Category: Industry News

What is an Insolvency Practitioner?

What is an Insolvency Practitioner?

Here at RPG Business Recovery, we’re often asked ‘what is an insolvency practitioner?’ We provide a wide range of advice for businesses which are experiencing difficulties. Whenever it’s possible, this advice is aimed at keeping the business running, via steps such as a restructuring, but sometimes that proves to be impossible. It’s in cases such as these that the question of what is an insolvency practitioner comes to the fore.

In simple terms, an insolvency practitioner is someone who is legally appointed to deal with the various issues which arise when a business or an individual becomes insolvent. Being in debt isn’t necessarily the same thing as becoming insolvent, and there are several legal formalities which have to be completed before insolvency can be officially declared. An insolvency practitioner will, in the first instance, try to avoid this happening but, if insolvency is the only solution, they will be appointed to carry out the following actions:

  • Sell all of the assets of the person or company which has become insolvent
  • Collect any money which is still owing to the company or person
  • Agree to the claims being made by creditors – people to whom the individual or business owes money
  • After paying costs, distribute any money to the various creditors

At all times, an insolvency practitioner such as RPG Business Recovery will work to arrive at the very best set of circumstances for the individual or business in question. Whilst insolvency is always going to be stressful and upsetting, it needn’t be seen as the end of the world. The best possible chance of future success will depend upon the details of the insolvency being handled correctly. For example, as an Insolvency Practitioner, RPG Business Recovery has a responsibility to create a confidential report on the conduct of the directors of a failed company, to be presented to the Insolvency Service.  The law is fairly strict regarding what you can and can’t do during the process of insolvency, and we will work with you or your business to ensure that you behave in a manner which is appropriate and won’t prevent you rebuilding a business in the future.

Another key answer to the question ‘What is an insolvency practitioner?’ is that, in the case of RPG Business Recovery, it is an organisation which will have the know-how and experience to guide you to the procedure which is best suited to you. For individuals, this will probably mean choosing between the following:

Individual Voluntary Arrangement (IVA) – an arrangement with creditors to pay all or some of your debts. As your Insolvency Practitioner, we will make sure that all of your creditors have the information they need to decide whether to accept your arrangement.  

Bankruptcy – you can make yourself bankrupt, or someone to whom you owe money may ask the court to make you bankrupt. Your IP may act as a trustee, but bankruptcy is a serious step which can mean that property and other assets have to be sold to clear debts, and strict limitations are placed on your business activity for a period of years.

Debt Relief Order – this only applies to people with debt below £15,000 and few assets. It doesn’t require input from an Insolvency Practitioner but does need an approved debt adviser to act as an intermediary.

When a business is experiencing problems, the options put forward by an Insolvency Practitioner will include the following:

Company Voluntary Arrangement – As with an individual arrangement, a CVA consists of an arrangement to clear all or some of your company debts. We would make sure that your creditors have all the information they need to evaluate the arrangement and, if it is accepted, we will make sure that all the terms of the arrangement are met.

Administration – this means that your Insolvency Practitioner will try to rescue your company or dispose of assets to deal with creditors. We may also advise the directors or major creditors as to the various insolvency options prior to an administrator being appointed.  

Liquidation – this refers to the assets of the company – things like vehicles, plant, and premises – being gathered by the Insolvency Practitioner and sold, with the money used to pay creditors in a strictly specific order. Liquidation could be ordered by the courts, or it could be a decision made by the directors of the company. In the case of the latter, an Insolvency Practitioner will ensure that the directors meet their legal duties, such as calling a meeting of shareholders and creditors.

As even this fairly brief explanation makes clear, the answer to the question ‘What is an Insolvency Practitioner?’ can be highly complex and will differ, in detail at least, from case to case. If you’d like to know more, because your business is experiencing difficulties, or simply to ensure you’re fully informed should things go awry in the future, then please contact RPG Business Recovery as soon as possible.

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 demands payment for their costs and then has 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 have 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 acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

What is an Insolvency Practitioner?

What is bankruptcy? What is Voluntary Bankruptcy?

What is an Insolvency Practitioner?

Bankruptcy is a formal and legal insolvency procedure for individuals only that are insolvent.  A limited company cannot be declared bankrupt.

How to become bankrupt?

Petition for your own Bankruptcy or some people call this Voluntary Bankruptcy

If you are insolvent you can petition for your own bankruptcy, however, we would strongly recommend that you take urgent FREE advice from a Licensed Insolvency Practitioner prior to petitioning for your own bankruptcy and please feel free to contact us.  Bankruptcy can have affect your employment (either current or future), your assets including your home and your company if you are a Director.

A creditor (someone you owe money to) can petition for your bankruptcy through the Courts due to non-payment of a debt

Your creditors (people, organisations or companies that you owe money to) have chased you for payment and quite often have already obtained a County Court Judgment (CCJ) and as a last resort they issue a bankruptcy petition in the Court for your bankruptcy.  One organisation that issues the most petitions throughout the UK is HM Revenue & Customs for outstanding taxes.  If you are on the point of receiving a petition or have received a petition it is still not too late to take advice.  We strongly recommend that you take FREE advice from a Licensed Insolvency Practitioner to see if alternatives to bankruptcy would be better for you.  Please feel free to contact us TODAY.

What happens once I have been made Bankrupt?

