Cargo bike delivery company Pedal Me goes into administration after failing to reach agreement with HMRC over debts

brooksby wrote:

I had thought that phoenixing a business like that was frowned upon. Putting the company into administration because it can't pay its debts while at the same time selling off everything that might have been used to paid those debts?

The money paid to the administrators for the assets will be used to pay off the debts, seems as though the company has been given plenty of time to prove that they could use those assets to create funds to repay their debts and has failed to do so.

Interesting...

I worked with Ben for about 4 years (not with PedalMe) and just as he started up his business. He had drive and determination. But, my word, was he chaotic and unorganised. He really couldn't organise 'a piss up in a brewery'. 

Utter rubbish. Pedlame has never amde a penny of profit and has to date lost almost £3m. They owed HMRC in Feb23 so a year ago almost £500k in unpaid employment tax. Staggering mismanganemtn for which Ben and his fellow idiots should be struck off. Thats out money he is wasting. 

Those accounts are not pretty reading - funding the cashflow by building up creditors and bank loans.

HMRC follow instructions of the government, not the will of the people. That would need PR, not FPTP. So putting responsibilty on to the public as a whole is somewhat disingenuous.

Given the size of the cuts the government made to the active travel budget last year, I'd say they can afford to take the hit of PedalMe's unpaid tax bill.

Perhaps it's a bit like a reverse stealth tax, leaving debts in lieu of active travel funding?!

Global Nomad wrote:

Just to balance all the criticisms of the business model - HMRC i.e the public/you, have allowed a business to go into administration and not repay its debts, that then is immediately bought out by existing shareholders, which clears all debts and carry on as if nothing happened with the same business model staff and assets.....

The only loosers here are you and me as tax payers.

Allowing a business to go into administration does not mean that it doesn't have to repay its debts, it just gives some protection from legal action whilst the administrator decides on the best course of action. In this case the assets of the business have been bought from the administrator, who will use any derived income from the sale to pay off the tax owing, or a portion of it. It's difficult to say whether that's a good deal without seeing the amount of debt owed and the amount raised from the sale of assets, but although it's clearly not a desirable situation for any of the parties it may be the only way the taxpayer can receive any of the monies owing.

Not necessarily. HMRC are preferred creditors, so they will likely get at least some of what they're owed. We'll find out more in due course when the liquidator's report is posted on Companies House.

Thats not how an admin works. 

Global Nomad wrote:

Just to balance all the criticisms of the business model - HMRC i.e the public/you, have allowed a business to go into administration and not repay its debts, that then is immediately bought out by existing shareholders, which clears all debts and carry on as if nothing happened with the same business model staff and assets.....

The only loosers here are you and me as tax payers.

this business cannot manage it's debts, the administrators step in to sell their assets (presumably to the highest bidder) the funds generated from that sale pay the existing creditors (HMRC first, shareholders last)

What difference to HMRC does it make if the assets are bought by tyhe previous owners or someone else?

But I have to wonder

1) where did the existing management get the funds to buy the assets

2) why do they think they can make a profit now, but not before? 

That's basically it, yeah

No. Depending on what was paid for these assets and whether there were other secured lenders on the failed Co, HMRC will get the cash  - which is why they have chosen thos route. im no fan of HMRC but Ben and Friends are pure fantasists and HMRc would have seen this from their various promises - which they alwasy failed to keep. Rubbish biz and this new version wont last long. 

....and why did they owe the tax man money? That would appear to suggest poor management's to blame. Rule 1: never loose money; Rule 2: always pay the tax man; Rule 3: never forget rules 1&2.

Chronic management.

No need to wonder, it's reported in the article. Substantial debts to HMRC, and unable to reach an agreement for repayment. That level of debt made it difficult to raise further investment, despite improving margins. 

.

Who the fuck invests in a company that plans to create a debt with HMRC?

don simon fbpe wrote:

Who the fuck invests in a company that plans to create a debt with HMRC?

Creating debts or a liability with HMRC is part of doing business, it's paying it on time that is the crucial thing. The latter is clearly what went wrong, which is what you appeared to be wondering.

I'm wondering how an unviable company ever got off the ground.

Because some business exploit buzz words and slogans like "Going Green" and "Green Agenda" , "Great for the environment"  or "Zero Emissions" to curry favor with the government or other big businesses which they wish to get in bed with. All of a sudden they get a huge cash injection of a few million to invest into the business.

I mean as a business alone. It wasnt a terrible idea to use cycling infrastructure for small deliveries when roads these days are quite heavily congested. There is merit behind the whole idea.

Perhaps someone should put a business plan together to see if it's viable.

It wasn't unviable. But like many business it got hit hard by the pandemic and had to take on a lot of debt. Then the interest rates on that debt went through the roof and the cost of servicing became too much to bear.