Learning from Recent Insolvencies: Why Commercial Debt Recovery Limits the Threat of Insolvency
In recent weeks, the insolvencies of renowned companies like Harland & Wolff, TGI Fridays and ISG Construction have sent shockwaves through the business world. These instances serve as powerful reminders of the importance of effective debt recovery practices in sustaining businesses and preventing financial crises. In this blog, we delve into the stories of these three iconic companies and explore Darcey Quigley’s involvement in these cases.
The Rise and Fall of Harland & Wolff:
Harland & Wolff is a historic shipyard with a rich legacy, potentially best known for building The Titanic and HMS Belfast. Last week the business announced they are going into administration due to a combination of financial mismanagement and escalating debts. The main difficulty with businesses in the shipbuilding industry, and the reason for so many insolvencies is it is a capital-intensive business, meaning you need to spend a lot of money before you can make any. This news of administration, although terrible, is not surprising, as the company was previously bought out of administration in 2019. Since the reincarnation of Harland & Wolff in 2019, it has struggled to become financially sound enough to sustain the operations it needed to tackle a major contract with the Royal Navy. They were unable to conjure enough capital to meet their ambitions to build three Royal Navy ships, so financial losses mounted, and the new government were unable to offer support. This was because there was “a very substantial risk that taxpayer money would be lost.” (BBC, 2024).
Having gone into administration twice in the last five years, the Darcey Quigley & Co team were aware of the businesses struggle to make payments. In 2022, our team recovered a debt from two entities within the Harland and Wolff Group. As our process is quick and efficient, we managed to recover the full payment for our client, however, at the same time, other creditors chose to use the court system to issue CCJs. Due to the lengthy process of the court system, these are still outstanding and as the company has now closed its doors, this money will not be paid. This is a great example of why commercial debt recovery should always be the first avenue to getting paid, as these four creditors could have more than likely been paid and avoided this huge financial loss. Once a business has gone into administration, debts cannot be recovered so it’s important to take timely action and understand who you are going into business with to mitigate risk and avoid unsecured creditors. We provide support with this through our digital partner, Know-it, which you can find out more about here.
TGI Fridays’ Financial Woes:
Last week, another household name announced its downfall, with TGI Fridays going into administration. A total of 87 of the restaurant’s chains have been put up for sale after the owners announced their struggles with debts and heavy losses. The hospitality industry has seen a 20% rise in insolvencies in the past year (The Caterer, 2024), and TGI’s claim their struggles stem from changes in customer preferences, as well as the financial strain from the pandemic that is still affecting the hospitality industry heavily.
Once again, the notification of administration of this business was not surprising to our team, as we recently retrieved payment for one of our clients, before the administration was announced. In early August, one of our clients had unpaid invoices from TGI Fridays and we managed to retrieve this debt for them plus all recovery costs and late payment interest. If struggling with unpaid invoices, it’s important to take action quickly and enlist the help of third-party debt recovery company even just for advice on when to hand over the debt. This client was quick to act and enlisted our help when the debt was relatively young – 90 days overdue – and we recommend not to wait any longer than this to get paid. In this case, the debtor had been unresponsive to our client, and it was due to our team’s investigation skills that we were able to track down the correct contact at TGI Fridays, who was able to secure the payment. It only took our team 3 days to get this resolved for our client. We understand that time is of the essence and the fact the insolvency has been announced only one month after getting our client paid, highlights this importance of time!
The Demise of ISG Group
The end of last week also saw the construction business, ISG Limited, closing its doors. The construction sector is rife with insolvency and accounted for 17% of all insolvencies in August 2024 (Creditsafe, 2024). The large construction firm and its 6 subsidiaries is the biggest casualty in the sector since the fall of Carillion in 2018 and the ripple effects of this closure has been felt by many. CEO of ISG Limited stated that the group’s trading and cash performance were impacted by legacy issues from previous contract losses. These losses have clearly severely impacted the businesses liquidity and has led to insolvency.
The insolvency of this business has sent shockwaves throughout the industry and those who have debts directly with ISG or any of its subsidiaries will be unable to recover these now the company is in administration. The importance of knowing your customer here is vital, as if you have contracts with anyone who has also worked with ISG, there is a risk of non-payment. It is therefore key that you take action now and contact the Darcey Quigley & Co team to ensure payment before any further businesses follow the same fate as ISG Limited.
These insolvencies all serve as clear reminders of the critical importance of commercial debt recovery in today’s competitive business landscape. If you have been affected by the closure of these businesses, or are looking to protect your business from any unpaid invoices, schedule a call with one of our friendly commercial debt specialists here or phone 01698 821 468.
Lynne is the Founder and CEO of Darcey Quigley & Co.
She is passionate and determined to help businesses get overdue invoices paid quickly.
Having worked within the credit management industry for over 27 years and ran UK leading commercial debt recovery specialists Darcey Quigley & Co for over 17 years, Lynne has helped businesses recover commercial debts from every continent across the globe.
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