The Official Receiver (Government Department) will initially deal with your affairs and takes the role as your Trustee.  In some cases a Licensed Insolvency Practitioner is appointed as the Trustee.

The role of the Trustee is to realise your assets (turn your assets into cash) and after the costs of the bankruptcy distribute the balance to your creditors.

Your Assets

Excluded assets (assets that you can retain) – not an exhaustive list

  • Tools of the trade – assets that you need to earn a living
  • Household items – most items that are in your home are excluded, however, if you have a “rolex watch” antique table, expensive piece of art etc these may be sold by your trustee.
  • Equity in your home (Value of home less your mortgage and secured loans) – if your share of the equity in your home is less than £1,000 this would be excluded
  • Vehicle – less than £1,000
  • Pensions – although the law changes regularly on this point

Included assets (assets that the Trustee will collect and sell) – not an exhaustive list

  • Any non-essential items which have a resale value
  • Stocks, shares and investments
  • Equity in your home if more than £1,000
  • Equity in investment properties
  • Holiday homes or caravans
  • Vehicles
  • Savings can include pensions (although the law changes regularly on the point of pensions)
  • Surplus income – The Trustee will review your income and essential household expenditure and if you have a monthly surplus then this amount will be paid to the Trustee for a period of 36 months known as either an Income Payment Order (IPO) or Income Payment Arrangement (IPA).

 

What happens to my creditors/liabilities (people I owe money to) in bankruptcy?  

Generally, all your unsecured creditors (people/companies that you owe money to) will be written off and the creditors are prevented from taking any further legal action against you including any recovery action so this prevents Bailiffs from continuing to pursue you.  If you are declared bankrupt and a Bailiff attends your home, our advice is not to answer the door and immediately contact your Official Receiver/Trustee who will then deal with the Bailiff for you.

Creditors that are not written off as a result of bankruptcy:

  • Secured creditors, mortgage/secured loans on properties or vehicles (these payments need to be maintained even during the term of bankruptcy otherwise the lender may start possession proceedings).
  • Child Maintenance arrears
  • Student Loans
  • Court Order against bankrupt for personal injury claims
  • Criminal fines
  • Debts taken out after the date of bankruptcy
  • Social fund loans

How long does the bankruptcy last?

The bankruptcy normally lasts for one year, however, the Trustee is unlikely to have concluded their work and they may continue working on your bankruptcy for many years post the end of your bankruptcy.  For example, the Trustee may have to collect your Income Payments Order/Arrangement which lasts for 36 months or deal with the sale of your home or investment properties and sale of properties can take time.

The Official Receiver can apply to have the bankruptcy extended for a period up to 15 years and this is known as a Bankruptcy Restriction Order normally due to the bankrupt acting dishonestly or recklessly or for not cooperating with the Official Receiver/Trustee.

Any good or bad entry on your personal credit file remains on your credit file for six years and this includes bankruptcy.

Who should avoid bankruptcy?

Employment – some employers frown on someone being declared bankrupt and someone that has been declared bankrupt may find that it breaches their contract of employment or future employers will not employ someone that has previously been made bankrupt.  Some examples include bankers, Police officers, certain Government Departments, financial services, some security roles, Pub Licensee, MOT Tester, holder of haulier operators license, and armed forces.

Directors of a Company – a bankrupt is unable to be involved in the formation or running of a Company including being a Director, Shadow Director or De Facto Director.

Being a Member of a professional organisation examples include Chartered or Certified Accountant, Solicitor or a Licensed Insolvency Practitioner

Some employers or professional organisations may preclude you during the term of your bankruptcy but allow you to recommence once your bankruptcy has ended and some may preclude you for life.  It is therefore very important to check with your employer, contract of employment or the organisation that you belong to.  We also add that younger people may want to consider what they wish to do in the future as becoming bankrupt may prevent you from pursuing your employment dreams in later life.

Other sundry matters that may affect you during bankruptcy

  • Your bank accounts are normally frozen as a result of bankruptcy.  You can speak to your Official Receiver/Trustee to arrange for these accounts to be unfrozen.  This can take time and for various reasons this is not always possible.
  • You are not allowed to obtain more than £500 of credit during the period of your bankruptcy without informing the lender that you are bankrupt.
  • The costs of petitioning for your own bankruptcy is in the region of £700, this is a Court fee only and the process is relatively straight forward.  DON’T use companies that advertise to “hold your hand through this scary process” as they will charge you a small fortune.  The process is designed to be used by an average person and is relatively straight forward.  If you are really struggling completing the online forms then we recommend you make an appointment with the Citizens Advice Bureau (CAB).
  • Bankrupts can struggle trading their businesses during the period of bankruptcy
  • Bankruptcy stays on your credit file for six years and can cause you difficulties for six years in obtaining credit including obtaining a mortgage or re-mortgaging for a better deal

Alternatives to Bankruptcy

If you have managed to read the whole of this blog, you will appreciate you should not become Bankrupt lightly, whether petitioning for your own bankruptcy (voluntary bankruptcy) or allowing someone to petition for your bankruptcy.  We strongly recommend that you take urgent action TODAY and contact us for an urgent FREE of charge no obligation meeting or chat over the phone.

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that you should always take advice as early as possible as this improves the chances of avoiding bankruptcy.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Bankruptcy

What is a Debt Relief Order also known as a DRO?

