Business Debt

Business Rescue

Administration

Administration is a formal insolvency process and primarily a tool to rescue a company that is having financial problems. This is different to a Liquidation in which a business is closed permanently.

A company may consider administration if it is experiencing pressures from:

HMRC
Landlords
Creditors
Bank(s) or investors

Administration can be a cost effective way of preserving a company whilst giving it protection from legal proceedings for recovery of debts, by providing an interim moratorium. This protects the company against any legal or other proceeding being commenced or continued without the leave of the Court. It also provides the company with an invaluable opportunity to evaluate its position and implement an appropriate strategy to meet one or more of the Administration’s statutory objectives:

Rescue the company as a going concern;
Or, achieve a better result for the creditors of the company as a whole than would be achieved if it were wound up without first being in Administration;
Or, realise the company’s assets for the benefit of one or more secured or preferential creditors.

Horsfields can assist with the process of placing the company into Administration including preparing the necessary statutory forms and supporting documentation. The company can be traded on whilst in Administration, however it should be noted that it is the Administrators rather than the directors who will control the company during the Administration period. Administration does however provide, where appropriate, the option for interested parties to purchase the company’s assets as a package under a sale agreement sometimes through a newly promoted company providing that the best offer is acceptable to the Administrator, this is often referred to as a ‘Pre-Pack’.

Company Voluntary Arrangement

A CVA is a procedure which enables a company to reach an agreement with its creditors to delay or compromise the payment of its debts. It is sometimes an alternative option to Liquidation where the company is forced to close.

It creates a legally binding agreement, which in essence replaces the terms of the company’s existing contracts with new terms as incorporated in the CVA proposal.

A CVA puts in place a timetable for the repayment of creditors with the aim of allowing a company to survive and provide a better return to creditors than would otherwise be achieved in Liquidation.

ADVANTAGES OF A CVA

The opportunity for the company to continue trading and avoid liquidation;
Enables control of the company to be retained without changing ownership or the directors;
An attractive restructuring tool;
The amount paid to creditors will be based on what the co can afford
Can offer legal protection from claims especially where a company needs time to ‘breath’ whilst it implements a recovery strategy

We can assist by drafting proposals, obtaining support from creditors and, if necessary, taking steps to obtain legal protection from claims against the company. We can also assist companies to obtain new funding following the approval of a CVA.

Partnership Voluntary Arrangement

There may be situations where a partnership gets into financial difficulty. In such circumstances the individual partners may wish to avoid the partnership being wound up through the Court. The individual partners may also wish to avoid facing Bankruptcy at the same time A Partnership Voluntary Arrangement (PVA) is a formal agreement between the partners of the business and partnership creditors which allows the partnership to continue to trade and repay creditors out of future profits or possibly through the orderly sale of assets. This is beneficial where the business is inherently profitable.

ADVANTAGES OF A PVA

To avoid the stigma of Bankruptcy;
To avoid the possibility of losing professional qualifications by virtue of Bankruptcy Orders where the partners are members of a professional body;
A useful restricting tool to enable the partners to keep control of the business to continue trading in order to generate contributions for the benefit of creditors;
To generate a higher return for the creditors of the business (where the business can be sold as a going concern); and
Where, as a result of cost savings, the creditors of the business would receive more than if the business were to be placed into Liquidation and the individual partners made bankrupt.

Pre-Pack Administration

A pre-pack administration refers to the insolvency procedure whereby a company agrees a sale of its assets to a buyer before the formal process of appointing administrators takes place, subject to the offer being acceptable to the Administrators. The buyer could be a director of the company buying the business back from the Administrator or any other interested party.

ADVANTAGES OF A Pre-Pack administration

Allows for the sale of a business as a ‘going concern’ without the possible negative impact on the business of a sale whilst in Administration.
Allows continuity of assets, customers and staff for the new business.

Receivership

Receivership is a legal process whereby a creditor appoints a receiver cover a company’s assets or property specified by a qualifying floating charge. The creditor known as a floating charge holder would is normally a bank or other lender. The receiver then “receives” any of the assets of the company that it can liquidate in order to pay back the lender. A receivership will inevitably result in the loss of control of the assets of the company. If your company is in distress or is threatened with action by a secured creditor, seek advice early from our experienced Insolvency Practitioners to discuss your options and best course of action for your business.

