Judane

[Ghostrider]

^^ Typo aside, its a fair comment though, and kinda sums of the whole problem at hand.

 

By the nature of the game some enterprises the SDT invest in will go down, that's business. The problem seems to be that when they're dealing borderline investments that could as easily go either way, SSG and Judane being prime examples, there is no better monitoring or safeguards to the investment put in place that with "safer" ones. You get the distinct impression that the SDT were as ignorant of changes as they occured with both SSG and Judane as the rest of us, and were only brought up to speed so long after material facts had occured that there was nothing left to work with.

 

Surely in cases like SSG and Judane where the investment is in a company at the brink, or at least fast sliding towards it, and is intended as a "rescue" package, for the investment to be conditional on a member of the SDT staff to being in on any and all changes within the business as they happen, and contributing to any and all decisions taken about the business. If that member of staff was then required to report any issues of concern as they occured to the SDT office bearers, who in turn could convene a meeting of the trustees at short notice if necessary, any and all issues arising could be reacted to timeously (and hopefully appropriate and prudently).

 

The present concept, or at least what appears to be the present concept, of handing over a cheque to the directors of an already very ailing business and expecting them to work miracles, is, as SSG and Judane is adequate proof of IMHO, naive and unrealistic. "Rescue" package type investments are always going to see significant losses, but at least with someone from the SDT effectively sitting in on everything occuring with the business, and charged with at least protecting the SDT investment, there would be a fighting chance of success, without a safeguard of that kind we are just going to go on repeating the mistakes of SSG and Judane until the kitty only holds dust as far as I can see.

[swc123]

 

Surely in cases like SSG and Judane where the investment is in a company at the brink, or at least fast sliding towards it, and is intended as a "rescue" package, for the investment to be conditional on a member of the SDT staff to being in on any and all changes within the business as they happen, and contributing to any and all decisions taken about the business. If that member of staff was then required to report any issues of concern as they occured to the SDT office bearers, who in turn could convene a meeting of the trustees at short notice if necessary, any and all issues arising could be reacted to timeously (and hopefully appropriate and prudently).

 

The present concept, or at least what appears to be the present concept, of handing over a cheque to the directors of an already very ailing business and expecting them to work miracles, is, as SSG and Judane is adequate proof of IMHO, naive and unrealistic. "Rescue" package type investments are always going to see significant losses, but at least with someone from the SDT effectively sitting in on everything occuring with the business, and charged with at least protecting the SDT investment, there would be a fighting chance of success, without a safeguard of that kind we are just going to go on repeating the mistakes of SSG and Judane until the kitty only holds dust as far as I can see.

 

Going slightly off topic here, but in three recent examples the SIC/SDT has offered funding on the condition that a director has been appointed to the board of the organisation applying for the funding. Perhaps they are learning from past mistakes?

[icepick239]

What a stange individual you are icepick. I just don't get it, you seem to be very bullying in your comments generally and I think you are discredited by the nature and tone of what you say.

I am sorry Shoogler, that you (and others) may feel that way.

I'm forthright, I stand no crap, I allow for errors in others and as I make posts regularly, I too am prone to make the odd mistake every now and again

[Colin]

he problem seems to be that when they're dealing borderline investments that could as easily go either way, SSG and Judane being prime examples

 

I don't know much about SSG but the problem with that argument is that when they moved into the new factory Judane were not a 'borderline' investment. They were (and always had been) a profitable company with a full order book and were in dire need of larger premises.

 

Additionally, they also paid back more than £700k of the loans they got.

How 'good' does a business have to be to attract investment? Good enough, perhaps, that it doesn't need it?

[Ghostrider]

^^ Yes, that's as maybe, but that was 17 years ago. The problem is with the second investment of 6+ years ago, which it seems little if any has ever been paid back.