What is an Insolvency Practitioner?

A Debt Relief Order is an alternative to Bankruptcy aimed at individuals with debts less than £20,000.

Some of the key criteria includes:

You may be able to get a DRO if all of the following things apply to you:

  • you unable to pay your debts and are insolvent 
  • your debts are less than £20,000 
  • you have less than £50 left each month after you’ve paid your usual household expenses
  • you do not own your home
  • other savings or things of value you own are worth less than £1,000 (some assets are ignored when working out the value)
  • you do not own a car worth £1000 or more, unless it’s one that’s been specially adapted because you have a disability
  • you have not had a DRO in the last six years and are not going through another formal insolvency procedure, such as bankruptcy or an individual voluntary arrangement
  • you have lived, had a property, or worked in England or Wales in the last three years.

If you are unable to satisfy the above requirements then please contact us to discuss all the options that are 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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that you should always take advice as early as possible as this improves the chances of avoiding bankruptcy.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

If you want further advice regarding a Debt Relief Order or wish to apply for a Debt Relief Order you will need to use an approved intermediary.  One of the approved intermediary includes the Citizens Advice Bureaux (CAB) and for more information on Debt Relief Orders can be found on the CAB website using the following link www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-relief-orders/

Debt Relief Order

What is a Company Administration?

What is an Insolvency Practitioner?

Administration is a formal legal process in which a Licensed Insolvency Practitioner, such as Alan Coleman or James Fish are appointed to act as the Administrator of an insolvent company to take control from the directors and aid the prospects of survival.  More commonly Administrators are appointed by the Board but can be appointed by secured/unsecured creditors.

If you have cash flow issues and/or your creditors are threatening legal action against your company including your bankers ACT NOW by contacting us for an urgent FREE of charge advice meeting to discuss ALL the options available to you which may include avoiding a business closure.

Moratorium

The administration brings about a full moratorium, protecting the company from legal actions of creditors, both ongoing and in the future.

All outstanding debt due to creditors is frozen at the date of administration, with the return to creditors wholly dependent upon the outcome of the administration. This relieves the pressure on the company and enables the administrators to explore ways to effect a turnaround and/or achieve their purpose.

Administrators Powers and Duties

Upon the appointment of Administrators the Directors powers of management cease, with all day to day business decisions and payments being controlled by the administrators. If the administrators decide to continue to trade the company, the directors can be retained as employees. Whether the company continues trading, is shut down or the business and assets are sold as a going concern, the directors retain their fiduciary duties and responsibilities and have an obligation to co-operate fully with the Administrator.

The Administrator is an officer of the Court and has a duty to all creditors and therefore must act with integrity and objectivity when performing his duties, which include collecting in all assets, maximising realisations and reporting the work undertaken.

The Administrator has the power to make distributions to secured and preferential creditors, together with distributing a prescribed part of the company’s net property to unsecured creditors.

The Administrator must set out his proposals to creditors as to how he intends to achieve his purpose, agree the fees of the administrators and the intended method of exiting the administration, which would be dependent upon the expected outcome to creditors.

In addition to reporting to creditors on the progress of the administration, the administrator has a duty to carry out an investigation into the reasons for failure and submit a report to the Department of Business, Department for Business, Energy and Industrial Strategy (BEIS) on the conduct of the Directors who held office in the 3 years prior to Administration.

How is an Administrator appointed?

There are three ways that a company can enter into Administration: –

Para22 – by the Directors

Following advice from a Licensed Insolvency Practitioner Alan Coleman or James Fish, the Directors can be assisted in placing the company into Administration. However, this entry route is not available to the directors if the company has received a winding up petition.

The Directors must hold a board meeting to resolve to appoint administrators and confirm that they are able to do so. They would then file a notice of intention to appoint administrators in court, which would provide the company with a period of Moratorium of 10 business days.

The notice of intention would then be served on any qualifying floating charge holder, who then has 5 business days to either consent to the appointment or appoint their own choice of administrators.

After consent is received, or 5 business days have expired (consent therefore assumed), the directors can lodge a Notice of Appointment of administrators in Court, at which point the Administrators are appointed and the Company is in Administration.

Again, this document will include a statement from the proposed administrator that they consent to the appointment and that a statutory purpose can be achieved. Additionally, the administrator will disclose any prior relationship that they have had with the company in question (if any) and, if there is to be more than one administrator, provide a statement that they will have joint powers in the Administration.

Note: if there is no qualifying floating charge holder the directors can proceed to filing the Notice of Appointment without having previously filed Notice of Intention.

Para14 – by the holder of a Qualifying Floating Charge (“QFCH”)

A bank/lender, possibly following the outcome of an IBR may seek to recover their indebtedness by appointing Administrators to take control of a company.

In this regard, the holder of a valid and enforceable charge would file a notice of intention to appoint administrators in court, which would provide the company with a period of Moratorium of 5 business days.

The notice of intention would then be served on any prior ranking charge holder, who then has 2 business days to either consent to the appointment or appoint their own choice of administrators.

After consent is received, or 2 business days have expired (consent therefore assumed), the QFCH can lodge a Notice of Appointment of administrators in Court, at which point the Administrators are appointed and the Company is in Administration. This document will include a statement from the proposed administrator that they consent to the appointment and that a statutory purpose can be achieved. Additionally, the administrator will disclose any prior relationship that they have had with the company in question (if any) and, if there is to be more than one administrator, provide a statement that they will have joint powers in the Administration.

