Business Rescue Tools

Our rescue and insolvency professionals have many years' experience using a range of tools to get businesses back on track or wind them up where there is no other viable alternative.

To help you understand your options, Atherton Bailey offers a free initial consultation during which we will listen to your problems and then outline:

• How you can resolve your problems without any further professional involvement;
• Which of the tools below are practical for your situation;
• How we would use these tools to tackle your problems;
• The consequences for you and your business.

Business rescue and insolvency tools

Administration

Not a remedy in itself, administration temporarily ring-fences a company to give it time to fix its financial problems. Administration stops creditors seizing goods or taking legal action. If cash problems are temporary, the ring-fence can be lifted. Some companies exit administration by a company voluntary arrangement or creditors' voluntary liquidation. Administration can also help an insolvency practitioner realise assets in an orderly manner where a business is going to cease.

A pre-pack administration is where the business is arranged to be sold at a proper market value immediately on administration to ensure continuity of trading. Although sometimes subject to ill-founded criticism, done properly, pre-pack administrations are proven to be the best outcome for all stakeholders.

For more on administration see our case studies

Company voluntary arrangement

A company voluntary arrangement (CVA) is a deal between an insolvent company and its creditors. The company agrees to repay some or all of its debts from future profits or asset sales over an agreed period (usually three to five years). A CVA can allow for the balance of debt to be written off where it cannot reasonably be paid. Atherton Bailey's turnaround experts often save companies by creating innovative, but realistic payment plans.

For more on company voluntary arrangements see our case studies

Creditors' voluntary liquidation

A creditors' voluntary liquidation (CVL) ends a company's life. But it can provide for all or part of the business to be transferred - at proper market value - to a new company. This means trading can continue without interruption. A CVL is the preferred route for realising and distributing assets where trading has to cease. Where a business is no longer viable, directors should talk to an insolvency practitioner as early as possible to avoid wrongful trading under the Insolvency Act 1986 and being personally liable for the company's debts.

For more on creditors' voluntary liquidations see liquidation services and our case studies

Members' voluntary liquidation

A members' voluntary liquidation (MVL) also ends a company's life but when it is solvent - ie able to pay all its debts in full, including any statutory interest. It can be a tax-efficient way of distributing accumulated profits to shareholders, particularly for single-purpose companies, since distributions can be made as capital rather than as income. An MVL may be used to overcome a temporary cash flow problem as long as you can pay all debts plus interest within 12 months. MVLs are commonly used to dispose of companies which have become dormant due to group reorganisations.

For more on members voluntary liquidations see our case studies

Informal schemes

For smaller businesses or where problems are temporary, an informal arrangement with creditors may be suitable. Informal schemes minimise bureaucracy and costs. They often give creditors a much better return and avoid the negative publicity of a formal scheme. Atherton Bailey has a lot of experience negotiating informal schemes with creditors.

For more on informal schemes see our case studies

Section 1003 strike-off

Under S.1003 Companies Act 2006, directors are entitled to request that a company be struck off if it has ceased trading, even if it is insolvent. It can be a cost-effective way of dealing with a small company where the costs of liquidation are prohibitive. The company has to have ceased trading for three months and have no assets. There are statutory forms to complete and known creditors receive notice and can object. HMRC may object if it believes directors have overdrawn accounts or if dividends have been paid to the detriment of creditors. The process is straightforward, although best managed by an insolvency practitioner, since there can be pitfalls.

For more on section 1003 strike-offs see our case studies

Receivership

Now almost entirely replaced by administration, receivers can still be appointed by secured lenders, such as banks, to recover debt due to them. Receivers usually wish to work with management to sell the business as a going concern and maximise the funds realised. Banks can now appoint administrators instead of receivers, but the administrators' duties are to all creditors, not just the bank.

Call us now

Call your local Atherton Bailey office to find out how we can help and arrange a free initial consultation.