A sad farewell to a valued member of the treasury community

I am the bearer of sad news this month. Gerald Leahy a past President and Director General of the ACT passed away in August.

Those of you that were members or involved with the ACT prior to 1995 will remember Gerald Leahy – the many messages we have received and passed on to the family reflect memories of a great friend and valued member of the treasury community. Ria Robinson (Director of Membership and Administration) summed up Gerry’s contribution to the ACT very succinctly "He played a huge role in the development of the ACT".

We will, of course, be publishing a tribute to Gerry in the October Treasurer.

Complacency amongst treasurers?

In an FT article on 27 August 2010 on Europe and US bond issuance it was suggested that memories of the financial crisis have been too short and a renewed bout of market volatility could cause problems for European companies. The suggestion being that US treasurers are well placed - a London based banker claimed that "there is a lot of ego among corporate treasurers and a fair degree of complacency". Perhaps this banker should have attended the annual conference in April or would care to present a paper to ACT members on this subject!

Breathing space for companies

Two papers have been published recently that are worthy of further attention. Firstly the Insolvency Service has published a consultation paper on proposals for a restructuring moratorium. Comments are sought by 18 October 2010.

On the face of it this is a worthwhile initiative. In part it seems to be driven by the £90bn of leveraged loans that are due to mature before 2015. The ACT will be commenting on the paper but the aim of providing a breathing space for companies with liquidity issues is welcome – the moratorium is not intended to provide breathing space for an otherwise insolvent company and there will be penalties for directors that abuse the mechanism which will be court sanctioned and monitored. It is the detail that we and I am sure the lawyers need to look at closely. In return for a breathing space the company needs to demonstrate that

• it is likely to have sufficient funds to carry on business during the (initial three month moratorium)
• the "attitude" of the creditors is supportive – those of the secured creditors seem to be seen as particularly important - and therefore there is a reasonable prospect that a compromise can be agreed.

Clearly, the companies’ suppliers will be key and it is proposed that obligations incurred during the moratorium takes preference over pre moratorium obligations – however directors can expect that the court will place limits on these as part of the conditions of the moratorium. It will be controversial whether a company invoking the new procedure can use it as a reason to terminate contracts generally with the company.

The court will rely on an insolvency practitioner to "confirm that the qualifying conditions for a moratorium have been met by the directors" and appoint a monitor to safeguard creditors’ interests during the moratorium.

It may only be a moratorium so long as circumstances don’t change for the worse – obligations on directors and the monitor seem to be quite onerous.

If you have views on these proposals please email technical@treasurers.org

Funding a recovery

The other paper has had rather more air time – the green paper from BIS and HM Treasury "Financing a private sector recovery" – which gave the ACT two name checks. As a result of this there are a number of initiatives underway – the British Bankers Association under Stephen Green’s leadership is reviewing inter alia "what can be done from a UK banking perspective to create a stronger and more sustainable market for business finance".

The ACT continues to work with BIS to develop supply chain finance. As set out in the report published by the ACT in July, we firmly believe that buyer driven receivable financing can be a major component in funding, especially for smaller businesses. Such programmes need to be promoted by banks and buyers and attractive to the suppliers – we do hear of "supplier on-boarding difficulties" is this because the suppliers don’t need the funding or the terms of the funding are unattractive? The attraction to the buyer is the fostering of a strong, resilient and responsive supply chain. If you have experience / views on supply chain finance we would like to hear them – Chatham house of course. Again, please email technical@treasurers.org or why not give us a ring?

Middle East conference update

We are now just over a month away from the ACT’s first Middle East Annual Conference. With a full day’s programme of speakers including H.E Sultan Bin Nasser Al Suwaidi, Governor, Central Bank of the UAE and Yuvraj Narayan, CFO, DP World, we are very much looking forward to the opportunity to grow the treasury network in the region further. The event is attracting ACT members and treasury contacts from across the GCC and we hope that this event will set a precedent for coming years as the networking event for treasurers in the region. We are also running a pre-conference workshop on treasury issues to set the scene for the conference which will conclude with the Gala Dinner and Middle East Treasury Awards. Now in its second year, the Gala Dinner and awards ceremony will be celebrating the particular work of treasurers from selected companies in bond and loan deals as well as a treasury team of the year. We will also be presenting awards to our high-achieving students from the region.

If you plan to be in Dubai on 13 October you would be very welcome to join us. For further information visit our website.

ACT qualifications - enrolment deadline 15 September

Lastly, with only two weeks left until we close registrations for ACT certificate and AMCT courses getting underway in October, a final reminder to make sure you don’t miss the 15 September enrolment deadline.

By Stuart Siddall