There are many outcomes to an insolvent position but it is essential you seek the advice of professionals as early as possible in any insolvency services matter.
Business outcomes can include: Business Recovery - where the business is rescued, Administration, Liquidation, CVA - Company Voluntary Agreement, MVL - Members Voluntary Liquidation. Individual outcomes can include: Bankruptcy, IVA - Individual Voluntary Agreement, DRO - Debt Relief Orders.
Whatever the insolvency issue it is important to seek professional advice as soon as possible. Insolvency news for Southport and the UK is shown below which reports many of the cases referred to the government insolvency service.
Getting the right advice is essential and the sooner you do it the better as there may be more options available. HBG www.hbg.uk.com in Southport provides 100% confidential and no obligation advice to your personal or business financial problems. Please phone freephone 0800 058 8750 to get professional help right now. HBG www.hbg.uk.com are experienced specialists experienced in business recovery strategies, insolvency services, liquidation services and personal debt solutions.
Not only in Southport but in 2012 there were over 16,000 company liquidations in England & Wales, a decrease over 2011. Personal insolvencies totalled nearly 100,000 in England & Wales, 10,000 down from the previous year. These figures are made up of both compulsory and voluntary arrangements.
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Business Recovery - "It is never too early to act for your business"
Actual and or potential cash flow problems can be very damaging to a business and the earlier these are identified and acted upon, increases the potential for a better solution.
Many of our clients have said the advice they received when experiencing problems was simply to cut costs. Sometimes that may work, but often six months down the line the business is no better placed and what to do then? Cut more costs? Is this really the road to business recovery?
Seeking early advice can unlock many opportunities that could assist your business.
We can you help look at all aspects of your busines. Examples of where we will help you include:
Assessing your liability with HMRC
Identifying major creditors
Analysing current and projected cash flows
Are you getting the right information from your computer systems to help you make the right decisions
Identify any assets that could be realised
Identify costs that could be saved
Discuss with major creditors if agreements can be reached
Help you put a recovery plan together
Finally, a well constructed business recovery plan should be prepared and agreed after exploring all the options, implemented, and then monitored to see if it is achieving all the objectives.
Business Administration - "administration is not only for big companies"
Administration can be a constructive way of preserving a company's business or achieving a better return for creditors than a liquidation. A licensed insolvency practitioner is appointed as administrator on the petition of either the company, the directors or one or more creditors.
During this time the company is protected from creditor action while a long term solution can be sought. Options can incluide:
Refinancing of the business
Sale of the business to new owners
Splitting the business into saleable divisions
The appointed administrators main responsibility is to get the best return for the business creditors and is appointed by the court.
Company Liquidation - "not necessarily the last option"
Company liquidation can take two forms, vountary liquidation or compulsory liquidation.
Voluntary liquidation as the name suggests is where the company itself calls in the liquidators as it feels it cannot continue trading and meet its obligations to creditors. Compulsary liquidation is where a creditor obtains a court order to have the company wound up.
Compulsary liquidation should be avoided at all costs and could involve action against the directors of a company.
Voluntary liquidation is called in by a company's directors when they do not see a trading position to continue with the business. Directors have legal responsibilities for running a company and they should be concerned about wrongful trading, where they realise the company is trading as insolvent - where creditors may not get paid - and continuing to trade.
Once a liquidator has been appointed then the liquidators role is to obtain the best returns for the creditors. There maybe preferential creditors such as HMRC and the Bank who may have a hold on assets realised in preference to other creditors, usually trade suppliers to the business.
There will be a creditors meeting where the liquidators initial report will be presented and an opportunity given to creditors to question any of the activities of the company.
The liquidator has to achieve the best return for the company's creditors and it is not unusual for all or some of the previous directors to offer to take back part of the company and set up again. Often this may be the only offer for the assets of the company. All may not be lost by your business going into liquidation, it provides protection from creditors and lets you draw a line in the failed business and possibly and end to the stress and anxiety of running the business.