Note: if there is no prior ranking charge holder the QFCH can proceed to filing the Notice of Appointment without having previously filed Notice of Intention.

Para12 – by an application to Court

This is usually done by unsecured creditors or shareholders, or by the directors in response to the company having received a winding up petition.

The Court must be satisfied that the company is insolvent and that a statutory purpose of Administration can be achieved (see below).

The proposed Administrator must consent to being appointed and provide an independent report supporting the Administration strategy and explaining the purpose to be pursued.

What is the purpose of an Administration?

The administrator is an officer of the Court and must perform his duties with the aim of achieving one of three purposes, as set out in Schedule B1 to The Insolvency Act 1986. The purpose must be pursued in order of priority, as follows: –

  • a) Rescue the Company as a going concern

This will usually be done by securing investment into the Company, sufficient to pay all creditors, at which point the Administrator can hand back the control of the Company to the Directors and cease to act.

More commonly, the Administrator will propose a Company Voluntary Arrangement (“CVA”) as an exit route for the Administration (see below).

b) Achieve a better result for creditors as a whole than what would be the case if the Company were wound up

If it is not possible to rescue the company as a going concern, the administrator must pursue the objective of achieving a better result for creditors that would be the case if the company were placed into liquidation.

Achieving this objective is usually the result of the Administrators having sold the business and assets as a going concern, either following a period of trading the company as administrators or negotiating the sale prior to their formal appointment as administrators in a Pre-Packaged sale scenario.

The purchaser of the business as a going concern is a separate limited entity, who continues to trade the business, leaving behind the liabilities. These stay with the company in administration.

In a going concern scenario, the administrators can realise going concern values for the company’s assets as the agreed sale price will reflect their value to an ongoing business. In addition, this will avoid the costs of having to collect the assets from their present locations and subsequent disposal costs, therefore maximising the return to creditors.

Any sale of the business and assets as a going concern would only be concluded following a full and transparent period of marketing the business to ensure that all potential interest is explored and the best price is achieved, therefore maximising the return to creditors.

As Administration is considered a rescuing tool rather than a terminal insolvency procedure such as a winding up/liquidation, the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) apply. This means that the employees transfer to the purchaser in a going concern sale, reducing the liabilities within the administration (wages, holidays, redundancy claims, etc.) and again maximising the return to creditors.

  • c) Make a distribution to one or more secured or preferential creditors

If the Administrators are unable to achieve either objectives (a) or (b) then they must ensure that they are capable of making a distribution to either the secured or preferential creditors.  

Conclusion of Administration

Extension

The administrators term of office lasts for 12 months, however, if the administration has not been fully concluded, this can be extended by a further 12 months by the consent of creditors, or for a further period upon application to the Court.

Company Voluntary Arrangement (“CVA”)

The Administrator can propose a CVA to creditors, with the aim of them agreeing to a compromise on their debts over an agreed period of time (e.g. 50p/£ over the next 12 months), to enable the company to be rescued as a going concern. If approved, the Administration can be brought to an end and the Company returned to the Directors, albeit subject to the terms of a CVA. The former administrators would then act in their capacity as Supervisors of the arrangement to ensure that the agreement between the company and its creditors is enforced.

Creditors Voluntary Liquidation

If, after repaying the secured and preferential creditors in full, there are surplus funds available to unsecured creditors then the company can exit Administration via Creditors Voluntary Liquidation in order for the funds to be distributed by a Liquidator.

Compulsory Liquidation

If there are no realisations available for creditors, yet there are matters that require further investigation, it is possible to apply to court to petition for the winding up of the company, resulting in a Compulsory Liquidation.

Dissolution

If there are no funds available to unsecured creditors then the company will likely exit via dissolution, at which point the company will be removed from the register at companies house and dissolved 3 months after the administrator has ceased to act.

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that Directors should always take advice as early as possible as this gives us the greater chance of being able to save your business and avoid a business closure.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Company Administration

What is Debt Consolidation or Refinancing?

What is an Insolvency Practitioner?

An option that allows for some individuals to avoid a formal insolvency procedure is to consolidate your debts into one affordable monthly payment.  This can be done by either obtaining an unsecured or secured loan that is sufficient to repay all your creditors.  Clearly, this is easier said than done and will be depending on your credit rating, income level, the value of equity in your property and general affordability of you being able to repay the loan.  The lender has obligations to ensure that the loan will be affordable to you.

It is highly important that if you obtain a consolidation loan that you remember to cut up your credit cards and avoid using credit that has been available to you while you are repaying your consolidated loan.  Otherwise, there is a real risk that if you restart using the credit available to you that in time the payments to creditors including the consolidation loan will become unaffordable to you and you may be forced to consider insolvency options such as Bankruptcy or Individual Voluntary Arrangement.  Remember your home is at risk if you don’t keep up with the payments of any loans secured against it.

If for any reason you are unable to secure a consolidated loan to repay all your creditors then please feel free to contact us to discuss all your options.

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 demands 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 you to break the law.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that you should always take advice as early as possible as this improve the chances of avoiding bankruptcy.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Debt Consolidation

What is an Independent Business Review also known as an IBR?

What is an Insolvency Practitioner?

