From News Thump:
A HMV spokesperson said, "It’s an unfortunate time for everyone associated with the brand, but rest assured that by using the web we have secured a much better deal than using a bricks and mortar administrator. Had we have gone the traditional route we’d just be paying for their swanky office in a nice, central location. But we’re no mugs. The Internet really is a wonderful place to conduct business."
From The Daily Mail:
A stubborn grandmother has forced a bank to reconsider plans to repossess her son's* enormous stately house - after she staged a three-day sit-in in its library. Feisty pensioner Stella Bond camped out in the panelled room at £2m Halswell House, near Bridgwater, Somerset, to stop security men repossessing 300-year-old Grade I-listed country pile.
Mrs Bond, 78, insisted she would not budge from the stand-off until Citi Private Banking provided written legal evidence that it had the legal right to claim the property...
Despite Mrs Bond's bold sit-in, the future of the sprawling property remains unclear. Her son Graham Bond bought Halswell House for £1.94 million and spent £800,000 restoring it as an upmarket wedding venue. At one time helicopters were almost as frequent arrivals as cars as well-heeled couples flew in wedding guests but the house also hit the headlines when it inadvertently staged a swingers' party.
Mr Bond's company, Dunster Properties Ltd, has run into financial problems and insolvency specialists Moorfields has confirmed that Robert Rick and Simon Thomas have been appointed administrators and are looking to sell the house which has temporarily closed as a venue.
* It's not "her son's" in any way shape or form, it belongs to an insolvent company which is in administration and therefore actually she is trespassing. Or possibly Messrs Rick and Thomas have been appointed adminstrators of the land and buildings (not of the company) in which case they can chuck her out for any old reason they like, it's not even her main residence or anything.
Officers Club collapses into administration again
Easy Living Furniture in administration
400 jobs under threat as off-licence Oddbins heads for administration
Daily Sport and Sunday Sport owner in administration
‘New Woolies’ is latest High St chain to fail
Mothercare reveals more UK woes
Dixons issues second profit warning
From yesterday's Daily Mirror:
BNP leader Nick Griffin could lose Euro seat as party faces bankruptcy... He is among top officials thought to be personally liable for the racist group's £700,000 debts - which it admits it cannot pay.
The BNP's money woes were laid bare by ex-chief fundraiser James Dowson in a letter seen by the Mirror. Mr Dowson told North-East printers who produced its newsletter that the finances were like "a shipwreck.. Cash is in very short supply... [it is] impossible for the BNP and persons associated with it to pay outstanding bills in anything like a normal timescale, if indeed at all." The "very grave" crisis meant it could only pay 20% of what it owed, he added.
Its money problems have been made worse by having to settle a legal row after illegally using Marmite in an ad and the cost of fighting the Equality and Human Rights Commission over its whites-only admission rules. Meanwhile, electoral chiefs are still probing its 2008 accounts as they contain gaps that breach the law...
A lot of people don't like the idea of banks being expected to sort themselves out via debt-for-equity swaps because they think that somehow debtholders are being 'forced' to lose money. Nonsense. The only serious alternative is government bail-outs, whereby the taxpayer is forced to give the banks money.
The good news is, if you just leave it to market forces, then debt-for-equity swaps are what will happen anyway, even though these swaps come in an infinite number of guises. From BusinessWeek:
RBS and its National Westminster Bank Plc unit offered to buy back some dollar-denominated preference shares with a face value of $14.3 billion, paying as little as 52 cents on the dollar, the Edinburgh-based lender said in a statement...
D'you see that? Those preference shares (halfway between shares and bonds - so the same principles apply) are trading at 52p in the £1. The pref holders have already lost 48% of their initial investment - provided they are offered a choice of 52p in cash; or ordinary shares or new bonds with a market value of 52p, then they shouldn't be too bothered.
The gimmick is that the old pref's had a nominal value of £1 but the cash paid out, or new shares or debts issued have a nominal value of 52p, so the bank can book the difference of 48p as a gain. It's not really a gain, it's just losses which have been crystallised in the hands of the bondholders, which have to be removed from the bank's accounts to prevent double-counting.
RBS, which is 84 percent owned by the government after it arranged a 45.5 billion-pound bailout of the lender, also said it converted $935 million of its 9.118 percent preference shares into ordinary stock. Investors in $548 million of the shares opted to receive a cash payout rather than common stock...
Again, d'you see the key word there - 'opted'?
RBS said it decided not to follow Lloyds TSB Group Plc in issuing contingent capital notes because it saw “limited benefits from doing so at this time...”
Which is a pity - those CoCo's are like rolling debt-for-equity swaps, something that Denis Cooper and I once dreamed up during an email exchange (not having realised that they already existed).
From The Daily Express:
BORROWERS could be protected from losing their home if they fall behind on credit card or loan payments, under new proposals from the Ministry of Justice.
It suggested setting a minimum level of debt before a court can order the sale of a home. Under the current system, property owners unable to pay unsecured debts such as credit or store cards can have a “charging order” placed against their property to secure the debts. In a small number of cases a judge can decide the property must be sold to settle the debt.
Justice Minister Bridget Prentice said: “We know only a small proportion of charging orders results in the property being sold, so it’s rare for a debtor to lose their home because of things such as unpaid credit cards. But it’s important that the Government considers whether there is a risk that the numbers will increase due to the current economic situation. We’re asking for views on whether a minimum threshold should be introduced in law, to prevent this from occurring.”
