Corporate Debt Advice and Assistance
When we use the term “corporate” this will usually apply to a limited company, but in most instances described below, it will also apply to a partnership or a limited liability partnership (LLP). If you are a sole trader or an individual please see the personal information pages.
“We provide simple, practical advice to help you avoid financial difficulties to start with.”
Insolvency legislation is complicated, as is any other area of law.
Many directors do not realise that what happens in the period leading up to the insolvency of a company can have a major impact on them personally. Whilst directors are protected to a large extent by the “limited liability” status of a company if it is solvent, that limited liability protection will not operate if a company has become insolvent and continues to trade. This could lead to severe personal liability for the directors.
Creditors of a company may also become disadvantaged once a company they are trading with becomes insolvent.
No company deliberately sets out to become insolvent and very often insolvency occurs through no fault of the directors. However, seeking advice, either as a director or as a creditor, at the earliest possible stage will often avoid problems in the future should the company become insolvent.
There are times when the directors of a company may feel that “something’s just not quite right” with their business but are unable to identify what the actual or potential problem may be. Or, it may be that a problem has been identified but the directors are not sure how to tackle it or what the consequences could be of not resolving it.
An independent review of the business could provide the clarity required to properly assess the business in order to decide whether or not to carry on with it, change its direction, seek additional funding etc.
From the point of view of the Directors
A review will highlight the solvency (or insolvency) of a business, identify current and potential future problems and what the consequences of not resolving those problems may be, in order to allow the directors to deal with such problems accordingly.
Alternatively, the company may be doing so well that it requires additional working capital to continue expanding. A review can be used as part of a request for funding (probably to Bank) and will often result in the lender gaining comfort that they can lend on a satisfactory basis and less time is taken in the funding being provided.
From the point of view of a Lender
A lender may need an independent review of a company or business in order to satisfy itself that any current or future lending decisions are based on accurate information and that the security offered by the company is sufficient to allow such lending. Such reports often provide a large measure of comfort to the lender that it is making a good lending decision and may mean the difference between a company or business obtaining the lending it requires.
Insolvency Advice to Directors
Many directors will not be aware of the pitfalls that await them once a company becomes insolvent. What is not commonly known is that once the company is insolvent, the directors can become personally liable for the company’s debts in some instances, as the limited liability status of the company no longer operates.
A Liquidator, Administrator or Administrative Receiver has a statutory duty to investigate the affairs of the company and the conduct of the directors. If the directors are found to done something wrong, action may then be taken by the Insolvency Service against a director (or shadow director) in respect of them being disqualified from acting as a director.
This disqualification period can be from between 2 and 15 years and prevents them from taking part in the “…formation, promotion or management of a company…” for this period. Acting as a director in this period could result in personal liability as well as civil and criminal proceedings being instituted against the individual.
As we have acted as Liquidator, Aadministrator etc, we regularly report on the conduct of directors. We are therefore uniquely in a position to advise directors on what steps they should be taking to protect themselves in the period leading up to the insolvency of a company as we have a clear understanding of what actions could be taken against them!!
Advice to Creditors
Creditors have many rights in respect of being able to take action to ensure they are paid the money they are owed. We are in a position to advise creditors on what steps or actions they should be taking to maximise their chances of getting any money back. In addition we are also uniquely in a position to advise whether or not they are likely to actually get any money back if a company ends up in liquidation, administration or CVA etc. This is due to us having been appointed to deal with companies going through these processes ourselves!
Whilst we specialise in rescue/recovery and insolvency utilising the formal solutions and processes available through the Insolvency Act 1986, there are many non-formal solutions available which we can assist with:
Many directors are perfectly capable of managing their company on a day-to-day basis and coping with minor emergencies. However, when a major crisis arises, being able to take quick, decisive action will minimise any impact on the business.
Utilising our experience, and our many and varied links with external advisors, we will be able to fully understand the factors contributing to the crisis and be able to put measures in place to deal with it. This could even include retraining senior staff and directors and instilling a renewed sense of confidence in them to allow them to take the business forward.
Turnaround Advice and Management
We will work with you to formulate a realistic plan to overcome a company’s financial difficulties and allow it to survive. Once a turnaround plan has been agreed, we will also assist in the implementation of that plan. This may involve us working closely with you in a monitoring capacity or we may be able to provide you with access to experienced individuals who will temporarily act as Chairman, Managing Director, Finance Director etc. whilst you learn the necessary skills to get up and running again.
Your company may have a profitable core business, but could be actually or potentially insolvent. A formal rescue or insolvency process may not be feasible, e.g. an operating licence may be revoked if the company goes into liquidation, administration, CVA etc. Financial restructuring without a formal rescue/insolvency process could be undertaken to put the company back on its feet. As this will depend upon individual circumstances, we have not provided any specific examples here. Call us first to discuss your options!
There will be occasions, mainly with groups of companies, although it is just as applicable to trading divisions within a single company, when an redundant or loss-making business or division needs to be closed down with the minimum of impact on the rest of the business. This can be a very complex and sensitive process dependent upon individual circumstances so we have not provided any specific examples here. Call us to discuss your options!