An IBR is an Independent Business Review or Viability Review and is performed to assess a company’s financial position.

An IBR is usually performed by an external (i.e. independent) Accountant or a Licensed Insolvency Practitioner see Alan Coleman or James Fish upon the request of a bank/lender or directors/shareholders of a company that is either underperforming or in need of finance to either fund a turnaround or new business strategy.  At RPG Business Recovery we have been engaged to complete IBRs for shareholders that are not involved in the day to day management of the Company.

It is common for a bank to send in an Accountant/IP if they believe that their indebtedness is at risk. The IBR report will cover a number of areas such as: –

  • Commenting on management and controls
  • Summarising historical performance
  • Establishing the present financial position
  • Reviewing future projections
  • Identifying funding requirements
  • Solvency review
  • Identifying weaknesses in the business and/or management
  • Options available to the Board or lenders

If a lender is threatening to send independent accountants into your business, you can lose control of the process and have no control of the costs of the independent accountant which you will be liable for the costs.  At RPG Business Recovery we can provide you with a FREE advice meeting to discuss the options which in some cases we have assist the Company moving lenders putting the business back into control of the Directors rather than the lenders. Contact us for a free no obligation meeting.

Alternatively, the bank may have received a request from the client for additional funding and the bank may want to establish the need for the additional lending, the terms required and security available against the assets of the Company, together with the Company’s ability to repay.  In this regard, an IBR acts as a kind of due diligence report.

Whether the IBR is initiated by the directors or the lenders, the reviewer will need to have a formal engagement with the company and be given full co-operation and information in order to undertake the agreed scope of work.

The IBR report is usually presented to the board of directors for comments before being finalised and issued to the bank. In some situations the report may be for the benefit of the bank only, as it may contain options, conclusions and recommendations that are sensitive.

Regardless of whether the report is made available to the board of directors, it is the company that will suffer the cost either by paying the agreed fee directly or via the bank making payment to the professional and adding the cost to its present indebtedness. In this regard it is important that the scope of work is agreed, together with a fee that is reflective of the work to be performed and urgency of the report. This should be evidenced in an engagement letter, usually signed by both the company and the bank.

The independent assessment of the businesses financial situation may give the bank/lender additional piece of mind, leading to more funds becoming available to affect a turnaround.

Alternatively, the IBR may identify that the company is insolvent and result in the bank taking steps to protect their position by calling in their indebtedness and/or by appointing administrators.

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have offices in Manchester, London and North Wales.  All Insolvency Practitioners at RPG Business Recovery are also qualified accountants and are authorised and licensed by The Institute of Chartered Accountants in England and Wales.  

At RPG Business Recovery we are experienced in performing these kinds of assignments and would always highly recommend that Directors should always take advice as early as possible as this gives us the greater chance of being able to save your business and avoid a business closure.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Independent Business Review

What is a Company Voluntary Arrangement also known as a CVA?

What is an Insolvency Practitioner?

A Company Voluntary Arrangement is a legally binding agreement between your company and its creditors. Your company has to be insolvent. A Company Voluntary Arrangement is an alternative to Liquidation and Administration.

The basic principle of a Company Voluntary Arrangement is to effectively consolidate all the Company’s creditors and the Company agrees to either pay a monthly affordable payment over a period of time normally over five years or make a full and final settlement with a lump sum payment.  These monies are paid to creditors with the balance being written off legally.

Does your Company qualify for a Company Voluntary Arrangement?

A Company Voluntary Arrangement is not available to all insolvent businesses.  Your business would need to be able to demonstrate that the company will be profit-making going forward.

Only a Licensed Insolvency Practitioner can be your Nominee that will propose a Company Voluntary Arrangement on behalf of your company and if the Arrangement is approved by creditors only a Licensed Insolvency Practitioner will become the Supervisor of the Arrangement which is normally the same Insolvency Practitioner.  Contact us to arrange an urgent appointment with either Alan or James to assess whether your company can propose a Company Voluntary Arrangement.

The Company Voluntary Arrangement Process

Stage 1

Taking advice from a Licensed Insolvency Practitioner – contact us

At RPG Business Recovery Alan and James are both Licensed Insolvency Practitioners and will firstly provide you with all the non-insolvency and insolvency solutions and discuss the suitability of each solution.

If the conclusion of the initial meeting, which is FREE of charge and without any obligation that a CVA is a viable option for your Company and it is the solution that the Board wishes to progress with we will work with the Company on:

  1. Business Plan
  2. Cash Flow Forecasts
  3. Understanding what has caused the cash flow issues
  4. Consider whether any restructuring needs to take place
  5. Obtaining breathing space with pressing creditors

Stage 2

Once we have concluded that the CVA remains a viable options, we then start drafting your bespoke CVA Proposal.  At RPG Business Recovery we believe that no two clients are the same and for that reason each CVA Proposal should be drafted in a way that works for each client.

Stage 3

The Board reviews the draft CVA Proposal and has involvement in the production of the final version of the CVA Proposal.  Although RPG Business Recovery will draft the bespoke CVA Proposal, this Proposal is YOUR Proposal.

