Mccoll's Retail Share Discussion Threads

[pwhite73] 11/5/2022 13:09

supercity - I don't think anybody is trying to convince anybody of anything. Most if not all of us have invested in shares that have been suspended and never came back so lets not kid ourselves here. All I'm saying is that each suspension has to be treated on its own merits. The government changed the insolvency laws last year to prevent the type of administration stitch ups that had been going on in the past. Like wiping out shareholders for the benefit of secured creditors who may have been instrumental in the demise of the company. This is what the administrators have to look at, why did the company collapse?

45% of McColl's shareholders are institutions and wealthy ones too (see link) was a rescue package ever put to them or had McColl's and Morrisons been engineering this collapse months in advance so Morrisons could pick up McColl's on the cheap. Asda also threw their hat into the ring why? if McColl's was going down the Swanee.

[loganair] 11/5/2022 12:50

Super - I 100% concur with what you're saying.

[supercity] 11/5/2022 12:24

Shareholders are entitled to nothing - its very naïve to think otherwise.If they had bid for the company shareholders might have benefitted - they didn't, they waited for administration.Posters can keep trying to convince themselves different but the shares will never come back to the market and are now worth zero.

[kinwah] 11/5/2022 09:34

Shane, under TUPE transfers, jobs are guaranteed for 30 days - no longer. However employment is regarded as being continuous so long serving colleagues would still be entitled to their sizeable redundancy benefits. Morrisons obviously need to review the situation and consult with those employees who will no longer be needed. By taking all the employees Morrisons saved the administrator paying out millions in severance costs. This will be partly reflected in the price paid for the business which will be revealed in the Administrators report to come around the time of the Jubilee bank holiday.

[pwhite73] 11/5/2022 08:58

RST2020 - The difference about this administration is that it is pre pack with the buyer being cash rich. The administrators look for the best solution for all stakeholders. The shareholders are also stakeholders. What you are presuming here is that the administrators have a limited cash pot in which to distribute funds. I don't believe this is the case. McColl's simply had a cash flow problem that's all. It needed more time to service its debts, time the creditors were not prepared to give probably including Morrisons as well.

At the interims to 30/06/2021 McColl's assets were £561 million. More than what the secured creditors (the banks) were owed for we know Morrisons were the largest creditor owed £130 million in stock.

Morrisons the largest creditor stepped in and refinanced McColl's. There is no evidence of assets having to be sold to clear the debt. Its a question of shareholders waiting to see what's in the administrators proposal. Personally I would not completely write off the shares yet or the listing for that matter.

All of this stuff about secured creditors first, unsecured creditors then shareholders is out of date and in reality more fluid than that. Shareholders can also be secured creditors, and unsecured creditors at the same time. Secured creditors can also be unsecured creditors as well. That's the role of the administrators to find the best solution the keep the company afloat first and foremost. Part of this solution might be to tap the shareholders for more money.

[flc] 11/5/2022 08:46

Perhaps time to move on, the party is over the lights are out for good. S/holders never get a penny following administration, that's it.

[mrblueface] 11/5/2022 08:42

Shareholders been mugged off PMSL

[monte1] 11/5/2022 08:27

In summary, and in the Scotch vernacular, shareholders are ‘on tae plums’

[rookieswingtrader2020] 11/5/2022 08:27

PWhite73 - The unsecured creditors are owed money. The shareholders are not owed anything.In what world could the administrator (whose very job it is to do the best that can be done to pay off company's debts with the company's limited number of assets) start doling out money to people who aren't even owed any, when there's not enough to go around for those who are owed money?

[monte1] 11/5/2022 08:26

Customers who have a valid claim against a company are hardly in the same position as shareholders who are clearly viewed as having taken an informed risk when investing in a Company’s shares.

[pwhite73] 11/5/2022 08:21

In reality the hierarchy of creditors is more fluid than the rigidity of the Insolvency Act 1986. If you really want to know where its at follow the case of Amigo.

Amigo put forward a scheme of arrangement to service its debts and advised if it was not accepted by all parties it would be left with no choice but to file for insolvency and call in the administrators. Of course such action would put the secured creditors at the top of the pecking order. The FCA appealed against the scheme of arrangement and the High Court blocked it. Furthermore the High Court effectively blocked Amigo from filing for insolvency so protecting the unsecured creditors. In this case the High Court took the view that the unsecured creditors meaning Amigo's thousands of ordinary customers should take precedent over its secured creditors who financed Amigo's dodgy loan schemes in the first place.

[monte1] 11/5/2022 07:47

The insolvency rules 2016 do not fundamentally change the ranking order or hierarchy of creditors as laid down in the 1896 Act, other than HMRC have moved up to a position of secondary preferred creditors.

