What are the options for a struggling business?
When a company finds itself in serious financial difficulty, they have serious questions that they need to face up to. The most sensible option regarding what to do next may be to call in specialist insolvency practitioners to confront the challenges ahead.
However, for many companies there is confusion surrounding their options. What will happen to the company assets? Which option is the most sensible one for my business? How much control will I still have? We have looked at a few of the most common options that a struggling business can pursue:
Administration is a process that protects a business from creditors whilst the process of restructuring takes place. The process can involve a reduction of overheads, re-financing or key changes to the management structure.
Liquidation becomes the most likely option if the company is unable to continue running and, as a result, administration is not possible. The central objective of liquidation is to ensure the release of as many assets as possible to pay off creditors.
Alternatively, creditors may agree to the installation of a Company Voluntary Arrangement (CVA) if they are convinced that this will achieve a better long-term result than liquidation. A CVA is a legally binding agreement that allows a company to freeze any unsecured debts and repay them over a specified period of time.
Compulsory liquidation can only happen when a court order is issued to wind up a company completely. It can be one of the most complex options for a company which is in trouble due to the potentially lengthy nature of the process. Once the court has appointed a local Official Receiver then a corporate insolvency service can become involved.
Corporate insolvency specialists
A corporate insolvency specialist can assist business leaders, financial directors and stakeholders to deliver pro-active solutions for their business. They can also offer insightful advice regarding how to proceed in the unstable economic climate of 2013.