Max

They didn’t answer the phone either.

Chris Lucas-Jones (JBW Bailiffs)

The phone’s switched off. She was in, just refused to open the door. All she’s done is made the situation worse for herself because her debt’s now going to go up.

Max

And what do you do; you just have to come back?

Chris Lucas-Jones

Yeah, we’ll keep coming back until one day the door’s open and basically we’ll just force the door in.

Max

Do you feel sorry for these people that you go and turn over?

Chris Lucas-Jones

These people we go and see they get quite a few letters sent to them so they’ve got prior warning of us turning up.

Andy Sababady (JBW Bailiffs)

If you’re going to go into business you’ve got to understand that it’s all about maths. If they’re failing then at some point you’re going to have to draw a line.

Max

So, next to say, I suppose, traffic wardens or tax men, you’re the people would least like to see you on the doorstep, aren’t they?

Andy Sababady

Umm, I don’t know, depends…

Max

Does it give you a complex?

Andy Sababady

Not at all, you’re there to do a job. The people you meet are not going to be hostile to you or the majority of them.

Max

In that case, why are you wearing a stab vest?

Chris Lucas-Jones

Because I usually deal with fines not business rates.

Max

Right. Have you both got one?

Andy Sababady

No, I haven’t.

Max

Oh great! Neither have I.

Max (commentary)

An hour later and another door with another claim. This time for over £3,000.

Again no answer but the bailiffs’ fees still go up.

Chris Lucas-Jones

They don’t get their mail very easily.

Max

So that mailbox is actually welded shut.

Chris Lucas-Jones

It’s empty.

Max

Looks like a dummy address; there’s no way of getting anything through that letterbox and yet again, nobody in.

Max (commentary)

Next it’s a debt of £4,500.

Chris Lucas-Jones

Thank you.

Max (commentary)

This time they were in but it’s only the debtor’s accountant’s office.

We were up there expecting to speak to somebody, we turned up with a camera crew obviously and they asked us to leave twice. They’re just about to finish now.

Max

What did they say?

Andy Sababady

Umm, it was a registered office so there’s not a lot we can do in there. We’ve got some details, potentially we could find, contact them.

Max (commentary)

I think today I was expecting a bit more action, some kick down doors or even just some shouting but clearly I’ve been watching too many episodes of The Sweeney. All we’ve met is two closed doors and a man who knows nothing about anything. But the bailiffs are still making money; it’s £24.50 for every letter they deliver. Those bailiffs they charge £60 per hour, per bailiff waiting time and just for that ugly white van to turn up is a £150.

Economist Vanessa Rossi feels it’s important to focus on how we pull ourselves out of a downturn.

Vanessa Rossi

We certainly should be looking for companies to survive this process. Unfortunately maybe a few will not but many will and we need those companies to work their way through this downturn and we need new ones to come in to provide us with that lift at the other end of this tunnel, the one that will pull us out of this recession and into the next upturn.

Max (commentary)

The last time we were actually in a recession in the early 90s, one sector did particularly well. The people appointed to manage failing businesses made hundreds of millions of pounds. Now with more and more companies going to the wall the outlook for business looks bad unless of course you work in insolvency.

Chris Morris is one of the country’s leading insolvency practitioners; he is the person appointed by the court to either administer or liquidate failed companies.

Chris Morris

Being an administrator I’m, I’m involved in all sorts of different businesses. I’ve been involved in an undertaker, lemonade factory, building, shoe manufacturing. I’ve wound up a bank, large bank, BCCI, that is part of the skill of an administrator to be able to adapt to the particular industry he’s involved in.

Max (commentary)

He’s off to Alphasteel, a steel mill near Newport in Wales, which has gone bust with debts of over £150 million pounds and the loss of over 350 jobs.

News Reporter

They came to find some certainty about their future. Up until Christmas more than 350 of them worked here at the Alphasteel factory. Now a skeleton staff remains while the receivers look for a buyer. And for those out of work it’s a difficult time

Caption BBC News, 5th January 2008

Alphasteel worker 1

I try to put on a happy face for my daughter. So I mean I feel like I ain’t a man anymore because I’m letting her down. I tried my best to celebrate Christmas and New Year for her but it’s, it’s, it’s just hard, do you know what I mean?

Alphasteel worker 2

I’m on the job, down the job centre searching like many of the men who worked for Alphasteel we’re not experts in anything else, bar steel making.

Chris Morris

Basically we take possession for everything the company owns, preserve it, try and turn it into cash and then share the money out, err, amongst the creditors in the priorities which they’re entitled to. Having been paid ourselves on the way through as well.

Max (commentary)

The industry rate for administrators is around £200-300 per hour with possible bonuses.

On arrival at Alphasteel, site manager Richard Steed shows Chris and his team around.

Chris Morris

I am occasionally seen as the bogey man by people who are uninitiated. But, I think people are quite pleased to see us often.

It’s extremely pressurised and demanding, particularly at the beginning of an assignment, you can’t waste any time otherwise the assets will start to disappear.

Max (commentary)

Before they secured the site thieves broke in and even stole the metal gates.

Chris Morris

How many people worked here at the maximum?

Richard Steed

At its peak we had about 650 persons.

Chris Morris

And it ran seven days a week, 24 hours a day?

