It is a difficult financial climate at present. If your business is troubled financially, it is important to understand company insolvencies, and what the next steps are, so that you can make informed decisions.
The financial situation might be because of insufficient cash flow or perhaps liabilities outweigh your available assets. This might mean that your company will have to enter bankruptcy, not a good state of affairs at all. However, this does not mean it is the end. There are ways to recover. When you are facing serious financial troubles, speed is of the essence.
There are various company insolvency avenues open to take you through the process. The Corporate Insolvency Service offers help and support to find the right route for your particular circumstances whether you choose Creditors’ Voluntary Liquidation or Court Liquidations.
Make the right choice.
Company directors have a very specific role to play in this process. They must understand their responsibilities and what the important warning signs are. Was your company in difficulty pre-Covid? Are your clients and trade creditors facing payment difficulties?
An Administration Order might be the right method to protect the company and minimise legal action taken against it by its creditors. This is because administrations offer moratoriums to ongoing businesses. It means that the company can be reorganised, or perhaps even sold, and is not untenable if large amounts of money are owed to creditors.
Your company does not have to be unable to pay its bills or talk to creditors. This might sound too late because a liquidator has already been appointed. You might have received notice that a Statutory Demand has been served. This is not the case; there is still help available. The Moratorium Option offers companies in a difficult position breathing room: it will act as a shield against creditor pressure because they will have to make a creditor offer before they can take any action to force the company into insolvency.
Similarly, the Restructuring Plan offers flexibility in binding creditors, facilitating compromises to address financial difficulties. Acting promptly enhances the chances of success.
Company Voluntary Arrangements (CVAs) provide a structured approach to repaying debts over time, preserving the company’s future.
The prospect of a company insolvency is daunting for a business owner. Callan Accountancy offer all the help and advice you need to to steer your business towards stability.
Understanding Company Insolvency:
Company insolvency occurs when a company’s assets can’t cover the debts it has. If you think you may be approaching, or already in this situation, it helps to have a good understanding of what options you may have. It’s also worth bearing in mind that there may be more options available to you than you think.
How Callan Accountancy can help.
We look at your company closely and give you expert guidance and a range of options that will be clear to you. Having all the information you need about the various options open to you will help you make the right decision on how your company can make it through the process.
Creditors’ Voluntary Liquidations and Court Liquidations:
After weighing up the various options the directors of the company might decide that the company can’t be rescued, In this case, they may choose to enter Compulsory Liquidation via a Creditors’ Voluntary Liquidation (CVL) or Court Liquidation. A liquidator will then be appointed with the aim of gathering the assets of the company and distributing them to the creditors.
Company Director Responsibilities:
During this process, directors of the company must act in the company’s best interests.
Administrations:
Administration offers protection from legal action, giving breathing space to reorganise the business or sell it. Getting advice early is really important for a successful outcome.
The Moratorium Option:
The moratorium provides breathing space for struggling companies to explore rescue options or refinancing without getting put under pressure by creditors of the business.
Restructuring Plan:
This flexible procedure aims to bind creditors. It offers compromises to address the financial difficulties of the company. Acting quickly increases the chance of it being successful.
Company Voluntary Arrangements (CVAs):
A CVA is an agreement with creditors to repay debts either in part or in full over an agreed period of time, preserving the company’s future. With a CVA the directors remain in charge of the company but their actions are overseen by an appointed supervisor to ensure the correct action is being taken to protect shareholders.
Facing insolvency is daunting for anyone. With our expertise and support, you can navigate this challenging time with confidence. Callan Accountancy can provide tailored advice to help get the best possible outcome for you and your company. Call us today. The earlier you take action the better the outcome is likely to be.
