Is it possible to save a limited company from closure?
If your company is struggling financially and you can’t make the payments you are obligated to, you might find yourself feeling like there is nowhere left to turn. If you find yourself struggling on how to move forward, do not worry. Despite how it might feel, there may be a few options that could just save the business from closure. However each option will require different courses of action to be taken, you will need to asses your business, your situation and decide which one is best for you. Some involve casual negotiations with creditors; others are formal insolvency solutions that require the input of a licensed Insolvency Practitioner.
We understand that it’s a lot to take in, and sometimes you don’t know were to begin, If you feel like this then the help of a professional is maybe what you need. You can always enlist the services of Insolvency Practitioner Professionals such as Marshall Peters, who will walk you through the required steps, offer support and advice throughout the entire process and can even negotiate with HMRC on your behalf.
Company Voluntary Arrangement (CVA)
It goes without saying, when dealing with any business or repayment negotiations having a licensed Insolvency Practitioner adds a great deal of weight to your corner. It instils confidence in your company’s ability to repay, usually over a longer period of time or at a reduced amount.
It’s not always the easiest task getting Creditors to accept a Company Voluntary Arrangement because of the fees. The fees associated with a CVA have to be included when agreeing the details of the repayment proposal, but this may be a better than the company being liquidated.
A CVA is an attractive proposition for the companies directors as it reduces monthly expenditure and releases cash.
Another possible option is company administration, however this does require you to hand over control to the administrator. If you can personally accept this it does offer a very effective solution to prevent closure, it could also delay or suspend all legal action once the order has been granted.
If the business is rich with assets and can secure long-term stability Company administration may be the preferable option.There is generally a 12 month administration period, which offers time for any assets to be restructured and the renegotiation of any contracts or leases.
This would also prevent HMRC from closing you down and given the correct circumstances it could be a very effective option. At the end of the 12 month period the control is handed back to the companies directors.
Pre pack administration
Under the supervision of a licensed insolvency practitioner, the assets of a failing company can be sold to a ‘phoenix company’ which has been set up by the directors of the failing business.
There is a sequence of events that must be followed to ensure the new business can continue to trade with little loss of continuity. All negotiations and marketing must be done before the Insolvency Practitioner is appointed.
You may need to act quickly if the creditors are about to issue a winding up petition. Be aware this option could also be ruled out once a petition has been issued and you may find yourself powerless to save your company because this will prohibit the sale of any assets.
The sale of business assets to a connected party is governed by strict regulations that ensure fair value is applied.
If you believe your business may benefit from the help of a liscenced business insolvency practicioner or would simply like to know more, get in touch with Corporate Recovery today. We are a team of experienced insolvency practitioners who specialise in corporate turnaround and financial restructuring. You can get in contact with us by filling out the contact form or emailing us at firstname.lastname@example.org