Stage 4

The Board signs the final version of the CVA Proposal

Stage 5

The Proposal is issued to Court (stamped and filed) and issued to ALL your creditors

Stage 6

Creditors then decide whether they wish to vote for the acceptance or rejection of the CVA Proposal.  It is uncommon for a well drafted Proposal to be rejected at this stage.  However, we will require at least 75% of the creditors that vote to accept the CVA Proposal.  Assuming that we receive at least 75% of voting creditors accepting the Proposal then any creditors that reject the Proposal or don’t bother voting are dragged along as if they have accepted the Proposal, they don’t get an option of standing outside of a CVA.

Stage 7

At this point the Licensed Insolvency Practitioners role changes from Nominee to Supervisor.  The role of the Supervisor is to “supervise” the Arrangement and to ensure that your Company adheres to the terms and conditions of the Arrangement

Stage 8

The Director’s continue trading the Company

What is a Company Voluntary Arrangement Proposal?

The CVA Proposal is broken down into a number of sections:

  1. Statutory information – details of Directors, Shareholders, Registered Office etc
  2. History of the business explaining to creditors why the Company is in the current financial position
  3. What has happened recently which has returned the Company to profit including any restructuring
  4. Summary of historic trading results and any commentary
  5. Statement of Affairs
  6. Estimated Outcome Statement – showing what creditors are likely to receive in a CVA compared to Liquidation
  7. Business Plan / Forecasts and the offer based upon these projections.  The monthly payment is set based upon affordability of the Company
  8. Terms and Conditions of the Arrangement

The basis of many CVA Proposals is to make one single affordable monthly payment over a period of time normally over five years, subject to annual financial reviews.

Benefits of a Company Voluntary Arrangement

  • The day to day running of the business stays with the Director(s) of the Company unlike other insolvency procedures where the Insolvency Practitioner takes over control of the business and assets
  • Creditors/suppliers appreciate that the Company is doing its best to trade out of the financial situation and are generally supportive especially as the return to creditors tends to be greater than Liquidation
  • The Director(s) don’t have to find the cash to purchase the assets/business back as they remain in the company in control by the Director(s)
  • If the Company requires an operators license to trade, the Company normally retains the license even once the Company Voluntary Arrangement is approved.  If the Company is placed into Liquidation or Administration and a new company is formed to take the business forward then a new operator’s license may need to be applied for
  • The Director(s) are not subject to potential disqualification proceedings unlike in Liquidation or Administration
  • Can improve cash flow quickly
  • Is a great tool for business restructuring that a Company may struggle to achieve outside of a CVA.  For example if you need to make employees redundant, end a property lease, terminate onerous contracts for no immediate cash outlay other than the agreed monthly payments
  • STOP all legal actions against the Company including a Winding Up Petition, Judgments or Bailiffs
  • At RPG Business Recovery our CVA Proposals are bespoke for each client as we believe that no two clients are the same
  • If circumstances change during the life of the CVA, changes can be proposed by your Supervisor to amend the terms of the Proposal (known as a Variation), subject to creditors approval.

Pitfalls of a Company Voluntary Arrangement

  • There is a low success rate for Companies completing a CVA, although this is true we believe at RPG Business Recovery that the main reason for this is due to poorly drafted Proposals and supporting cash flow forecasts
  • The CVA will affect the Company’s credit rating and this is true and at RPG Business Recovery we consider the impact of the reduction of the credit rating when assessing the projections to ensure that they are realistic and achievable
  • Failure to maintain the monthly payments may result in the Supervisor, at the request of creditors, issue a petition against the Company to place the Company into Liquidation
  • Tendering for new contracts can prove difficult while subject to a CVA and we would not recommend a CVA as a solution for a business that tenders for new business especially if the tendering process including looking at the financial position of the Company
  • If the Company does well during the course of the CVA then at the annual financial reviews the monthly payment may increase.  RPG Business Recovery CVA Proposals normally allow for some of the additional profits to be retained in the Company (normally 50%)

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.

At RPG Business Recovery we highly recommend that Directors should always take advice as early as possible as this gives us the greater chance of being able to save your business and avoid a business closure.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Company Voluntary Arrangement

What is a Pre Pack Administration?

What is an Insolvency Practitioner?

The term Pre Pack is a style of Administration.  A Pre-Pack Administration is when a sale of the business and assets BUT not creditors are negotiated prior to the Company being placed into Administration normally by the Directors. Immediately following the appointment of Administrators, who have to be Licensed Insolvency Practitioners, the Administrators immediately complete the sale of the business and assets as negotiated pre Administration.

Only a Company that is insolvent can be placed into Administration.  It is a powerful tool to allow the business to move forward protecting the business and safeguarding employment.  The process allows for protection against pressing creditors, creditors threatening legal action or recovery action, stops a winding up petition and also prevents Bailiffs trying to remove company assets.

At RPG Business Recovery we provide advice to the Board, FREE of charge and without obligation and at this initial meeting we discuss all the options available to the Board including non-insolvency and insolvency options.  Please contact either Alan or Jimmy both Licensed Insolvency Practitioners today to arrange an urgent advice meeting.

Who can purchase the business and assets in a Pre-Pack Administration?

  1. The current Director(s)
  2. The Management Team
  3. A third party – can be a competitor

What is the process?