Corporate Voluntary Agreement (CVA) - "offering protection from creditors"
A Corporate Voluntary Arrangement is where there is an agreement with your creditors to allow you to keep control of your company and continue trading.
This type of arrangement is literally an agreement with your creditors and what amounts they can expect to get paid in the future. Obviously it has to be agreed between the company and its creditors.
It can be agreed where all or part of the company's debts will be repaid over a period of time from the future trading profits of the company or as cash flow allows.
The benefits of entering into a CVA can be:
Protection from creditors
Protection from a winding up order
Terminating employee contracts
Lower costs than going into administration
Avoiding full liquidation
Ability to trade out of a problem
Members Voluntary Liquidation (MVL) - "when you are not insolvent"
A Members Voluntary Liquidation (MVL) Arrangement is a process of unlocking the assets in your business. Unlike insolvent businesses your business will be solvent and this is a method of enabling the shareholders of the business to have a tax efficient return of their investment.
This is quite typical where directors may wish to retire or when the business does not see a continued future before it may become insolvent.
Whilst some aspects may appear complicated we can help you achieve a successful MVL with the right advice.
Winding Up Petition - "received a petition, it's not too late"
Even if you believe you might receive a winding up petition rather than actually received one then action is needed urgently.
A winding up petition is made by the courts to literally wind up your company, usually because you have defaulted on payment to a creditor.
It's late but not too late to take action. After a petition has been raised you cannot put your company into voluntary liquidation, nor can you sell the company or its assets. However it may not be too late to seek an CVA unless of course you can seek to defend the petition legally.
In this situation you must seek professional advice immediately. Don't wait until the petition arrives - Act NOW
Bankruptcy / IVA - "for individuals and sole traders / partnerships"
Personal Insolvency can take many forms and there are several options if you are suffering from extreme personal cash flow problems and cannot pay your debts.
We can provide assistance in all of the areas listed here: Bankruptcy; Individual Volunatary Agreements (IVA); Debt Relief Orders (DRO)
Bankruptcy is for individuals and may be used to clear debts and often, but not necessarily, be discharged as being a bankrupt in just one year. It is used when debts simply cannot be paid and a creditor or creditors decide to go to the court to take action. It is also possible to make yourself bankrupt. An official receiver, or insolvency practitioner, is appointed to handle the bankruptcy. They have the power to realise any assets, including your home, to pay creditors what is possible. During the bankruptcy period it will be difficult if not impossible to obtain credit, be a director of a business or hold certain positions such as an accountant or solicitor. Your bankruptcy will stay on credit reference files for six years and obviously affect your ability to obtain credit for many years.
An IVA is a method of handling your debts with protection from your creditors without losing all your assets. Typically you agree what you can afford to pay back to your creditors by periodic payments. The period of an IVA is usually five to six years and at the end of the term any remaining debt is written off. Over 75% of your creditors need to agree to the debt repayment plan for an IVA to be accepted.
A Debt Relief Order (DRO) is a way to write off debts if they total less than £15,000 and you don't have many assets, and this really does mean very few assets e.g. less than £300, and a car worth less than £1,000. This is not available to home owners and your spare cash after reasonable living is less than £50 per month. The period is usually 12 months in which you don't have to pay anything and the debts will be written off after that period.
Business Finance - "raising finance to save your business"
Raising finance can be difficult in today's economic climate whether you are a new business or an existing one seeking further funding. We can try and help match your requirements with suitable funding organisations for your business.
Traditional bank lending is not the only option, and different banks often have different policies regarding funding to various types of business. We have contacts with all major banks and should be able to help you know who best to approach.
There are other ways to improve the financial cash flow in your business such as: Factoring - raising money against sale invoices, Re-financing of assets e.g. equipment, Grants that may be available, Help with import and export activities, Private venture capital
All of these areas are discussed in more detail on HBG
Some useful external links for many aspects of insolvency are as follows: