however, very reassuring to be able to let off a bit of steam and to engage with other people at times like for interesting discussion!

[BertieWooster]

I do think we all need to keep things in perspective at the moment and not be totally influenced by the media whipping everything up. Sure things are hard, theres no denying it, but listening to some you would think England is shutting down to make way for the 'four headless horseman of the appocolipsy'!

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And its going to get a hell of a lot worse. The recession has hardly started moving into the real economy yet. Should be another three years of pain at least judging by housing/real estate super-cycles (something the horsemen of the appocolipse will be riding).

BLaming the media for whipping it up is missing the point that everything in markets is based around fear and greed. Its an essential part of the process.

[Infrasonic]

I do think we all need to keep things in perspective at the moment and not be totally influenced by the media whipping everything up. Sure things are hard, theres no denying it, but listening to some you would think England is shutting down to make way for the 'four headless horseman of the appocolipsy'!

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And its going to get a hell of a lot worse. The recession has hardly started moving into the real economy yet. Should be another three years of pain at least judging by housing/real estate super-cycles (something the horsemen of the appocolipse will be riding).

BLaming the media for whipping it up is missing the point that everything in markets is based around fear and greed. Its an essential part of the process.

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Agreed, even the vested interests are talking about 2010 before any significant growth comes back. And isn't it apocalypse...