As a company we take great pride in doing everything we can to keep the clients who come to us operating. We’ve got the experience to be able to see solutions where there may appear to be none, and the help we’ve delivered over the years has left us perfectly placed to remain calm, take an overview and offer a route to the best possible outcome in each individual case. In some cases, however, the problems in question have reached the point at which there is no option but to accept corporate insolvency.
If corporate insolvency becomes inevitable then the services of a company such as RPG Business Recovery become more important than ever. That’s because life will have to go on after the corporate insolvency, and the way in which it is handled will help to ensure that you maintain the goodwill of your customers, your wider reputation and the chance to move on. Most people will be able to understand that circumstances sometimes make corporate insolvency impossible to avoid, but what will impact upon how they regard your business in the future will be how you deal with the situation. Being honest with creditors and other business partners is vital, and coping with the situation of corporate insolvency in general is likely to be simpler and less damaging if you have a thorough understanding of what it actually means.
In simple terms, corporate insolvency arises if:
- A company cannot pay its debts when they are due, or will soon be unable to do so
- A company has liabilities which amount to more than its assets
Other circumstances which may lead to corporate insolvency are a creditor who is owed £750 or more serving a formal demand which isn’t paid after three weeks, or a judgement or court order which a company hasn’t met.
The consequences of corporate insolvency will differ from case to case. The following, however, are some of the ramifications which might have to be dealt with following an instance of corporate insolvency:
- If the directors of a company continue to trade after insolvency has become inevitable, then they may find themselves facing personal claims or being disqualified from directing in the future.
- If a winding up petition is issued by a creditor, then the company may find itself subject to compulsory liquidation.
- In these circumstances, the company would no longer be able to sell goods or make payments, unless authorised to do so by the court. The process will also probably involve the withdrawal of banking facilities, as it will be regarded as a default on any loans, with the lenders able to call in any security. A similar response is likely to come from suppliers and customers, as both groups take action to protect themselves.
There are various procedures available for making corporate insolvency a reality, and the option chosen will probably depend upon the point at which the company accepts the inevitability of insolvency, and whether it takes place on a voluntary basis, or following the actions of one or more of the creditors. In the event of a company going into administration or liquidation – during which all assets are converted to cash which is then used to pay off creditors – there is a strict order of prioritisation under which creditors have to be paid off. This begins with secured creditors, moves through the charges relating to the liquidation and ends with the shareholders of the company. This last instance is extremely rare, as it is doubtful that a company with sufficient assets to pay shareholders would be facing corporate insolvency in the first place.
As can be seen from what is only a fairly brief description, corporate insolvency is a very complex process. If you feel that your business may be approaching the point at which corporate insolvency becomes inevitable, then it’s vital to seek the help of experts such as RPG Business Recovery as soon as possible. If insolvency can be avoided, we’ll find a way of doing so, and if not, we’ll work to make the process as pain-free as possible.
Please contact us for a no obligation, confidential and free of charge meeting to discuss the options available to you.
Remember – only Licensed Insolvency Practitioners can assist you with formal insolvency appointments (this is a legal requirement) and are best placed to provide insolvency/debt advice. Licensed Insolvency Practitioners are highly regulated and have professional indemnity insurance. Unfortunately, there are a number of unregulated “debt advisors” advertising on the web that demand payment for their costs and then have to refer you to a Licensed Insolvency Practitioner for any formal insolvency who may also require payment and you could effectively end up paying twice unnecessarily. In our experience, many debt advisors provide poor or wrong advice and in some cases encourage Directors to break the law.
At RPG Business Recovery we are Licensed Insolvency Practitioners and also specialists in providing businesses with turnaround solutions including avoiding liquidation. Please feel free to contact us for a FREE no obligation meeting on 0161 608 0000 to discuss the options available to your company. You are also welcome to contact either Alan (Mobile 07580 885750 or email firstname.lastname@example.org) or James (Mobile 07717 001087 or email email@example.com) directly.
RPG Business Recovery is part of Royce Peeling Green Limited a firm of Chartered Accountants established over 100 years ago with offices in Manchester, London and North Wales. All Insolvency Practitioners at RPG Business Recovery are authorised and licensed by The Institute of Chartered Accountants in England and Wales.