[pwhite73] 11/5/2022 07:34

The Insolvency Rules 2016 will come into force on 6 April 2017. This article highlights some of the main areas of change.

The long awaited Insolvency Rules 2016 (the “2016 Rules”) were laid before Parliament on 25 October 2016, and will come into force on 6 April 2017. The Insolvency Rules 1986 (the “1986 Rules”) and all amending legislation will be repealed. The 2016 Rules aim to:

consolidate the 1986 Rules and subsequent amendments;

restructure and modernise the 1986 Rules;

reflect modern business practice and increase efficiency; and

implement policy changes introduced by primary legislation.

[rookieswingtrader2020] 11/5/2022 07:34

"The administrators can part compensate the unsecured creditors and still leave a few crumbs for the shareholders" - Nonsense.

[rookieswingtrader2020] 11/5/2022 07:32

I have never before heard it suggested that there is "no pecking order" when it comes to compensation in the event of insolvency; this is a first. Of course there is a pecking order. In some agreements, for example inter-creditor agreements, it is called a "waterfall".

[monte1] 11/5/2022 07:21

Who gets paid first in an administration?

The Insolvency Act 1986 sets out the order of payments where a company enters administration. As a company enters a formal insolvency process, each level of creditors is paid what they are owed, with any leftover funds then moved on and allocated to the next level of creditors. This process continues until there are no longer any funds left.

Funds are established through the sale of assets, as well as possible restructuring of a company to realise as many assets as possible. Creditors are ranked in the following terms:

The fees and costs of the Administrator
All secured creditors that hold a fixed charge (usually property or stock debts)
Preferential creditors
Secured creditors holding a floating charge
All unsecured creditors
Shareholders of the company
The appointed Insolvency Practitioner will first take fees for the process of administration that they have undertaken- those creditors who hold title over a business asset will be next to be paid from the pot.

Preferential creditors then includes employees seeking wage arrears and holiday pay owed. Ordinarily, employees will claim via the Redundancy Payments Service who will in turn, submit a claim to the approved administrator. Secured Creditors are then entitled to receive money from the net property of the company.

Unsecured creditors, such as suppliers, contractors, customers, HMRC and some staff members are paid next, finishing with shareholders.

[pwhite73] 11/5/2022 07:16

ShaneJay74 - The security of jobs at McColl's has nothing to do with the pre-pack administration. As someone else posted earlier over the next 12 months Morrisons like any other retailer would take stock of the overall UK economy and decide what's best for the business going forward. Morrison's own staff could face redundancies as could the staff at Asda, Sainsbury's or Waitrose. The pre-pack is not a precursor for redundancies. Alternatively if the economy picks up and footfall rises Morrisons could employ even more staff at McColl's and their own stores.

[mrblueface] 11/5/2022 07:12

I hope all staff get zero hours contracts. I have emailed Morrisons head office to suggest this as a way to cut costs PMSL

[shanejay74] 11/5/2022 06:46

Are the colleagues 100% safe in there Jobs for the next 12months or are Morrisons going to do the dirty and recontract everyone to lower contracts

[pwhite73] 11/5/2022 06:35

loganair - "If the Unsecured creditors are not paid in full as is suggested, then there is no money for the shareholders as shareholders come behind unsecured creditors."

This is simply not true. There is no pecking order when it comes to compensation. The reason why secured creditors are paid first is because secured creditors cannot be forced to agree to any proposals by the administrators whereas the administrators that are officers of the High Court can force unsecured creditors to accept a solution they consider best for all stakeholders. No pre pack administration, administration or CVA can take place without the agreement of the secured creditors.

The administrators can part compensate the unsecured creditors and still leave a few crumbs for the shareholders whereas the secured creditors can block any payment to shareholders if their debts are not settled in full.

[loganair] 10/5/2022 19:52

If the Unsecured creditors are not paid in full as is suggested, then there is no money for the shareholders as shareholders come behind unsecured creditors.

[kinwah] 10/5/2022 19:10

PWhite, I believe the posting on the LSE board. "We will be issuing the Joint Administrator's Proposals in the coming weeks which will contain details regarding any potential return to Shareholders." This is standard stuff but has to be seen in context. The only thing that matters is the monies that are available for the unsecured creditors. Rumours are that there is some but not enough for them to be paid in full. If they get paid out 100% then there will potentially be a distribution to shareholders. But my guesstimate is that there will be an insufficiency of tens of millions of pounds to the unsecured creditors. As regards the employee share ownership schemes, it's not an area I know well but any shares owned by employees are equally worthless as those owned by any other shareholder. Money in share schemes not yet invested in shares may well be recoverable but it will depend on the small print. Anyway it will take 2-3 weeks for the administrator's proposals to be filed at Companies House. If there is not enough money to pay off all the unsecured creditors then I doubt shareholders will even get a mention in the proposals.