Richard Steed

Yeah, it ran 21 shifts in the steel plant, 21 shifts in the rod and bar mill and ten shifts in our hot strip mill.

Max (commentary)

Chris wants to find a buyer to take on the mill as a going concern.

Richard Steed

The first thing you miss is the heat and the noise of a very heavy, harsh process.

Chris Morris

Well let’s hope we can get this back up and running if we can.

Richard Steed

Exactly. Exactly. There’s a huge amount of interest from the past workforce to come back in and carry on where they left off really.

Chris Morris

Yeah, well, we’re doing our best.

Well, walking round here at the moment it’s rather a desolate scene. Fortunately the product is good, the workforce is excellent but the way the company was run incurred significant losses.

It would be nice to think that one day we could get all this back up and running again and get people back to work.

Max (commentary)

But, even if that happens, all the company’s affairs won’t be sorted for a couple more years, which means lucrative fees for Chris and his team for a while to come.

Vanessa Rossi

It’s a little bit like having a party, basically it’s great fun while it lasts. Unfortunately slowdowns do occur and if they turn into rather nasty affairs then the cleaning up process needs to start; it’s like the day after the party, somebody needs to come in and help out tidy this up. So, we go through a slow down, you tidying up, you’ve got your hangover from the party but then you move ahead again and you move out of it and in a couple of years time we’ll be back to partying.

Max (commentary)

Moving on from debt and insolvency I wanted to find out more about how to make money in a downturn.

Merryn Somerset Webb is the Editor of MoneyWeek magazine

Merryn Somerset Webb (Editor, MoneyWeek)

It’s hard to actually get rich during a recession but the first thing you can do is protect yourself and put the ingredients in place to get rich and that means getting hold of as much cash as you can and keeping it safe. So, cutting back on your spending, cutting back on some of your riskier investments and just keeping a pile of cash, then you’re ready.

Max

What, shoving it under the mattress?

Merryn Somerset Webb

Shoving it in a nice bank account. Under the mattress is kind of risky; what if your house gets repossessed?

Max

Why is cash crucial?

Merryn Somerset Webb

Cash is crucial because if you’ve got it you’re ready to pounce if an opportunity comes up because in a recession there’s always going to be opportunities; things are going to at some point be too cheap.

Merryn Somerset Webb

Actually a recession is not a bad time to start a business at all. You can keep your costs very low, you may be able to get a cheap lease on a building, you may be able to get staff much more cheaply than you would otherwise, you can get good stuff at a low price. If you can leverage that in starting a reasonable business but you can keep going during a recession, when the good times come you will be very much in the money.

Max (commentary)

This April has been the worst for retail sales since 1995. High street giants like Currys and Next are feeling the pinch and Dolcis has gone into receivership.

But the fall in consumer confidence has benefitted discount stores Primark, Lidl and Poundland, which have all reported substantial growth and one, Home Bargains, based in the North West saw its profits rise by 20 per cent in the last quarter.

Joe Morris

This is a typical store that we have, so, umm, one of the things we do at the start is always put some, some of the good new one-off lines, that, that we’re promoting at a particular time in the star buys so there’s always some good bargains to get the customer interested.

The strap line we have is ‘Top Brands, Bottom Prices’. Our whole strategy is about selling the best possible product at the lowest possible price. If we can’t sell it cheaper than everybody else we don’t sell it.

Max (commentary)

Home Bargain’s headquarters and central warehouse are based near Liverpool.

The business is run by the four Morris brothers. Joe is Operations Director.

Joe Morris

We have about 400 staff here. They are, we’re operating pretty much seven days a week, 24 hours a day and with the stores we have about four thousand staff in total.

Max (commentary)

And they’re doing so well they’re building a second depot for £35 million and taking on an extra 950 staff.

All part of a plan to extend the chain of 160 shops.

Joe Morris

We have a lot of standard lines but there are a lot of one-off lines. If a supplier has some distressed stock for whatever reason they’ve made too much, someone’s cancelled an order, the packaging has changed and the big supermarkets only want the latest packaging, well, we can take those products and we can clear them and, and provide a service.

Max (commentary)

Home Bargains is spreading south…to Stroud in Gloucestershire.

Joe Morris

The plans really are for us to grow to be a national retailer. At the moment we’re a regional retailer but our goal is to cover the whole of the UK so we get up to five, six hundred stores.

Max (commentary)

There’s a one-week turnaround. On Monday this site is totally empty. It’s due to open on Saturday.

Linda Kay is in charge.

Linda Kay

…if you’ve got any queries about what you’re doing. What’s going to happen this week is we’re going to be having deliveries on a daily basis. So we’re looking at two deliveries a day, which we need to get out. So it’s quite intense this week but I do hope you enjoy it.

Max (commentary)

Home Bargains acquired the Stroud site from another supermarket chain, capitalising on the falling price of property.

Joe Morris

Well, it’s tough on the retailer, there’s a lot of companies going, going bust, there’s a lot of retail property coming in, coming available so that will be a good opportunity for us, we see that as a great opportunity because we, you know, we are cash rich so, if opportunities come along we can take them quickly and we can react quickly.

Max (commentary)

This is exactly the advice that Merryn gave me; hold on to some cash so you can take advantage of a bargain.

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Content last updated: 17/06/2008

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