I think my business is insolvent

If you have come to the conclusion that your company may be insolvent then you need to take advice from a licensed insolvency practice without delay. Why? – see below.

You should not trade while you are insolvent, this is known as ‘wrongful trading’ and it is illegal. By doing this, it will diminish your asset position for your creditors and as director you have a duty of care to your creditors. Wrongful trading can also result in you losing your limited liability status granted to you as director of a limited company. This will mean that you will become personally responsible to cover any debts from the time when you became aware of your company’s insolvent position.

Services to deal with the situation

If you are concerned about your company’s financial situation, we offer a range of services to help turn your business around or deal with the situation before it gets any worse.

Company voluntary arrangement (CVA)

If your company is struggling with its cash flow situation and threats of legal action from creditors, but it is still a viable business, a CVA could be the ideal solution. It is a good way to retain control of your company while it trades through its cash flow problems. It involves the company entering into a legally binding agreement with its unsecured creditors.

We work with you to create an arrangement that works for your company to pay back an amount it can afford and rebuild its cash flow. You retain control of your company during the CVA period, we will leave you to manage the day-to-day operations but we will be there for you should you need any advice during this time.

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Compulsory Liquidation

This type of liquidation is a formal closure of a limited company through the Courts. Perhaps it is the worst thing that can happen to a limited company, particularly if the owners have any ambitions of salvaging the business. The procedure starts when a winding up petition (WUP) is issued.

If you manage a company and have received a WUP get in touch with us as soon as possible. Failure to take immediate action could result in all bank accounts being frozen effectively causing the company to cease trading – even if there is cash in the bank. We may be able to help you save your company, staff jobs and assets and enable you to continue trading.

If you do not take any action the court will ultimately issue a winding up order causing the company to be liquidated, the assets sold and all your staff made redundant.

Here at Company Liquidation Solutions, we want to help companies and turn them around. This is why we will work quickly to try and save your company after the issuing of a WUP.

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Creditor’s voluntary liquidation (CVL)

When your company is insolvent and no longer viable, another option worth considering may be a CVL to liquidate your company voluntarily. Once you know your company is insolvent and no longer viable, you should cease trading to ensure the position of the company’s creditors does not worsen. Compared to a compulsory liquidation mentioned above, the procedure is not managed by the court, the fees are usually lower and there are still opportunities to restart the business as a different entity.

A CVL is a quick and relatively easy way to liquidate a company but must be undertaken by a licensed insolvency practitioner (IP). Company Liquidation Solutions can help you to close your company, cancel leases, and make staff redundant taking the pressure off you leaving you free to follow other interests. You may have ambitions set up a new business or open a business similar to your current one in a phoenix company, and it may be possible to purchase assets from the liquidators to facilitate this.

We will manage the liquidation process for you by completing all paperwork, organising any meetings, making distributions to creditors where appropriate and completing statutory paperwork.

Read more on Creditor’s voluntary liquidation (CVL)

Member’s voluntary liquidation (MVL)

This type of liquidation is only suitable for solvent companies (those who can pay their debts) and it can be a good way for directors/shareholders to unlock their business investment, perhaps on retirement. It is a low cost, tax-efficient solution which will enable you, as company director, to close your solvent company.

Even though your company is not insolvent, it is a legal requirement to employ the services of an IP to complete the MVL process. You will need to complete a Statutory Declaration of Solvency stating that the company can repay all outstanding creditors within a twelve month period. We will deal with the rest. We will dispatch creditors’ and legal notices, arrange meetings and guide you through the process leaving you free to get on with your life or the next steps of your career.

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Administration

A company administration is a process designed to help an insolvent company, which currently faces serious threats from creditors, to regain control of their situation. If your company still has a viable business despite its insolvent position, this procedure can help you protect it from any action while a restructuring plan is drawn up.

On appointment, administrators have the opportunity to look into the company’s financial state and its prospects for the future. During that time the company is protected from creditor action.

If Company Liquidation Solutions were to be appointed as administrators, we would look at all options and try to rescue your company as a going concern.

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Pre-pack administration

This process is a powerful restructuring tool for a struggling company with a viable business, which has hit a stumbling block financially.

In a pre-pack administration, the administrators will arrange to sell the business and assets at market value to a new company (newco). Negotiations often take place before the company enters administration. The newco may be managed by a third party or the current directors/shareholders.

As soon as administrators from Company Liquidation Solutions are appointed, we will make plans to sell the business as a going concern to maximise creditor interests making this a quick process for yourself and the company.

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Time to pay arrangements

If you are running a company which is suffering cash flow problems and is struggling to pay corporation tax, VAT or PAYE but has a viable business, then a Time to Pay arrangement (TTP) could be the answer. The process can help your company tackle tax arrears problems quickly and it may help you to avoid insolvency procedures.

TTPs were created by the government to help businesses to survive when tax arrears have accrued.

Company Liquidation Solutions are experienced dealing with HMRC and negotiating TTPs.  We will handle all discussions and negotiations. Even if you are already in a TTP which has fallen behind we still may be able to renegotiate a further arrangement.

If we are unable to obtain the agreement of HMRC to a TTP, there are still alternative ways of rescuing your business. Contact us now for a free, confidential chat about your company.

What should i do now?

If you feel that your company may be insolvent then you need to take advice from a licensed insolvency practice without delay.