Contacting an insolvency practitioner can feel like the last resort but if your business is facing insolvency, early advice is invaluable.
Whether you’re facing cashflow issues, fending off creditors, struggling to obtain credit, exceeding overdraft limits, missing tax payments or dipping into personal finances to stay afloat, an experienced professional can help you clarify the situation your business is in and work with you to map out the best route forward. Crucially, sound advice will also position you to start taking necessary action immediately.
Business directors have a legal responsibility to make sure their company remains solvent while creditors and stakeholders need to manage their exposure to losses.
Whatever your business and wherever you’re located, our experienced team at Evelyn Partners is here to help you.
What to expect when you contact us about corporate insolvency
Our team is highly experienced, qualified and sympathetic. When you get in touch with us, we’ll move quickly to understand your history, review your accounts and learn from your management team about the issues you’re facing.
- Initially we need to establish if your company is insolvent or close to it
- We’ll then offer detailed and practical recommendations based on in-depth factfinding and analysis to come up with sensible, well-rounded solutions
- Insolvency isn’t the only option. We’ll look at all avenues, with a focus on minimising costs and maximising recoveries to help satisfy creditors and get you back on the right financial track
- Where appropriate we can work with our transactions team to market a business for sale and help negotiate the right deal for the best price
What are the options if my company is insolvent?
If your company can’t pay its outgoings or debts on time, it is considered insolvent. But this doesn’t necessarily mean the end for your business. There are a number of different options for insolvent companies and by seeking professional advice quickly, you’ll increase the chances of rescuing your business. As a director, you can:
- Explore opportunities to save your company or the business within your company
- Seek a ‘white knight’ who may be able to save the company without the need for insolvency
- Try to reach an informal agreement with your creditors
- Enter into a company voluntary arrangement, which is a legally binding arrangement to pay your creditors over a fixed term
- Enter into a restructuring plan if you are an eligible larger company. These were introduced in 2021 and are a formal arrangement between your company and your creditors or shareholders
- Put the company into administration. Which may mean the business can survive through an organised accelerated sale process which protects the directors’ position, some or all of the staff and that of the creditors as well
Any business can find itself in trouble. Which is why everyone who runs a company needs to know about insolvency: what it means, how to avoid it, and what to do if you think your company might be facing it.
How Evelyn Partners helps businesses facing corporate insolvency
Company voluntary arrangements
Through company voluntary arrangements, we help businesses agree a flexible yet binding arrangement with creditors, tailored to specific circumstances, in order to avoid insolvent liquidation.
Where possible we help companies avoid liquidation by realising assets for secured or preferential creditors through sale, handling pre-pack administration sales and assisting with the sale of businesses and assets during administration.
In some cases a more appropriate option is for an appointment over a specific asset rather than the whole company. We are appointed receivers for Law of Property Act (LPA) receiverships, fixed-charge receiverships and court-appointed receiverships.
When a company is closed through liquidation, the process involves selling or distributing assets and property to pay off outstanding creditors and shareholders. We take responsibility for this, sorting out employee claims and issues, agreeing creditor claims and making distributions.
This is where company’s have come to the end of their purpose ie holding a specific asset or trade which has ended without being insolvent. This has the added benefit of tidying up a group structure and save ongoing compliance costs.
Turnaround or insolvency? What company directors need to know on-demand event
Watch our on-demand event to understand the importance of being pro-active in avoiding insolvency and the key warning signs to look out for.
Why choose Evelyn Partners when your business is struggling?
- We have a team of experienced practitioners who have many years’ experience of all of the above procedures and will look to give the most practical and commercial solution to the problem
- Evelyn Partners is a top 10 UK accountancy firm, as ranked by Accountancy Age (source Accountancy Age, 2021).
- We are a member of R3, the association of business recovery professionals
- We are representatives on the Charity Commission Interim Manager and Proceeds of Crime receiverships (POCA) panels
Frequently asked questions
What does going into administration mean?
When a company can no longer meet its financial obligations, it can go into administration. This means management of the company passes from the directors to an administrator, who is a licensed insolvency practitioner. Where possible the administrators will aim to rescue the company. Administration is a legal process and while a company is in administration it won’t face enforcement action from creditors.
What is liquidation?
Liquidation is a process that brings about the closure of a company. As part of the process, all company assets and property will be sold or distributed to pay off outstanding creditors and shareholders before the company is dissolved. Liquidation is sometimes called winding up.
What is a receivership?
Receivership is a legal process where a creditor – often a bank - appoints a receiver to receive – in other words, liquidate – a company’s assets so they can get their money back. A company can be forced into receivership but they are not very common these days because the emphasis is on rescuing companies where possible.
What is a Company Voluntary Arrangement?
A Company Voluntary Arrangement (CVA) is an agreement between a company and its creditors that is legally binding. It allows the company to pay its creditors over a fixed timeframe. The terms of a CVA agreement can differ from company to company and they must be approved by at least 75% of creditors. While a CVA is in place, the directors remain in control and the company can continue trading. The terms of a CVA are supervised by an insolvency practitioner.
What is the difference between bankruptcy and insolvency?
Bankruptcy and insolvency are often used interchangeably but they do have different meanings. Only an individual or a sole trader can be bankrupt whereas insolvency applies to both individuals and businesses. Insolvency describes a financial state where a company or individual can’t pay their outgoings or debts whereas bankruptcy is a legal process. An insolvent person can be declared bankrupt by a court.