Stage 1 –  A Licensed Insolvency Practitioner would need to consider all the options available to the Company and conclude that a Pre-Pack Administration is a viable option

Stage 2 – The business and assets have to be professionally valued (requirement of SIP16)

Stage 3 – The business and assets have to be marketed for sale normally for a couple of weeks (requirement of SIP16)

Stage 4 – The Insolvency Practitioner invites interested parties to make their best and final offers and starts the negotiation process

Stage 5 – The Solicitors drafts a sale of business agreement and agrees a final version with the purchaser

Stage 6 – The Company is placed into Administration and immediately following the sale of business agreement is finalised and completion takes place

Stage 7 – The purchaser now has control of the business and assets

Stage 8 – The Administration realises all assets of the Company, pays the costs of the Administration and distributes any balance of funds to the creditors

The Insolvency Practitioner has to follow the guidelines set out in SIP16

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that Directors should always take advice as early as possible as this gives us the greater chance of being able to save your business and avoid a business closure.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

Pre Pack Administration

What is an Individual Voluntary Arrangement also known as an IVA?

What is an Insolvency Practitioner?

An Individual Voluntary Arrangement (IVA) is an arrangement between a debtor (someone that owes money) and their creditors (people and companies that are owed money).  An Individual Voluntary Arrangement (IVA) is for people that are insolvent.

An Individual Voluntary Arrangement is an alternative to Bankruptcy.

Only a Licensed Insolvency Practitioner can propose an Individual Voluntary Arrangement on your behalf.

There are two main ways in which an Individual Voluntary Arrangement can be proposed:

  1. Paying monthly affordable payments from surplus income (income less day to day living expenses) over a period of time and normally over 60 months.  This is in full and final settlement of your unsecured creditors and allows for debt forgiveness.  
  2. Paying a lump sum into an arrangement in full and final settlement of all unsecured creditors (a few exceptional creditors are excluded including any secured creditors on property and vehicles).

Paying monthly payments from surplus income (income less day to day living expenses) over a period of time and normally over 60 months.

This type of proposal is based on affordability and you will work with your Licensed Insolvency Practitioner on calculating your monthly income less your reasonable monthly expenses (outgoings) leaving what is known as your surplus income.  The surplus income payable over a period up to 60 months (five years) is paid into your Individual Voluntary Arrangement this is known as your voluntary contribution and can be in full and final settlement of all your unsecured debts.  At each anniversary the Insolvency Practitioner will complete a financial review of your income and expenditure which may result in your voluntary contribution increasing.  In addition you may have to pay 50% of any unforeseen income such as overtime, bonuses, lottery wins, inheritance etc.  

If you own a property, a calculation is normally carried out towards the end of the term of your Individual Voluntary Arrangement to calculate whether you have any equity.  The calculation is normally done based on 85% of the value of your home (known as 85% LTV), less any mortgages or secured loans and less your partner’s/spouse’s share.  Illustrations of the calculation are below:

Individual Voluntary Arrangement

 

 

 

 

 

 

This calculation has become the industry standard and one that creditors over time have agreed to.

Towards the end of the Individual Voluntary Arrangement (IVA), in scenario’s 1 and 2 there would be no requirement for you to pay any additional monies and as long as you have maintained the monthly payments into the Individual Voluntary Arrangement.

In scenario 3 you would have to attempt to remortgage your property and make a payment of £5,625. If however, no lender will release any monies you would have the option of extending the term of the Arrangement for a further 12 months and this would be in lieu of your equity.  Even if the additional 12 payments does not total the calculation used here of £5,625 this would be in full and final settlement of your share of the equity.

These scenarios are for demonstration purposes only and to provide you with a guide.

Paying a lump sum into an arrangement in full and final settlement of all unsecured creditors (a few exceptional creditors are excluded including any secured creditors on property and vehicles).

The lump sum tends to be from either:

  1. A third party payment from say a friend or family member, or
  2. Equity from a remortgage or sale of the property

Creditors tend to accept these types of Individual Voluntary Arrangement if the lump sum is greater or equivalent to your assets and that you have no real surplus income.

How do you consider whether an Individual Voluntary Arrangement is suitable for you?

Considering and proposing an Individual Voluntary Arrangement is a serious matter and should not be considered lightly.  At RPG Business Recovery we don’t believe that you should agree to such a serious option without having a face to face meeting with a Licensed Insolvency Practitioner.  Many Individual Voluntary Arrangements last between 5-6 years which is a long time and you may be agreeing to deal with assets such as your home.  It should be considered much more seriously than making a consumer purchase online.

Once a Licensed Insolvency Practitioner agrees that an Individual Voluntary Arrangement is a viable option then the License Insolvency Practitioner will draft an appropriate Proposal.  It is important that you read and understand the Proposal as this will become a legal binding agreement between you and your creditors.  Get this wrong and you may be giving permission to your Insolvency Practitioner to petition for your bankruptcy at some future point in time if the Individual Voluntary Arrangement does not work out and then your home may be at risk.

Once you happy with the Proposal you will need to sign it and your Insolvency Practitioner will present it to your creditors and your creditors will vote on the acceptance or rejection of your Proposal.  You will need at least 75% in value of your creditors that choose to vote to agree to accept your Proposal.  Assuming that you achieve at least 75% of your voting creditors to accept your Proposal, any creditors that then rejects your Proposal are effectively “dragged along” and they can’t legally sit outside of the Voluntary Arrangement.

