Insolvency Advice, Services and Products Provided

There can be many reasons why a business finds itself in financial trouble.
When we become involved, it is not to judge but to find a solution.

A free initial meeting or meetings, is the starting point. At those confidential meetings we will seek to gain an understanding of your business circumstances, consider all possibilities and explain your options. Above all, we will listen to what you have to say. We will work exclusively for you, both you personally and you corporately. We are independent and able to act solely in your best interest. We negotiate with all the various bodies on your behalf, creating space between you and those you or your company is indebted too.

Our job is to take the pressure off you and get the best and most appropriate assistance to you, including financial support if that is needed and appropriate. Our advice will save you money, stress and may well save your business.

We always exhaust all the business rescue possibilities before considering the formal insolvency options. When a business becomes insolvent, the owners or the directors have a duty to act in the best interests of the creditors. Continuing to trade while insolvent, to the further disadvantage of creditors, is a serious matter and there are personal liability and disqualification risks if you “wrongfully trade” as it is known.

We will work with you to find the best way to save or re-start your business. Our “Business Manager” is extremely experienced and skilled in assessing clients’ problems and needs and then quickly providing the necessary resources to support and manage each particular circumstance. That might include a “Recovery-Turnaround” specialist, an “Insolvency Practitioner,” or both, “Interim” Managers to either run “Projects” or to bring a new dimension, temporarily, to the general or specific management of the company. It may be just to listen and give advice. We do that free of charge.

INSOLVENCY

The choices available to an insolvent company are:

Take our 2 minute test for Insolvency, or click on any of the above choices for more information.

RESCUE • RECOVER • RENEW

Recovery

A Recovery plan is the best way to “trade out” of insolvency, if cash flow problems are temporary and can be managed so as not to disadvantage creditors. There are two possible options:

Internal Recovery Plan

Obviously the first choice for any company, where the recovery plan is designed and implemented in-house. The directors contact all the creditors informally to explain the current situation and to negotiate new terms for the repayment of debt and to protect future supplies. A new and realistic “business plan” and budgets will be introduced and approved and regular weekly/monthly results communicated externally and internally.

External Recovery Plan

Where an external Business Recovery and Turnaround specialist is employed to provide those services. The use of an expert and experienced professional to oversee the formation and implementation of the plan, acting as an “Interim Manager” also provides transparency to creditors, shareholders and employees.

Neither of these two options involves any formal legal procedures.
Unfortunately, quite often, advice is not sought quickly enough and in a deterioating situation,
the best solutions become less and less likely to suceed.

Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement (CVA) is a legal arrangement which allows a company in debt to keep trading and avoid liquidation. In a CVA the company and its creditors agree to an extended period of up to 5 years to repay debt. Once in place (creditors holding 75% of the total debt have to agree to the proposals) all future interest and other charges are frozen. Normally only an agreed percentage of the debts are repaid and once the CVA term is completed all the remaining “unsecured” debts are written off and the company continues to trade.

A “Statement of Affairs” is produced, together with a new Business Plan to see the viability of the process and an Insolvency Practitioner is appointed to draw up the arrangement, oversee its implementation and administer it. We at Phoenix & Co can choose the most appropriate Insolvency Practitioner for your particular needs, from our panel, or you are free to make your own choice.

Personal or Individual (Sole Trader) Solutions - Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a legal arrangement which allows individuals to write off a percentage of their debts, paying back the balance over a period of time up to 5 years. If eligible for this government scheme and once in place, all interest and other charges stop, as do threatening letters and all contact from creditors.

As with a CVA an Insolvency Practitioner will be appointed to manage the process and the same rules apply.

Administration

Administration is a legal process that protects insolvent companies from aggressive creditors until a solution to its financial problems is found. Once in the process all legal actions against the company are stopped. The main aim of Administration is to protect the company while plans are drawn up to “Rescue” it, “Sell it”, or “Liquidate” it. An Administrator is appointed by the courts who will decide the best way forward, which might be to:

Administrative Receivership

When a company fails to keep to the terms of a loan, or faces financial difficulties, the lender (a bank for example) may be entitled to appoint an Administrative Receiver, who is mainly concerned in getting money back to the secured creditor, the bank. Since September 2005 the right to appoint is generally limited to "Debenture" holders, whose "Charge" existed at that date. A "Charge" is taken out by the lender against the company's assets and is then recorded in a legal document called a "Debenture".

 

Liquidation

Liquidation involves selling off all the company assets to raise money to repay creditors and then closing the company down. Before liquidation all “Recovery” options should have been considered, as this is the final process for an insolvent company. Liquidation can be voluntary or compulsory.

Voluntary Liquidation

A Creditors Voluntary Liquidation (CVL) is initiated by the Directors and Shareholders who nominate a Liquidator (who is an Insolvency Practitioner) to wind up the insolvent company. The IP will sell all the assets and share the proceeds with the creditors in accordance with their proven claims and priorities. The IP will also report on the conduct of the Directors, which in this case should show they behaved responsibly and no wrongful trading took place.

Compulsory Liquidation

A Compulsory Liquidation is initiated by a creditor who has taken all reasonable steps to recover an undisputed debt. A winding up petition is served and a liquidator is appointed. by the courts. Either the official receiver or an IP can be the liquidator. Even if the debt is paid at this stage the winding up hearing will still go ahead and a report on the Directors conduct made.

Note: Bankruptcy is the personal equivilent of liquidation

Legal

If you are threatened with legal action or have received legal notices, do not ignore them. The problem will not go away. It will get worse. Handled quickly and professionally, legal action can be stopped, giving time to discuss and plan a solution.