A couple of weeks old, but this article from this is money website http://www.thisismoney.co.uk/money/...pping-channel-Sit-Up-TV-hopes-clear-debt.html how can they be allowed to clear this debt ? Other businesses would be made bankrupt why is this company still allowed to operate ?
Read this news artcle from this is money
- Thread starter Adam82
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Dave
Still just a Pleb!
If you scroll down to the bottom of the page, some of the comments posted there are very similar to those on this forum - nice Post Adam82. Let's wait for next weeks CVA result. Personally I would like to see someone take responsibility for amassing £68 Million debt, then having the gall to offer 1% of what is owed to the creditors and begin again. It's criminal.
Mommabear
Registered Shopper
We're not talking a couple of million here either, which would be bad...... but 68m!!!!!!!!????
Dave
Still just a Pleb!
Whatever the real amount is - if the CVA goes through and is accepted, the debt is wiped out and hey presto they can start the ball rolling again. All for the creditors accepting 1% would be a shame. I would not accept 1% of what is owed to me, then expect them to continue! I hope getting offered 1% is worth a no vote, and the company goes under. It's the staff that will suffer for the bad management style.
I read that the bulk of the debt is fines for contractual breaches, so not exactly real debt, as in money owed for stock supplied or work done.....if that is the case then the votes for those large amounts could swing it and the small guy who is owed maybe tens of thousands loses out
I think the decision on whether the people owed the money will accept a low % in the pound will hinge on assets owned by Sit up, If I knew I was in trouble & was going to be applying for a CVA in the near future I would sell most my assets or move it to the parent companies books and then mostly sell goods direct from the manufacturer for a %. This way even if you go bankrupt they can't get blood out of a stone... it happens all the time on that TV show the Sheriffs are coming.
Price Plunge
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To be fair, if a group of managers had stripped the company of most of its assets and plundered the rest (including its 'reputation') then promptly departed, why should any of the company's current management and/or employees lose their jobs simply because of that? The former managers should in theory be tracked down and held account for their actions, but in the absence of such accountablity a CVA is perhaps the only option they can take at present, and the 1% offer could be the best they're capable of without resorting to a wholesale asset strip (as in losing one Freeview channel slot) that would most likely prevent the company from successfully rebuilding its business model.
(Of course that ignores the company's public face, namely its sales outlets and primary sales techniques of which reform was forced upon it from outside sources, but that again can be blamed upon certain people within the management team at that point for not being sufficiently compliance-aware and/or not following compliance orders.)
So it's up to the creditors to decide whether or not Sit-up can rebuild its business whilst essentially blindfolded and with its hands tied behind its back. My opinion is that Sit-up haven't done anywhere near enough to prove that they can at all make a decent profit within five years, and their most valuable fixed assets (namely the TV channels) would raise millions of pounds on the open market in a short space of time even if creditors still won't get all of their money back by any means.
Therefore it's a gamble of either waiting for Sit-up to gradually restore its reputation for long term profits or a fire sale that could raise (for example) 60% of the missing assets that could still leave creditors being something like 40% out of pocket but that's still a big improvement over being 98% out of pocket in the short term.
Do they feel lucky, I wonder?
If they do succeed with the CVA then the business can definitely be profitable from now on, any fool can start a business with zero debt and zero set up costs, a warehouse full of stock and a clean slate, it is easy to make money in that situation.
The new format means VERY low costs need to be involved, they can lose a lot of staff, buying teams etc if they are only showing a few products a day on loop, they can use more VT's and pre-records, they have already lost the assistants and half the presenters, get down to one camera per channel,plus a lot of the admin, HR , merchandisers etc would no longer be required. As most products would be shipped from suppliers direct there is little need for warehousing space.
Add to this the massive margins products are now being sold at and it really is not hard to make a profit.
None of this of course helps the current creditors, who stand to gain nothing even if the company starts making money again.
The new format means VERY low costs need to be involved, they can lose a lot of staff, buying teams etc if they are only showing a few products a day on loop, they can use more VT's and pre-records, they have already lost the assistants and half the presenters, get down to one camera per channel,plus a lot of the admin, HR , merchandisers etc would no longer be required. As most products would be shipped from suppliers direct there is little need for warehousing space.
Add to this the massive margins products are now being sold at and it really is not hard to make a profit.
None of this of course helps the current creditors, who stand to gain nothing even if the company starts making money again.
If they don't accept and they go bankrupt that doesn't mean the creditors are going to see any more money. If the chinese suppliers don't accept, they will be losing a lot of their custom so they are probably better off accepting it.