There's been a two month gap since part 30 of this series, which looks at the measure that our government is taking to prop up the house price bubble (rather too successfully for my liking, but hey),, but that story is a corker.
It also illustrates yet again the Home-Owner-Ist* approach to classifying debt: mortgage debt is responsible and credit card debt is irresponsible; but a homeowner with unpayable credit card debt still ranks well above a non-homeowner with similar debts. And who's paying for all this? The owners of the nationalised banks, maybe?
PS, not all homeowners are Home-Owner-Ists.
Story via HPWatcher at HPC.
Pop over to Mummy Longlegs for more. Don't let me spoil the surprise/disappointment*.
* Delete as appropriate.
They slip in their subliminal messages everywhere, for example, in today's Telegraph:
A total of 134,142 people went bankrupt or took out an Individual Voluntary Arrangement (IVA) or Debt Relief Order during the year, according to the Insolvency Service... The figure dwarfed the previous record of 107,288 personal insolvencies set in 2006, with insolvency practitioners estimating this level had already been passed by October last year...
Chris Nutting, director of personal insolvency at KPMG, the accountancy firm, said: “Our research shows that over 223 people a day are choosing to petition for their own bankruptcy. The figures show that there are still many people experiencing serious financial difficulties, despite record low interest rates. While Britain is technically out of recession, the harsh reality is that many people are still living beyond their means. Lessons from history show that personal insolvencies will continue to rise after the recession finally ends and for some time to come."
Ho hum.
1. Ignoring a few people who maxed out on store cards and credit cards (and there will always be a few, tough shit, one man's Premier League club is another woman's wardrobe full of designer shoes), the main reason why people are struggling is because they are lumbered with huge mortgages, and/or because they have lost their jobs (in most cases, through no fault of their own).
2. Now, by and large, the people with the biggest mortgages are those who bought in the last few years when prices were ridiculously high, so they probably bought a much smaller property than they would have done if they'd bought more than fifteen years ago (when housing was, let's be honest, reasonably cheap).
3. Ergo, in material terms, these recent purchasers are not in any way "living the high life", they have been forced to accept a lower standard of living by the incumbents, the Home-Owner-Ists, who by and large have smaller or no mortgages. So the established Home-Owner-Ists can sit their smugly on their paper capital gains and boast about how little debt they have, as opposed to the arrivistes.
4. In their own minds, of course, the recent purchasers saddled with colossal debts are 'responsible borrowers' who wanted to 'invest in bricks and mortar to secure their own future', i.e. suckers who bought into the Home-Owner-Ist dream and who are now being derided as 'reckless borrowers' by the more established Home-Owner-Ists.
5. As to 'record low interest rates', as we well know, you only qualify for these if you have a loan-to-value of only 60% or 75%. The effective rate for the extra borrowings to take you up to 90% loan-to-value or more is above fifteen per cent. This gives the established Home-Owner-Ists all the more reason to be smug.
Disclaimer: "homeowner" is not synonymous with "Hone-Owner-Ist". There's nothing wrong with owning - or wanting to own - your own home, that's our culture.
I use "Home-Owner-Ism" to refer to people who insist that "prices can only go up" (and if they are not going up then the government should do something about it); people who demand that banks treat mortgage borrowers in arrears with kid gloves; the NIMBYs; a lot of buy-to-letters; people who insist that Council Tax should go down and Business Rates are unfair because they 'do not relate to ability to pay'; people who wail on about the hallowed green belt (without actually understanding what it is); people who think that they have earned their paper capital gains on housing; people who think that increasing house prices means increasing wealth; and who think that selling off the council houses was a good idea.
Adam Collyer left a comment here as follows:
OK. I'll try again. Why is your idea [that BA issues new shares to its pension funds to settle the pension fund deficit] better than BA doing a £4 billion rights issue to meet its pension deficit?
That is another option that is well worth considering, of course, if BA's shareholders are up for it, a variant of which I have recommended myself on more than one occasion. However that wasn't the point of the original post, the point was to highlight that BA and its pension funds, taken together, are in fact a worker-owned "investment trust with an expensive hobby of running an airline" (as Lola put it).
I always find it helpful to look at the 'big picture' before worrying about solutions (sometimes there simply aren't any, and it's best to let the trade and assets go into new ownership and start again).
From FT Alphaville:
Nine UK building societies, including Nationwide, have been downgraded by Moody’s* – some by as much as four notches - amid concerns about their exposure to falling house prices and specialist mortgage loans. The ratings agency said it had made the cuts after conducting stress tests on how mutuals would perform against sharp falls of up to 60% in house prices**. Several societies, including Chelsea Building Society, may even challenge Moody’s on the downgrades.
* Don't forget that the ratings agencies were complicit in the credit/property price bubble by handing out triple-A ratings like confetti for all the 'mortgage back securities' that the banks and building societies were churning out.
** That's bearish, even by my standards. The full article in the FT itself refers to "a base case scenario of a 40 per cent fall in house prices from the peak of the boom", which seems 'about right'.
The first comment says it all:
About 3 years too late. I wonder if they will remember this in 15 years time when the housing market undergoes yet another round of overheating...
Good to see that my ideas are being taken seriously by HM Government: on the front page of today's FT I read this ...
Among the options in yesterday's consultation paper was an administration system for insolvent banks...The proposals would allow administrators to sort out problems more quickly ... An administrator could take over client accounts, with depositors given higher priority [than] creditors. "This new regime would mean depositors are insulated from a bank that has failed, greater compensation for them, and certainty their compensation can be paid out quickly," Mr Darling said.
You read it here first!
