22.02.2012

Crane company warns MP

UK crane rental company Bryn Thomas has written to Liverpool member of parliament Luciana Berger calling on her to “stop misrepresenting it by using it as a case study for a campaign she is running to change the law related to ‘phoenix companies’.”

The company insists that her campaign facts are wrong. Earlier this month Berger tabled a ten minute rule bill aimed at preventing companies going into administration to avoid penalties following a serious accident, she used Flint based Bryn Thomas Crane Hire as an example after the company filed a pre-pack administration in 2010, claiming that it did so to ”avoid punishment”.

Bryn Thomas finance director Derek Hook said: “the administration the firm entered into in January 2011 was legitimate and unavoidable. The company secretary and its administrator detailed the financial pressures the firm was under, as a result of the recession, at Liverpool Crown Court and these were accepted as genuine by both the HSE and the Judge.”

Hook added “Ms Berger’s use of Bryn Thomas Crane Hire in her publicity is therefore ill informed and inaccurate and her campaign is endangering more than 40 jobs at the business which generates more than £2.5 million for the local economy each year.”

A further statement from the company is published in full below:
“Bryn Thomas Cranes Limited wishes to clarify the position regarding the previous company, Bryn Thomas Crane Hire Limited, following a series of misleading reports generated by Ms Berger’s campaign. We have written to Ms Berger to ensure she has the full facts and can see our administration was genuine. We have included a letter from our administrator BDO explaining the background to the company’s finances which resulted in a pre-pack administration in January 2011. This independent letter shows the financial pressures the company was under at the time. These pressures had built up from 2008 when the credit crisis began. Between 2008 and 2010 the company was hit by a perfect storm of reduced bank lending, bad debts and a massive slowdown in the construction industry. These are the reasons for the administration - not as a means of avoiding punishment that was due to be given in the court case following the tragic death of Richard Mark Thornton in 2007. As stated the Judge and HSE accepted this at the court case.”

Vertikal Comment

We are sure that the economic facts would have justified the Bryn Thomas administration exactly as it claims. Although the fact that it was facing a serious fine, could not have but influenced its decision at some level or other.

Bryn Thomas used the law in a perfectly legal way to allow it to restructure and put it into a stronger financial position and thus better able to survive the on-going slow down. There is no doubt about this at all.

Our issue is with the law itself, we believe that being able to organise an administration that completely sidesteps responsibilities to creditors is wrong. Being able to do this in advance and on an exclusive basis - without giving any other party a chance to arrange a more advantageous restructuring - is even worse and completely distorts the market. There may be companies today that are struggling to pay their debts, with their efforts exasperated by having to compete with other companies that have shed their responsibilities.

The American Chapter 11 process is far from perfect, but it does offer creditors more scope, it leaves managers in charge of the business– let’s face it administrators make the worst managers – and it gives others a chance to offer a better restructuring deal. If I am not mistaken it also offers no protection at all against law suits such as the one that Berger claims Bryn Thomas avoided.

It is time for the law to be changed, in order to both better protect jobs, offer a fairer deal to creditors and to be fair to competitors that run their businesses more carefully.