In some cases, creditors may accept the Proposal subject to certain changes to the Proposal known as Modifications.  An example of a Modification is that creditors may believe that spending £75 per month on a television package may be classed as excessive expenditure and they may reduce this allowance by say £40 per month.  This would mean that you would have to pay an extra £40 per month for the life of the Arrangement if you are prepared to accept the Modification, however, if you reject the Modification then that creditor’s vote will be classed as a rejection which may mean that your Voluntary Arrangement has not been approved.  The Licensed Insolvency Practitioner will explain the ramifications of such Modifications if creditors propose any (they are not proposed in every case).

Once the Individual Voluntary Arrangement has been approved you will become legally bound by the terms of the Arrangement.

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 you to break the law.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

Please feel free to contact us for a FREE no obligation advice meeting.

Individual Voluntary Arrangement

What is Liquidation?

What is an Insolvency Practitioner?

Liquidation is a legal process whereby a limited company is ‘wound up’ and eventually dissolved – which means it ceases to exist (the Company will be taken off the formal Register of Companies at Companies House).

There are two types of Insolvent Liquidation: –

  1. Creditors Voluntary Liquidation
  2. Compulsory Liquidation (involuntary)

There is one type of Solvent Liquidation:-

  1. Members Voluntary Liquidation

During the course of the Liquidation, all assets of the company will be sold/realised (i.e. liquidated) and the net proceeds will be distributed to creditors (that owed money from the insolvent company being liquidated) in accordance with the order of priority set out in the Insolvency Rules 2016.

A Creditors Voluntary Liquidation is instigated by the Director(s) who, having considered the financial position of the Company, choose to voluntarily close down the business and appoint a Liquidator to deal with the Company assets and the claims of creditors.

This is generally a less stressful procedure for the Director(s) who have the guidance of Licenced Insolvency Practitioners who can assist in the process of placing the Company into Liquidation and relieve the pressure by communicating with creditors on behalf of the Company. In addition, the expertise of the Insolvency Practitioners should ensure that realisations for the Company’s assets are maximised and the loss to creditors minimised.

A Compulsory Liquidation is forced upon the Director(s) when a winding up order is made in Court, usually because the Directors of a company have not made payment to a creditor which has resulted in a Winding up Petition. Upon the making of the winding up order, the Official Receiver is appointed Liquidator and all employees are automatically dismissed and the Company ceases to trade. The Official Receiver will make enquires of the Directors concerning the Company’s assets and liabilities and may eventually appoint a Liquidator from the Private Sector to take the job on and realise the assets identified.

In both types of liquidation, the Directors powers of management cease upon winding up – being the passing of a shareholders resolution in a Creditors Voluntary Liquidation and the making of the winding up order in a Compulsory Liquidation.

The liquidator, whether that is a private sector Licensed Insolvency Practitioner or The Official Receiver have a duty to investigate the causes of failure and submit a report to the Department for Business, Energy & Industrial Strategy under the Company Directors Disqualification Act 1986 regarding the conduct of the Director(s) who held office in the 3 years immediately preceding the Liquidation. In a Compulsory Liquidatio, the Official Receiver retains this duty even if a Private Sector Liquidator is appointed to deal with the assets.

Additional duties of the Liquidator

The Liquidator(s) principal duty is to collect in the Company’s assets, treat creditors fairly and sell company property in order to maximise realisations for creditors.

A Liquidator must act in accordance with the standards set out in the Code of Ethics – for example to act with objectivity, independence, integrity and due competence and skill and care, aiming towards the highest professional standards.

A Liquidator must report to creditors on an annual basis to keep them fully appraised of developments within the Liquidation.

Powers of the Liquidator

The liquidator has a number of powers set out in statute, as follows: –

  • Power to disclaim onerous property
  • Power to apply to Court for guidance/decisions
  • Powers of investigations

In terms of investigations, the Liquidator has the following powers: –

  • Power to collect in the Company’s property,
  • Power to obtain full co-operation from any party who held office as a Director or Employee or took part in the formation of the Company, and
  • Power to apply to Court to summon to appear before it any person known or suspected to have company property in their possession, or who the Liquidator considers capable of giving information concerning the promotion, formation, dealings, affairs or property of the Company.

Solvent Liquidation

Where the Company is solvent, but the Directors decide that the business should cease, for example due to retirement or the loss of a major customer, the Company’s affairs can be wound up in a similar way via a Members Voluntary Liquidation. In this process, a Licensed Insolvency Practitioner is appointed by shareholders to wind up the Company and must ensure that all liabilities are paid in full before making distributions to shareholders. Once done, the Company is then dissolved and taken off the formal Register of Companies at Companies House. There is no duty for a liquidator to report on the conduct of the Director(s) in a solvent liquidation.

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.

RPG Business Recovery is part of Royce Peeling Green Limited (a firm of Chartered Accountants) and was established over 100 years ago (established in 1911).  RPG have 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.  

At RPG Business Recovery we highly recommend that Directors should always take advice as early as possible as this gives us the greater chance of being able to save your business and avoid a business closure.  Please feel free to contact us for a FREE no obligation advice meeting or if you prefer you are welcome to contact our Licensed Insolvency Practitioners directly.  Our Insolvency Practitioners are Alan and James. You are welcome to contact either Alan (Mobile 07580 885750 or email acoleman@rpg.co.uk) or James (Mobile 07717 001087 or email jfish@rpg.co.uk) directly.

What is Liquidation