What solutions could a struggling business seek?
The economic situation in the UK may be improving but businesses can still find themselves in serious financial difficulty.
In such instances, many issues can present themselves and opting for insolvency practitioners could be a requirement as a way of tackling the challenges faced.
But there are many options available and deciding on the right approach is by no means a straight-forward process.
Concerns over company assets, the most sensible options moving forwards, and retaining a certain level of control, may all be on the minds of company directors.
A few of the more common approaches are listed here, providing a brief insight into how a struggling company may want to act.
Administration is designed to protect a struggling business from creditors while any restructuring processes are underway.
By doing so, it can be possible to reduce overheads or make influential and important changes to the way a business is run.
If a company is unable to continue trading which makes administration impossible, then liquidation could be an option.
It aims to release as many assets as possible so that creditors can be paid off, although the degree to which this is possible will vary from case to case.
Company Voluntary Arrangement
In some instances, creditors may agree to a Company Voluntary Arrangement if they believe better outcomes can be achieved than by liquidating.
A CVA will see any unsecured debts frozen and repaid over a set period of time under a legally binding agreement.
A court may order the winding up of a company completely which is known as a compulsory liquidation.
It can be a very long and arduous process due to its complexity.
In any instances where businesses find themselves in financial difficulty, seeking guidance and advice from insolvency practitioners is recommended.
By Phil Smith