Recovery & Insolvency

Often something completely beyond your control can leave you and your business facing a difficult financial situation. To help avoid business failures and prevent personal debt from becoming unmanageable, it is important to seek professional advice as soon as a problem is identified.

Our experience shows that when running a business, whether you’re a sole trader, in partnership or have a limited company, the quicker you act the more chance you’ve got of being able to save your business or personal affairs. Many situations can be resolved without the need for a formal insolvency process so getting advice at an early stage is vital.

Administration

Administration is a legal rescue procedure used when there is reasonable expectation that a solution can be found. This process creates a legal stay against creditor action to safeguard the business and give you and your company breathing space whilst you work with us to decide on the best recue strategy.

Bankruptcy

Bankruptcy as the result of a Court order is a process that takes an individual's assets and sells them for the benefit of those who are owed money. You may either petition the Court yourself or wait for a creditor to do so.

If your home has equity it is likely that it will be realised in the bankruptcy but this does not necessarily mean you will lose your home. There are also certain assets that will not be taken from you including those required for basic human needs, the tools of your trade and your pension.

However, bankruptcy has many consequences including restrictions on your finances and working life and these can be difficult to grasp. We work with you to make sure you understand how bankruptcy would affect you and your family and the best course of action to take.

Company Voluntary Arrangement (CVA)

A CVA is a flexible arrangement between a company and its creditors and involves making a monthly contribution from profits or an asset to fund a lump sum payment. A CVA often pays creditors considerably less than their full amount due and at the end of a successful CVA, any remaining debt will be written off.

If a CVA is the right option we will help you draft a proposal and present it to creditors. If 75% by value of creditors vote in favour then the CVA is approved and becomes binding. As long as the company then does what it has promised to do, the creditors must leave it alone.

Creditors’ Voluntary Liquidation (CVL)

Sometimes, business recovery or rescue is not a viable solution. Initiated by the directors and shareholders a CVL is the liquidation of an insolvent company and brings the company's life to an end. The creditors of the company must then approve the choice of liquidator since the company is not able to settle all of its debts.

We will advise you on the legal, technical and practical issues so that you fully understand your obligations including what you can do to minimise further deterioration of the company.

Members' Voluntary Liquidation (MVL)

An MVL is the liquidation of a solvent company. Whilst the directors initiate this process it is the shareholders who appoint a liquidator and since the company is solvent, all debts are settled and any cash remaining is passed to the shareholders.

There are many good reasons for an MVL and since distributions from liquidation are automatically treated as capital distributions, one of the most common is to ensure shareholders pay less tax.

We have also seen MVLs motivated by amongst other things, the company having run its course and being of no further use: the directors wishing to retire, or in many cases to facilitate the reconstruction of the company and create separate businesses going forward.

 

Often the question of how to pay for proper advice is just one more worry so we initially offer you our time for free. To discuss your business or personal needs please contact our Recovery and Insolvency team or send us an online enquiry.

Recovery & Insolvency

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