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If you are facing financial difficulties such as demands for payment from suppliers or lenders or, looking forward, you are concerned about your ability to meet your liabilities, it is important to act quickly and seek professional advice.
As a member firm of the R3 Association of Business Recovery Professionals and Licensed Insolvency practitioners, we can advise you on the formal and informal insolvency procedures available to you. We take time to understand your financial position and consider your specific requirements so that we can provide you with a tailored solution and the best advice on how to move forward.
The procedures available to businesses and individuals are summarised below.
An administration is a formal procedure placing a company or partnership that is, or may become, insolvent under the control of a licensed insolvency practitioner. When a business is put in administration, no legal action can be taken against it (including from creditors such as HM Customs, banks and suppliers). This will give time to reevaluate and consider a plan of action such as selling the business, negotiating a payment plan with creditors or selling the assets and winding up the business.
Company Voluntary Arrangement
A Company Voluntary Arrangement or “CVA” is a procedure that allows an insolvent company to reach an agreement with its creditors to delay or compromise the payment of its debts. This can be a good solution where Directors consider a business to be overburdened with debt although inherently still viable. Under a CVA the creditors are unlikely to recover all they are owed and the agreed debt amount would be paid back over a period of time. As long as the creditors agree, typically the business will be able to continue trading as before.
Creditors Voluntary Liquidation
Liquidation is the formal winding up of a business entailing the realisation of its assets and the distribution of the resulting proceeds in a prescribed order of priority and is followed by the permanent dissolution of the company. A Creditors Voluntary Liquidation is the most common way for directors and shareholders to deal voluntarily with their company’s insolvency.
Members Voluntary Liquidation
This is a procedure where a solvent company formally ends its trading life, leaving no loose ends and usually providing a tax efficient exit route for shareholders.
A Compulsory Liquidation is initiated by a creditor who petitions the Court to formally wind up a company. The primary duty of the liquidator is to maximise realisations and minimise losses for creditors.
If your business is under performing and demands on your cash flow are becoming excessive, we can give you specialist advice on ways to revitalise your business such as new funding, investment or restructuring. These and other options form part of the turnaround routes we would consider with a view to restoring your business to a healthy financial position.
It may be that an offer to compromise an individual’s debts can be made on an informal basis but that creditors would prefer for such an offer to be provided via a professional firm so they feel more secure about the viability of the proposal.
Debt Management Plan
This involves a rescheduling of an individual’s debts in a manner similar to either a Deed of Arrangement or an Individual Voluntary Arrangement although is not legally binding on creditors. Where the debt is relatively small, a scheme such as this may be the best option.
Individual Voluntary Arrangements
The most popular alternative to bankruptcy. This comprises is a formal contract between an individual and their creditors whereby the creditors usually agree to accept a reduced offer in full and final settlement of their debt. Once approved, it is binding on all creditors.
There are instances where bankruptcy is the best option for an individual as this will result in the majority of their personal debts been released.
Please get in touch to find out more about our services and how we can help