We are currently in one of the most difficult and unpredictable financial climates that businesses have ever had to endure and the fear of insolvency is very real. However making the decision of talking about the problem is one that is often feared by many directors and business owners typically because they still don’t understand what Insolvency Practitioners are there for and hence remain afraid of them.
Quite simply, a Licensed Insolvency Practitioner is a professionally qualified person with the necessary expertise and experience to deal with and help businesses in financial difficulty.
As Licensed Insolvency Practitioners Focus Insolvency Group specialises in helping and advising all types of businesses whether they are a large limited company or a small sole trader; and in whatever situation they may find themselves in. The following are details of common questions on which our clients have sought our advice:
Q. A lot has been heard on the news about businesses being affected by the downturn in the economy, what should I be watching out for?
A. Increasing overdraft levels, banks reducing or eliminating funding, unpaid bills and no provision for accrued liabilities particularly to HMRC. Sole Traders or Partnerships can find the owners threatened with bankruptcy, whilst limited companies can find themselves having winding up petitions against them for non-payment of debt. Debt collectors and bailiffs can effectively stop businesses trading by taking the remaining working capital or the assets of the business.
Q. What do I do at the first signs of trouble?
A. If debts cannot be paid then it is essential that an Insolvency Practitioner is involved to look at the various options available. The act of taking professional advice at an early stage will mitigate any losses to creditors and protect directors personally. Failure to take advice and implement appropriate procedures can make directors potentially personally liable for the company debts as a result of the wrongful trading provisions in the Insolvency Act 1986.
Procedures can be implemented immediately to protect the company from creditor action including bailiffs and winding up petitions. Once the pressure is off, we can sit down and look at the company trading position and see if it is viable to continue trading going forward. It may then be possible to make a proposal to the creditors, which although may not pay them back all their liabilities will be better than the company being placed into Liquidation and employees made redundant. The company will then be free from debt in 5 years.
Q. Will going bust always be the answer, with the loss of jobs?
A. No. the strategy at Focus Insolvency is to always look at rescuing a viable business and save jobs. Naturally, this is as long as the business is viable going forward and we have management support. We can provide FREE initial advice by sitting down with the business owners and seeing what is available to the creditors perhaps by way of monthly contributions and formulating a proposal to creditors< for rescue.
Q. My business has a lot of debt and I do not wish to continue trading. There is a buyer for the assets but he is not willing to take on all those debts, what can be done?
A. An option is to put the company into Administration and sell its assets to an interested buyer. The money received will then be used to pay creditors (after deducting costs). An Administrator only sells the assets of the company not the liabilities and this is far more attractive to a potential purchaser and can be the best result for all rather than Liquidation.
Q. How can I pay for Professional help if my business is struggling?
A. As funds are tight, it is essential that you obtain a FREE consultation from a Licensed Insolvency Practitioner to discuss the options available. Any formal insolvency procedure to rescue or wind up the business will involve costs that are generally paid out of asset realisations.
Remember that legal protection from creditors is available, and it is likely that creditors will accept less than full payment over a period of time given the financial position of the business.
ocus Insolvency Group welcome personal and business enquiries direct and also offers a Professional Partners referral facility to advisors who need help with their clients. If you can identify with anything within this blog for yourself or your client, then it is important that you act immediately, do not be afraid of seeking our advice.
If you have any opinions or questions about this blog, please leave a comment below or get in touch