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Services

Insolvency options

We do all we can to help businesses experiencing financial difficulties return to profitability and growth. In some cases this is not possible and it may be necessary to use a formal insolvency procedure. We can help with the following:

• administration
• company voluntary arrangements
• liquidation and administrative receivership.

Administration
An administration is a court controlled procedure placing a company or partnership that is, or is likely to become, insolvent under the control of an administrator following an application by the company, its directors, partners, a creditor or a secured creditor with a floating charge.

The statutory purpose of an administration is the rescue of the company as a going concern or, achieving a more advantageous realisation of assets for the benefit of creditors than would be possible in liquidation, or to facilitate payment to the secured or preferential creditors. An administrator must try to achieve the first of these objectives unless the second is more favourable for the creditors. From the 15th September, an administrator may, subject to certain requirements, pay dividends directly to creditors, including unsecured creditors, potentially reducing time and costs in returning funds to the worst affected by the insolvency.

Company voluntary arrangements
A less severe measure is a company voluntary arrangement (CVA), where a plan of reorganisation or composition in satisfaction of debts is put forward to a company's creditors. A CVA once approved is controlled by a supervisor. It is possible to propose a CVA using a moratorium to protect the company from pressing creditors for a limited period while the proposal is prepared and put forward to creditors.

The crucial factor in rescuing a business and protecting creditors' rights is the early involvement of specialists who are experienced in helping ailing companies and returning them to profit to ensure a viable future and who are skilled in dealing with the various interests of creditors. Our experience has proven repeatedly that creditors will usually support a properly planned CVA proposal without the need the for the company to arrange a moratorium.

Liquidation and administrative receivership
Liquidation - whether court ordered or voluntary - is a process whereby a company has its assets realised and distributed to satisfy, as far as possible, its liabilities and repay shareholders.

It is a terminal process, followed by dissolution of the business, which can also occur when administrators are called in too late.

The key challenge for the liquidator or administrative receiver is to act quickly and judiciously to realise as much of the value of the company as possible, so that potential losses to creditors and shareholders are minimised.

This is a difficult task. Move too hastily - without investigating the options - and it could mean the end of the company, which perhaps could have continued trading after all. Act too slowly and there may be no value left to realise.

It takes a trained, specialist practitioner to make the right decision. Our licensed insolvency practitioners have many years experience in handling liquidations and winding down companies.