Posted on 23rd February 2009

Even Celebrities Are Not Recession Proof!

The recent spate of insolvencies involving high profile media figures just goes to show that even celebrities are not immune to the recession.

The slump in the property market has forced one of the businesses owned by property expert and presenter of Channel 4's Location, Location, Location, Phil Spencer, into administration as well as a business owned by Anthea Turner and her husband Grant Bovey.

Meanwhile, TV chef Anthony Worrall Thompson has blamed the squeeze on lending by the banks as the reason for the closure of four of his six restaurants.

While some will have little sympathy for the rich and famous whose bubbles may have suddenly burst, whatever the reasons for the collapse there is a knock-on effect for ordinary people in the street.

Mark, who is a partner at the law firm, said: "The well-known figureheads of these companies continue to grab the headlines, but arguably it is their staff and suppliers who suffer more. They are unlikely to have personal properties worth millions.

"Being forced into administration is, of course, disastrous for the owners of that particular business, but the situation is also bound to cause a ripple effect through redundancies, loss of orders for suppliers and money owed to various creditors including the very people that have worked so hard to make that business a success the staff and suppliers.

Some sectors of the market are going to be badly hit either because people lose their jobs or bonuses, or simply now realise that they have been living way beyond their means.

Mark warned businesses dealing with those sectors of the market that they need to be conscious of the risks they run.

He said: "They need to make sure that they stay on top of the bills owed by businesses, consider restricting credit terms, watch for danger signs when they deliver to premises and most fundamentally never give more credit to all their customers than they can afford to lose in a worst case scenario.

"Businesses also need to consider their terms of trade, retention of title clauses and make sure they know when and how to incorporate them into the arrangements. They should also not be afraid of taking swift legal action to recover sums due.

"Hopefully it will never happen to them. In this climate, however, everyone is going to have to face these issues.

"Business owners have to realise that too many insolvencies and they will find themselves in the same mess as these celebrities, but without the million pound mansion behind them or the savings to buy back some of the assets.