 

As best as I can recall, so I stand corrected if wrong on any point of detail, is that the original investment was to develop and expand a then viable company. That investment was largely successful as it did what it said on the tin for around 10 years. The second investment of 6+ years ago was described as "working capital", ie. their cash flow wasn't adequate to keep the business afloat and they needed an additional pot just to keep going. Again, as best as I can recall, they were being squeezed out of the market(s) they had been supplying by competition, and the SDT investment was to buy them time to try and locate fresh markets and/or attempt to restructure their own operation to better compete in their existing markets.

 

I have no real quibble with the initial investment, it is the second one which creates the issues. The business had attained a position where they were no longer viable in their previous marketplace, and were granted a significant cash injection while they attempted to locate new markets and/or had more time to try and adapt themselves to the new conditions of their formerly successful marketplace. If that wasn't a "borderline" investment, I can't think what is. When a producer cannot supply their former outlets at a unit cost that keeps them viable, and they don't know if there are other markets available that will buy from them at a cost to keep them viable, it is pretty much the end of the line.

 

Judane were six years ago in the same position as the grocer and butcher shops on the street were when the supermarkets arrived, but on a grander scale. Lower priced competition and no obvious alternate market, and the end result has been the same for both.

[paulb]

was the second loan for support through a difficult period. i don't know I'm only asking. the second loan must have been classed as higher risk as they had the first one still outstanding.

[RFR937]

They were (and always had been) a profitable company with a full order book and were in dire need of larger premises.

 

 

 

If this is true then why indeed did they need the loan , assuming they were needing it to build the new premises I wonder why the old factory was never used as security on it. Seems to me there has been a lot of mistakes, it can't be right to have your company go bankrupt but still be the owner of two factories..............can it?

[Colin]

^^ Yes, that's as maybe, but that was 17 years ago. The problem is with the second investment of 6+ years ago, which it seems little if any has ever been paid back.

 

The second investment of 6+ years ago was described as "working capital", ie. their cash flow wasn't adequate to keep the business afloat and they needed an additional pot just to keep going.

 

The additional loan ("working capital"(?)) was needed as they had reached an agreement with Polo Ralph Lauren to produce garments for them but, in order to do so, had to purchase some new (specialised) machinery.

 

The agreement with PRL put the factory back at 100% production.

 

I'm sorry if this reply is a little 'clipped' but it is as much information as I feel that I can give out.

[Colin]

it can't be right to have your company go bankrupt but still be the owner of two factories..............can it?

 

They didn't 'go bankrupt'. They simply ceased trading as a knitwear company and tried to realise their assets in order to pay their creditors.

[unlinkedstudent]

it can't be right to have your company go bankrupt but still be the owner of two factories..............can it?

 

They didn't 'go bankrupt'. They simply ceased trading as a knitwear company and tried to realise their assets in order to pay their creditors.

 

But that's part of the problem, isn't it? They didn't try hard enough to realise their assets, nor have they, to date, paid all their creditors. From my understanding of the matter, they could have done that deal with the joinery firm thus "realising" that particular asset but they didn't.

[Shoogler]

Hello Colin,

You sound like you know a fair bit about the business. Did you work for them in some capacity? I realise that is your business but it may explain why you are keen to present a positive view and appear to defend the directors actions.

[Ghostrider]

^^ Yes, that's as maybe, but that was 17 years ago. The problem is with the second investment of 6+ years ago, which it seems little if any has ever been paid back.

 

The second investment of 6+ years ago was described as "working capital", ie. their cash flow wasn't adequate to keep the business afloat and they needed an additional pot just to keep going.

 

The additional loan ("working capital"(?)) was needed as they had reached an agreement with Polo Ralph Lauren to produce garments for them but, in order to do so, had to purchase some new (specialised) machinery.

 

The agreement with PRL put the factory back at 100% production.

 

I'm sorry if this reply is a little 'clipped' but it is as much information as I feel that I can give out.

 

As I said, I was working from memory, so the "working capital" description may well not be particularly accurate. It matters little to the point I was trying to make though, Judane's prior markets were shrinking from competition/falling demand as I seem to recall it being described at the time, and they were on the way out unless they found a way back in to their previous market(s) or secured new outlets.

