SOLUTIONS TO SAVE YOUR BUSINESS

 There are a number of solutions available to rescue a troubled business, and the most appropriate will depend upon your company's own unique circumstances, what you are seeking to achieve, and also the intensity of pressure you are under from the company's creditors.

Pre-Pack Administration, Liquidation, and a Company Voluntary Arrangement ("CVA") are all formal insolvency procedures, whilst a Company Debt Management Plan is not a formal insolvency process.

In either a Liquidation or Pre-Pack Administration scenario, the company will cease to trade, although the business (including all assets) can be seamlessly transferred to, and continued by, a new, debt-free phoenix company (which is perfectly legal, subject to certain conditions and criteria being met), as the Enterprise Act 2002 encourages business rescue and the survival of the core business via a phoenix company scenario. 

In a CVA or Debt Management Plan scenario, the limited company will remain in existence and continue to trade, but with its debts restructured and rescheduled. A CVA is a formal insolvency process, which is registered at Companies House, although it does offer the benefit of a moratorium, preventing creditors taking enforcement action.

For most businesses, Pre-Pack Administration or Liquidation are most appropriate, as the business can seamlessly continue via a phoenix company, but with all debts fully written-off, and once free of the burden of historical debts, can trade profitably. However, in circumstances where the company itself needs to be preserved for legal or contractual reasons, then a CVA or Debt Management Plan will be appropriate.

Each solution has pros and potential cons. We will work closely with you to fully understand your company's unique circumstances, identifying any areas of potential concern, and will formulate the best solution, tailored specifically to your business and the outcome you want to achieve.

Whilst Pre-Pack Administration and Liquidation write-off all company debts, allowing the business to continue via a new, completely debt-free phoenix company without the burden of historical debt, directors will be subject to an investigation, and certain transactions with directors or shareholders, or any connected parties/companies, may be deemed to be voidable. Also, a report will be submitted on the conduct of the directors under the provisions of the Company Directors Disqualification Act, which in cases of misconduct, could potentially result in disqualification from being a company director. However, assuming that a company's directors have acted reasonably, there should be no issues whatsoever regarding their conduct or any other personal implications.

In a CVA or Debt Management Plan scenario, the limited company will remain in existence and continue to trade, but with the benefit of its debts restructured and rescheduled. There is no investigation into the conduct of the directors, and no prospect of any transactions being deemed to be voidable. An agreed proportion (or all) of the company's debts will be repaid to creditors, albeit over an agreed period of time, and therfore these procedures can be more expensive overall, and will place a potentially significant debt and cash-flow burden on the company, with monies being required to be paid every month to repay historical debt from future income & (taxable) profits.

Buy-back of the business (assets, contracts etc.) is agreed in advance

New, debt-free, company can trade under the same (or a variation of the original name) 

All legal action is stopped, and the business continues to trade solely under the control of the phoenix company

Seamless transfer of business ensures that minimal disruption occurs 

Customers are not necessarily contacted (they may well be unaware of the procedure)

Transfer of the business includes goodwill, customer list, IP etc.

The transfer of ownership can include the book debts (sales ledger) of the old business

You can choose to simply close the company and walk away without any personal liability

Directors may also be able to claim £'000's in unpaid wages and redundancy from the Redundancy Payments Office

Legally binding agreements with the company's creditors, allowing up to 75% of liabilities to be written off

Debts are significantly reduced, with the balance rescheduled into regular monthly payments

The business continues to trade under the control of its directors

Minimum disruption occurs (it is probable that customers will be unaware of the CVA)

CVA enables onerous contracts, leases, obligations etc. to be terminated

Legal action by creditors is stayed

No investigation into directors’ conduct

No calling-in of overdrawn directors’ current accounts, no voidable transactions etc.