Member Info for Franalex

Speed, usually lower cost and more importantly less disruption to the business, if it goes well it just continues to trade seamlessly. Many customers and suppliers will have contractual clauses that allow them to exit the contract in any insolvency process but I have only seen these used on rare occasions.

The administrator will have needed to ensure that he has the best deal for creditors but agree these do often appear to be stitch ups.

No, the administrator has an obligation to look at all offers for the business and act in the best interest of creditors (not shareholders), this could be a single sale of the entire business or multiple deals. Ashley is very well placed as he has already looked at the business, has funds and could move quickly.

No he won’t, bought a multisite business out of a pre-pack late last year and did deals with all the landlords and retained over 90% of the supplier base.

He bought HoF and Evans Cycles to name but two out of administration, he is well versed in the process.

They actually do, Branson has written off millions on bad investment decisions, he is happy to talk about his mistakes as that is what you learn from. The money has gone at present and he will be evaluating how he can make money out of this deal going forward, if he can make more by buying out of administration then he will do so even if that means his existing holding is worthless.

Would it really bother him if the money committed to date was written off, if he is able to buy the parts of the business he really wants cheaply, leave the rest behind and not pick up legacy liabilities. It is a sunk cost and you do not take account of this in evaluating future investments.

Neither did he become a billionaire by paying more than he needed to acquire a business.

Bond holders will want to see ordinary shareholders pretty well wiped out before taking a major haircut. They are not know for their philanthropy.

What we do not know is the solvency position of the Group and this will determine if the Board has to act in the best interest of shareholders or in the interests of the creditors of the business. This will depend on their forecast cashflows over the coming months and whether they have a reasonable prospect of paying debts as they fall due. You can be sure they will be taking very expensive advice on this to ensure that they cannot personally be sued.

You have been giving predictions on dates for weeks, all of which have passed without a bid.
If you go on long enough one will probably eventually be right.

Very difficult to say what is going on, but this is a decent business that has been mismanaged for a number of years. Far too little sector experience in the Executive Team, compare their CVs to say Biffa and Augean both of whom have individuals with an extensive background in the industry. May be OK when things are going well but when problems arise no specific historic knowledge to draw on. Remember in 2010/11 the Board turned down £1.20 a share from Carlyle Group because it did not fully reflect the value of the business.

Agree I have only been posting here for a few weeks and I am a holder having gone in after one of Ashley’s purchases but understanding it was speculative. I have been trying to provide balance based on transactional experience to all those inexperienced individuals who may have taken notice of posts suggesting massive share price increases, ruling out CVAs and administration and thinking deals with large landlords are either quick or easy. By all means buy the shares if you can afford to lose but it as a gamble not an investment.

Do. It know who they are but everything I have read has been sound advice and suggests someone with an Insolvency qualification, a corporate finance background or a lot of transactional experience. Generally good input that should be noted.

Yes, possibly take only what he wants and leave liabilities behind.

Whilst there has been much discussion on this Board looking from the investor perspective, too few have looked at how an experienced businessman would see things.

About as likely as all of your other unrealistically optimistic posts.

My understanding is that it is the directors who make the decision to appoint administrators and can do so without approval of either shareholders or bond holders. However, they will not do this until they have explored all other options and, like Interserve, will let the main stakeholders know that the alternative is administration.

Directors only have a duty to act in the best interest of shareholders whilst a business is solvent. Once the business faces the prospect of being unable to meet liabilities as they fall due, their obligation moves to one of acting in the best interest of creditors. What we have never had is the cashflow forecasts of the business and hence do not know what guidance they were being given by an Insolvency Practicioner that they will certainly have taken advice from. These are very grey areas but you can be sure that the directors will not have wanted to run any risk that made them personally liable. Whilst you can never say never, my posts have continually said that there would be no solvent sale of the business.

Not necessarily as simple as that. The scheme had until recently been in deficit and the move to surplus came about due to a change in actuarial assumptions. The pensions regulator has made public that it has been in discussion with the schemes Trustees. It is certainly in a better place than many but there are various ways that a schemes liabilities are calculated and in this scenario they will probably have to calculate the buy-out position (ie what an insurance company would want to take on the full liability). Frankly, the calculation of pension liabilities for accounting purposes has been ridiculous for a number of years and just a gravy train for advisors.

Generally agree with you but in this cycle with Debenhams we are into gambling not investing and whilst people should not buy based on comments here, some do. As you will see from my previous posts I have always believed that Ashley will not buy the business unless part of a CVA or admin but equally some posters totally dismiss this and think he, or another, will come riding along to rescue a failing business and the share price will rocket. Truth is Ashley will make his own decisions but you usually to not become as wealthy as him by overpaying for businesses and taking account of the aspirations of existing shareholders.