Bank –cor-rupt

Because I have been very busy recently on money-earning work I have been unable to research future writing which I would usually share with you in my blogs. However I am hoping to get back to writing again in the next few days. My first task will be to complete the preparation of a novel called Bank-cor-rupt which is based on my own past unsatisfactory experiences with the banking industry. The following is the technical synopsis:-

Andrew Denbury owns a company called Gyroflow. He is called in to his bank one morning and told they are calling in the overdraft on which his business runs. He must repay nearly two hundred thousand pounds within twenty-four hours. Because he has signed a debenture, he has given the bank the power to appoint a receiver if he does not instantly pay back the money. The overdraft has been used to pay for materials, equipment and wages to produce hydraulic pumps which he is selling to customers who will take two or three months to honour the invoices he has rendered to them, so there is no hope of him having the cash to immediately settle the loan.

In desperation Andrew approaches his main suppliers who agree to delay asking for payment of their own invoices. He also arranges to take out a commercial mortgage on his house (which has a low existing mortgage) that will produce enough money to pay off the bank and provide working capital to continue trading. However this will take two or three weeks to put into effect and the bank tells him that it will not wait that long. That day they appoint a receiver take over the running of the company.

The receiver and his team of assistants turn up first thing next morning. Andrew has to sign a form handing over power to the receiver. If he refused to do so, English law would make him personally responsible for the debts of the company. He is told to personally leave the premises and his salary and other benefits are instantly terminated.

The receiver closes down production in the factory and dismisses all the employees. They are entitled to pay for work done, holiday pay and legal redundancy payments which they will get in the next few days. He tells all suppliers of goods that they won’t be paid. They can recover any unused materials still in the factory. They become unsecured creditors. The receiver also contacts the company’s customers and tells them they will get no more supplies. He demands immediate payment of all monies owed. However many of the valves are being supplied on long-term contracts and those customers refuse to pay because the delays and disruption caused by Gyroflow ceasing trading will cost them money. They also know the receiver won’t spend legal fees in trying to recover any money owed.

Although on paper Gyroflow is owed more than three hundred thousand pounds, because he cannot obtain immediate payment, the receiver reports to the bank that the company is insolvent and must either be liquidated or the assets sold to bring in money to pay the bank. They will expect to recover the shortfall by selling Andrew’s house or forcing a new mortgage on him. The bank has also bounced cheques to suppliers for about fifty thousand pounds which they had previously added to Gyroflow’s overdraft. Although this reduces his liability it gets him a very bad name with his suppliers who blame him for writing cheques which they believe he knows won’t be honoured.

A further problem is the 20-year lease on the factory. The premises is leased and the receiver tells the landlord he will not be paying any rent because he intends to close down the business. When the lease was signed, Andrew was required to sign a personal guarantee, so the landlord will now look to him to personally pay the rent until he can relet the factory. Unfortunately general economic conditions have declined, so it will probably not be possible to find another leasee willing to pay the £10,000 quarterly payments for the remaining seventeen years of the lease. The landlord tells Andrew he will expect him to pay any monies which he can’t get from a new company renting the factory. It could mean Andrew has a total liability of over a million pounds.

His next ordeal is the meeting of creditors when the people who are owed money by Gyroflow are permitted to question Andrew and the receiver over why the company has failed and whose fault is it. They want to know whether fraud or incompetence is involved. Some of the creditors are very upset and accuse Andrew of taking personal benefits from the business which caused its collapse. These false allegations make him even more unpopular.

Because this is fiction, Andrew is able to find a way out of the mess. But you will have to read the book to find out how he does it.



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