Also known as a CVA, this entitles a company to carry on trading despite their debt situation. As long as a formally agreed repayment scheme is in place, the CVA will allow the business to trade, in order to survive while repaying its outstanding debts.
Need specific advice? Arrange a call back from one of our specialists.
Formal Insolvency Procedures
When your company is faced with formal insolvency it is actually possible to emerge from the process in an improved position, financially. The key to this outcome is to speak to us as soon as possible so that we can guide you towards the right course of action, which can include:
• Company Voluntary Arrangements
• Administrative Receiverships
• Fixed-Charge Receiverships
• Court Appointed Receiverships
• Liquidations (solvent or insolvent)
Please speak to us if you would like to discuss these methods of action; we’d suggest that you do this at your very earliest convenience.
Company Voluntary Arrangement
The primary of Administration is to rescue the company as a corporate entity. The secondary objective will not achieve this, but it may well still achieve the rescue of the company’s business by selling the business to a buyer. When a business enters into administration while insolvent, it can continue to stay together following a reorganisation process. This is a good choice if your company has a potentially bright future despite the financial issues it's currently facing. The company's directors will need to initiate this move, and it will allow some much needed breathing space for the business. Speak to us if you are interested in pursuing this course.
A creditor (typically a bank or other lender) with security in the form of a mortgage or charge over the company’s assets may, if the terms of the security allow, appoint a receiver to enforce their security.
A receiver appointed under a floating charge (the whole or substantially the whole of the company’s property) is called an Administrative Receiver.
If your business has already breached the terms of your creditor borrowing by way of a floating charge, or another set of circumstances set out in the charge, your creditor may well appoint an administrative receiver to help recover this money. This is also referred to as receivership. The administrative receiver appointed must be a licensed insolvency practitioner.
The administrative receiver has the power to deal with the Company's charged assets and is able to take over the management of your business thereafter. Your business will still be able to trade in this scenario, and if you have sufficient assets to cover the costs of receivership, they can be passed to a liquidator to cover the claims and/or investigate historical transactions.
This is the technical term that covers the closing down of a business whether solvent or insolvent by either a Voluntary or Compulsory Liquidation. If the company’s shareholders or directors decide to put the company into voluntary liquidation, this can be done via a Members Voluntary Liquidation (solvent) or a Creditors’ Voluntary Liquidation (insolvent). Alternatively, the Company can be placed into Compulsory Liquidation following the Court making an order, known as winding up order, following the presentation of a winding up petition.
Creditors’ Voluntary Liquidation – CVL
If your business is unable to pay its debts, or has more liabilities than assets, the directors need to take immediate specialist professional advice so as to avoid potential personal liability.
If it is deemed that insolvency is unavoidable, then the directors are able to commence the process to place the company into voluntary liquidation. Meetings of the shareholders and creditors are then held to put the company into liquidation. This will allow for the business to appoint a responsible person (a Licensed Insolvency Practitioner) to realise the company’s assets, and distribute these out appropriately to the creditors.
We can help as we have the experience and the licensed insolvency practitioners to provide advice and if necessary commence to the Voluntary Liquidation process if this is the most appropriate course of action for your company.
Members’ Voluntary Liquidation – MVL
This is also known as a solvent liquidation and can be carried out as long as the company's assets are realised and the proceeds distributed to satisfy the company’s debts in full within 12 months. Typically, an MVL will be used to reorganise the business, tax planning, or to allow the shareholders to realise their own interest in the company.
This is usually where your creditor(s) have already petitioned the Court for the winding up of your company. The official receiver (who is a government official) will initially become the liquidator, the creditors have the power to appoint a liquidator of their choice should they so wish.