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Our starting point is to see if your business can be saved by either restructuring the business internally or by using an insolvency procedure.

Informal Restructuring

In many circumstances a company may be able to trade out of its difficulties and to achieve this it must formulate a recovery plan. Such a plan will assist the company’s cash flow and improve its ability to obtain fresh financing on reasonable terms. The recovery plan may require third party providers of funds other than mainstream bank facilities. Here at Bennett Jones we have access to many such providers who are able to provide short to medium term funding either through asset financing or even taking a share in your business in return for the risk capital which is provided.

For further information on how we can help with rescuing your business please contact us here

In some circumstances to ensure that your business survives and has the best chance of returning to profitability it may be necessary to restructure the business by using one of the insolvency procedures outlined below.
This is a rescue solution for failing companies and provides immediate protection for companies. It is also aims to maximise returns for all stakeholders. In the first instance once administration is in place the company's assets are protected by a statutory 'moratorium' from creditor actions including protection against bailiffs taking equipment, stock and vehicles.

Early consultation with the company’s creditors who hold fixed and floating charges (i.e. the bank/lender) is essential as notice (at least five days) is required to be given to such creditors.

The appointed Administrators have many powers to enable them to maximise returns including the power to continue to trade the insolvent business without the pressure of continuing creditor action with a view to finding prospective buyers.

Administrations are commonly associated with the term 'pre-packaged' insolvency. It is possible to negotiate a sale before an insolvency process occurs which has to be agreed by an Insolvency Practitioner. Immediately after the Administration commences the sale is completed on by the Insolvency Practitioner Administrator on the terms previously agreed.

A pre-packaged sale is undertaken to protect the value of the business from the obvious damaging effects that insolvency can have on the business. From the Insolvency Practitioner’s perspective he must be happy that the sale achieves a better return and that the outcome to creditors is the best for them in the circumstances.
An insolvent company may enter a CVA if it can demonstrate that its business can survive provided its debt repayments are restructured or reduced. The Directors in association with Bennett Jones will formulate proposals which will be presented to meeting of the Company’s creditors (75% of the value of creditors voting need to approve).

Once a CVA is approved by creditors it is a legal arrangement and the Company’s creditors are bound by the arrangement which means that they are unable to take any recovery action against the Company. The arrangement is supervised by a Licensed Insolvency Practitioner.

The advantages of a CVA are that it avoids winding up actions by creditors and starting again and it preserves the name of the business. In addition, the Directors maintain control of the day to day running of the business.

CVAs have other advantages including the for example enabling employee contracts to be terminated without the Company having to pay unaffordable termination payments. The terms of long term contracts with service suppliers may be amended to a more favourable basis for the Company.

A CVA may last between 12 months and five years. At the expiry of the arrangement the company is no longer liable for to pay anything further to any of the creditors included in the CVA.
A creditor’s voluntary liquidation is often seen as the insolvency of last resort although in certain circumstances it can be appropriate for this process to be used to rescue the business with the directors or shareholders purchasing the business or its assets from the liquidator. It is a formal insolvency process during which the company’s assets are realised in order to settle in part or in whole the company’s liabilities.

In order to place the company into liquidation the board of directors must meet and appoint an Insolvency practitioner who will then assist the company in preparing the statement of the financial position of the business (the statement of affairs) and a narrative history of business. The directors will also summon meetings of the shareholders and creditors. The shareholders’ meeting will appoint the insolvency practitioner and resolve to place the company into liquidation. The creditors’ meeting which normally takes place immediately after the shareholders’ meeting is held for the purpose of approving the appointment of the Insolvency Practitioner selected by the shareholders.

Please contact us for further information about company liquidations including information about the costs and expenses involved.
A members liquidation is a solvent liquidation and the process is controlled by the directors and shareholders. Where a company has finished all its activities and there is no reason for the company to continue in existence this process is used to formally conclude the affairs of the company and distribute the shareholders’ capital remaining after payment of any outstanding debts and tax liabilities.

Although the company will be solvent the process for the winding up is covered by UK insolvency legislation. The shareholders appoint an insolvency practitioner to assist in the winding up of the company’s affairs and distributing the assets of the company to the shareholders.

Bennett Jones is happy to work on a fixed fee basis for these appointments. We will assess the complexity of the case on a no obligation basis and then provide you with details of our fixed fees and expenses for undertaking the work Please contact us for further information.
A compulsory liquidation starts with a court order. The initial liquidator will in most circumstances be the Official Receiver who may pass this to an Insolvency Practitioner with a view to realising assets.

A company can be placed into compulsory liquidation by a creditor who is owed at least £750 but the cost of the Court process is often seen as prohibitive by creditors who are owed relatively small amounts particularly in cases where they are unsure if the company will ever have the funds available to pay the creditor’s debts.

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