Help & Advice for Insolvent Companies

Where the company is clearly insolvent, the right course of action will depend upon a number of factors:

Is the situation capable of being turned around?

Procedures that can be considered:

Administration – is a great business rescue tool governed by the Insolvency Act 1986 [the Act]. It provides an insolvent company with a period of statutory protection from creditors, allowing the Administrator, working with the directors, time to formulate a strategy going forward. Getting the company into Administration does not require an application to Court and can be done very quickly, thereby getting early protection from pressing creditors. The objectives of the Administration are laid down in the Act and can include the rescue of the company as a going concern or the sale of the company’s business and assets. Learn more >

Pre-Pack Administration – an arrangement under which the sale of all the business and assets is negotiated with a purchaser [can be a third party or the existing management team, or a combination of both] prior to the appointment of an Administrator, and the Administrator effects the sale immediately on, or shortly after his appointment. Such a Pre-Pack Sale does not require the approval of the court or the creditors although there are safeguards in place to ensure that such a sale is both legal and transparent. Done properly, the process gives continuity and maintains the value in the business, as well as preserving jobs. Learn more >

Company Voluntary Arrangement [CVA] – a highly flexible business rescue tool governed by the Insolvency Act 1986 where a company enter into a legally binding agreement with its creditors. It gives the company breathing space in which to try and trade out of its difficulties or give it time to sell its assets at better than “fire sale” prices. Payments to existing creditors are frozen and the directors are left in charge to run the company’s affairs whilst a Licensed Insolvency Practitioner will act as Supervisor ensuring that the agreement that has been reached is adhered to by all sides. Quite often creditors will be required to write off significant amounts of debt as part of the CVA agreement. Learn more >

Do the directors and shareholders want to fight on

Procedures that can be considered:

Administration – is a great business rescue tool governed by the Insolvency Act 1986 [the Act]. It provides an insolvent company with a period of statutory protection from creditors, allowing the Administrator, working with the directors, time to formulate a strategy going forward. Getting the company into Administration does not require an application to Court and can be done very quickly, thereby getting early protection from pressing creditors. The objectives of the Administration are laid down in the Act and can include the rescue of the company as a going concern or the sale of the company’s business and assets. Learn more >

Pre-Pack Administration – an arrangement under which the sale of all the business and assets is negotiated with a purchaser [can be a third party or the existing management team, or a combination of both] prior to the appointment of an Administrator, and the Administrator effects the sale immediately on, or shortly after his appointment. Such a Pre-Pack Sale does not require the approval of the court or the creditors although there are safeguards in place to ensure that such a sale is both legal and transparent. Done properly, the process gives continuity and maintains the value in the business, as well as preserving jobs. Learn more >

Company Voluntary Arrangement [CVA] – a highly flexible business rescue tool governed by the Insolvency Act 1986 where a company enter into a legally binding agreement with its creditors. It gives the company breathing space in which to try and trade out of its difficulties or give it time to sell its assets at better than “fire sale” prices. Payments to existing creditors are frozen and the directors are left in charge to run the company’s affairs whilst a Licensed Insolvency Practitioner will act as Supervisor ensuring that the agreement that has been reached is adhered to by all sides. Quite often creditors will be required to write off significant amounts of debt as part of the CVA agreement. Learn more >

Have the stakeholders accepted that the situation is untenable and trading should be brought to early closure?

Procedures that can be considered:

Creditors Voluntary Liquidation [CVL] – a formal winding up of a company’s business affairs governed by the provisions of the Insolvency Act 1986. The process is instigated by the directors of the company and the company is actually placed into liquidation by way of special resolution of the shareholders. A meeting of creditors is also held at which a full report is given concerning the company’s assets and liabilities and an explanation of the reasons for the insolvency of the company. A Licensed Insolvency Practitioner is appointed as Liquidator and his main function is to realise the assets and distribute monies to the creditors. In addition, the Liquidator will make a report to the Insolvency Service on the conduct of any party that has been a director or acted in the capacity of a director in the three years leading up to the commencement of the liquidation.

Once you have made contact with us, we can guide you through the various procedures and provide you with our considered advice helping you to choose the correct course of action to fit the circumstances.

Each of our specialist Insolvency-Online sites has specific help and advice for directors and individuals seeking solutions to financial hardship and difficulties. Review our helpful free Guides.

Whether you are a director looking for protection and turnaround solutions [Admin/Pre-pack, CVA] or simply seeking the most cost efficient way of drawing a line under a company’s business difficulties [CVL], our specialist sites will help you make an informed decision. With our additional advice, we will help you make the right decision. Learn more >

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Talk to a professional advisor

If you would like to speak to one of our friendly, qualified insolvency experts then please do get in touch. We will be happy to give you all the time you need.

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Browse our downloadable guides

Our very own No Nonsense Guides which are jargon free and succinctly outline the various procedures offered.

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Read our frequently asked questions

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