Business Solvent Closure

Members Voluntary Liquidation

Winding up solvent companies and asset restructuring through Members Voluntary Liquidation (MVL) can offer a simple cost- effective and potentially tax efficient method for restructuring a business or releasing assets from a solvent company.
At Horsfields, we advise in two specific areas:

Distributing surplus assets back to the shareholders where retirement or tax planning issues arise; and
Dealing with company or group restructuring in cases where, by mutual consent, the parties request a reorganisation plan for parts of the business under separate management or where a dispute has arisen and an exit route is required.

In both instances, cost budgeting is likely to be a key element of the planning exercise and we would carry out initial due diligence in this regard free of charge.

Dissolving a company

Dissolving a company or “striking off” refers to the process for closing down the company whilst still solvent (it can pay its debts within a 12 month period) by removing it from the Companies House register.

There are several criteria that need to be met, however the process itself is straightforward in simple situations. More complicated scenarios may require a company to consider a Member’s Voluntary Arrangement as an alternative.

We can discuss your company’s specific circumstance to provide initial no obligation advice.

Business Insolvency

Compulsory Liquidation

A Compulsory Liquidation is a court driven process, the end result usually being a winding up order against the company.

A company can be presented with a petition for winding-up or a winding-up order, or a company may wish to petition for a winding-up order to be made. If a winding-up order is made against the company, it may be possible to contest it.

Once a company is in Compulsory Liquidation, a Liquidator will be appointed primarily to sell the Company’s assets for the benefit of a distribution to creditors in respect of monies owed to them.

Our experienced Insolvency Practitioners at Horsfields can provide expert advice ensure the most appropriate course of action is considered and followed and will determine the future steps that need to be adopted.

The earlier you deal with any action against your company, the greater your options may be. If you have a creditor seeking a Compulsory Liquidation you may still be in a position to negotiate a payment plan with them, or a Time To Pay (TTP) if it is HMRC that are taking action. We will advise you based on your company’s specific circumstances.

We can also assist if a company has already been wound up through the Court. If you plan to fight a winding up petition or rescind a winding up order, seek advice early from one of our Insolvency Practitioners to ensure you take the correct steps and get the best possible advice.

Creditors Voluntary Liquidation (CVL)

When the directors of a company conclude that it is insolvent (it cannot pay its debts back within a 12 month period) they can take steps to have the company voluntarily liquidated.

The process provides a route for directors to wind up the affairs of the company in a controlled and efficient manner. The process involves three meetings:

Board meeting of the directors of the company;
Meeting of the members of the company; and
Meeting of the creditors of the company.

The directors/shareholders will normally decide the timing of when to commence the procedure for placing the company into Liquidation. They will also decide on the Insolvency Practitioner who will assist the company to go into Liquidation and who is to be nominated as Liquidator.

The shareholders will put forward a nomination for the Liquidator, however the choice of Liquidator is subject to the agreement of the creditors at the creditors meeting.

A company will normally cease its business activities following Liquidation. The role of a Liquidator would not normally include trading the business.
It is the responsibility of the Liquidator to realise the assets of the company for the benefit of its creditors. Where the company has tangible assets this can be by way of private sale or sale at auction. The directors, shareholders and employees of the company are not prevented from bidding to purchase the assets of the company subject to agreement with the Liquidator.

The Liquidator is also tasked with dealing with the claims of former employees and other creditors of the company.
Horsfields can assist shareholders or directors looking for options to wind up the affairs of a company. We can also assist accountants and solicitors in advising their clients with the process of liquidating the company.

Winding up petition

The earlier you deal with any action against your company, the greater your options may be. A company would receive a winding-up petition due to creditor action in respect of an outstanding debt. It is a time sensitive process and therefore essential to act quickly.

A winding-up petition puts a company at risk of being put into compulsory liquidation. If you plan to fight a winding up petition, you should seek advice early from one of our Insolvency Practitioners to ensure you take the correct steps.

If you are able to repay your creditors, you should consider this first. Alternatively, you may still be in a position to negotiate a payment plan with your creditors to avoid the pending action being progressed.
We can discuss your company’s specific circumstance to provide initial no obligation advice.

We're here to help you

If you are experiencing debt problems and would like some assistance, please contact us to book a free confidential consultation

If you are experiencing debt problems and wondering how to clear some of the debts you have incurred, please contact our friendly team for advice.

Contact us

Downloads

The Creditors’ Guides to Fees provide explanations of creditors’ rights with regard to insolvency practitioners’ fees:

Insolvency Practitioners M G Mistry and H Mistry are authorised and regulated by the Insolvency Practitioners Association, and where appointed as Administrators of a company act only as agents of the company and without personal liability. Horsfields Ltd have in place appropriate Professional Indemnity Insurance