Highland Airways - the final outcome
The BBC report on the final financial position of Highland Airways is a bit confused and unclear, but some obvious conclusions can still be drawn from the situation.
It appears that the company owed a total of £3.2m of which £1.13m is to unsecured creditors.
It appears from the report that there was further debt of £2m (including a £1.2m overdraft) which was secured; which is to say that it will be repaid from the sale of assets etc.
This will obviously have a huge impact on some of these firms, and a loss of £50,000 for Argyll & Bute will also be painful.
The plug was pulled by the Inland Revenue over unpaid PAYE liabilities, and at the time a lot of politicians were lambasting the Inland Revenue for threatening to do so.
The simple fact is that the Inland Revenue - through it's business support scheme - is helping to give time to pay to lots of individuals and businesses affected by the recession. BUT it is also propping up some business that are insolvent, and where further debts are being run up, which in turn could bring down other businesses when the crash actually happens.
The business support scheme is excellent, but it is not a cure-all; nor is it something that a business should rely on for more than a few months. Above all, it is not cost-free. Just how much extra did the tax-payer lose by giving the extra time to the company to renegotiate its funding streams?
This kind of support - and the calls for unqualified funding from politicians - helps no-one, and it would be much better for this to be more accurately targeted on business that can and will survive, rather than those which are insolvent. It's never a perfect science, but in this case it is clear to me that the Inland Revenue acted properly to safeguard the public purse and other creditors and the political energy should have been directed earlier and towards turning around the company before the collapse became inevitable. That in itself may not have been successful, but it would certainly have been more constructive.
It appears that the company owed a total of £3.2m of which £1.13m is to unsecured creditors.
It appears from the report that there was further debt of £2m (including a £1.2m overdraft) which was secured; which is to say that it will be repaid from the sale of assets etc.
This will obviously have a huge impact on some of these firms, and a loss of £50,000 for Argyll & Bute will also be painful.
The plug was pulled by the Inland Revenue over unpaid PAYE liabilities, and at the time a lot of politicians were lambasting the Inland Revenue for threatening to do so.
The simple fact is that the Inland Revenue - through it's business support scheme - is helping to give time to pay to lots of individuals and businesses affected by the recession. BUT it is also propping up some business that are insolvent, and where further debts are being run up, which in turn could bring down other businesses when the crash actually happens.
The business support scheme is excellent, but it is not a cure-all; nor is it something that a business should rely on for more than a few months. Above all, it is not cost-free. Just how much extra did the tax-payer lose by giving the extra time to the company to renegotiate its funding streams?
This kind of support - and the calls for unqualified funding from politicians - helps no-one, and it would be much better for this to be more accurately targeted on business that can and will survive, rather than those which are insolvent. It's never a perfect science, but in this case it is clear to me that the Inland Revenue acted properly to safeguard the public purse and other creditors and the political energy should have been directed earlier and towards turning around the company before the collapse became inevitable. That in itself may not have been successful, but it would certainly have been more constructive.
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