 

Fine, they got a deal with a new outlet that probably helped swing it for the SDT to commit the additional investment to secure said deal, but as I again seem to recall from the time, it was far from being a "sure thing" and caused controversy. Unfortunately it seems that the critics of 2003 were the wise men, as what happened to the deal, what happened to the investment? Two years later Judane closed down without having paid back one penny of the £335,000 2003 SDT investment. By any standards that investment was not altogether wise, it may have put the factory back in to full production, but only for two years, clearly it was a "put all your eggs in one basket" thing, they had no other work to hand, and nothing else lined up. Obviously "this will keep us going, and hopefully we'll get something else lined up before it runs out" was the thought of the day, aka "clutching at straws". The fact they didn't get anything else is hardly surprising either, given that this was a business in decline from shrinking worldwide outlets nefore they secured the one order. It could hardly have been a worthwhile order either, as apparently it was not profitable enough to be able to repay any of the capital required to fulfill it. Some would say that that was intentional underpricing just to get the work.

 

To put it another way, if anyone was to go to the SDT right now and say, "I have an offer of work right now, if I got it I'd employ X number of staff, it'll last for up to 2 years, but I'm not sure what happens then. For what I get for the work I'll cover my overheads and should be able to pay back some on what I need to borrow from you....Ummm....Will you give me £300,000+?"

 

Would you really expect the SDT to just go "Oh, sounds good, here's your cheque"? As that's effectively what they did do in 2003 withn Judane.

 

Certainly there may well have been many ways the SDT could have helped Judane secure the order, which in itself was good for Shetland, but simply handing a cheque to a business which otherwise had an empty order book and was on the brink of going down was not the smart way to do it IMHO.

 

Judane was for some time a successfully run business, I'm not disputing or knocking that, the wages they paid employees and the spend of the business was all good for the local economy. Come 2003 though the writing was largely on the wall for most that wanted to see it for all businesses in their sector unless possibly for a few small bespoke operators supplying small niche markets. It wasn't new news by a long shot, the trend had been heading that way for a decade and more.

 

Judane's failure IMHO was to know when to quit, and in holding on as long as they did sent a sizeable chunk of good public money after bad, placing themselves in a position that they're both finding it difficult to get out of and difficult not to sink deeper in to the mire.

 

BTW. Seeing as we've establised at least part of the 2003 investment went towards purchasing "specialist machinery". What become of said machinery? Surely under two years old specialist machinery originally costing in to the hundreds of thousands had some resale value. Or was this a completely Mickey Mouse set up and they bought old second hand machinery that was near the end of its life anyway and worthless to sell on after they'd taken two years out of it. Surely it wasn't, as someone described some ex-Judane machinery on here when Hodge was an occupant of the shed, something along the lines of "lying in a rusty pile outside the shed"?

[Colin]

But that's part of the problem, isn't it? They didn't try hard enough to realise their assets,

How can you possibly say that? I saw them trying, you didn't.

 

From my understanding of the matter, they could have done that deal with the joinery firm thus "realising" that particular asset but they didn't.

Chris Hodge offered more money.

[Ghostrider]

From my understanding of the matter, they could have done that deal with the joinery firm thus "realising" that particular asset but they didn't.

Chris Hodge offered more money.

 

They knocked him back too though, or is Hodge a liar?

 

I seem to recall that after the Planning Appeal was settled Hodge was on record as stating that his previous "handshake" offer to buy had been rejected.

[Colin]

Hello Colin,

You sound like you know a fair bit about the business. Did you work for them in some capacity? I realise that is your business but it may explain why you are keen to present a positive view and appear to defend the directors actions.

 

No I didn't work for them. The Millers are personal friends and I was in their factory quite a lot. As such, I was/am privy to quite a lot of knowledge that is not in the public domain.

 

I was also in quite a bit with Chris Hodge.

 

For the most part I have kept out of this thread but now that Caroline Miller has spoken, I feel able to dispel some of the myths surrounding the whole issue.