As 2025 progresses, more and more businesses are finding themselves under financial pressure. It probably comes as no surprise, then, to learn that rising numbers of companies in England and Wales are facing insolvency and entering into liquidation. However, if you are also struggling, it’s important to know that liquidation is not the only option available and there might be alternatives (including business rescue) that suit you better. We have outlined these alternatives to company liquidation in this article.
Why Companies Liquidate Their Businesses
When a business becomes insolvent and cannot realistically pay its debts, it will often enter liquidation to have its assets correctly redistributed among the company’s creditors. This can happen either voluntarily, through a process known as Creditors Voluntary Liquidation (CVL), or be compulsory and as a consequence of a winding-up petition being issued by HMRC.
What Alternatives To Company Liquidation Are There?
While liquidation is the most well-known formal response to severe financial troubles, there are other solutions that business directors should be aware of. Though choice may not be a luxury in all circumstances, understanding and considering all of the available options is key to acting in the best way for your business. These alternatives to company liquidation may well be more suited to your specific situation, particularly if the business does still have some viability for the future..
Company Voluntary Arrangement (CVA)
A CVA process is a formal agreement between the company and its creditors to repay a set portion of its debts over an agreed period. The CVA proposal must be comprehensively detailed and requires a 75% majority among creditors to pass through. Note that this percentage is based on the total value the creditors hold, not the individual number of creditors.
The CVA process has a number of advantages over liquidation. Directors get to maintain control over the company throughout the process, and everybody is legally bound to its terms once it’s agreed upon. It also allows the company to continue trading (providing all obligations of the arrangement are met), effectively paving the way for recovery.
Administration
Company administration is an extremely useful option for relieving pressure from creditors if your business is faced with insolvency. Through this alternative formal process, control of the company is handed temporarily over to an administrator, who will work to restructure the company and provide a better result for creditors than liquidation would. While the administration process is ongoing, the company has breathing room to work out the next steps and put in place a suitable rescue plan. This means it’s often used by businesses with a reasonable chance of recovery, including larger businesses with salvageable components or those with potential buyers lined up.
Restructuring
Another of the alternatives to company liquidation is restructuring. Making changes to the way the business is structured can help you to increase efficiency, cut down on costs and take unnecessary pressure off the company. Debts can also be restructured for more favourable payment terms to better suit your current position. It might not be the best option for a company facing imminent problems, but it can help you head off future issues before they escalate.
If your business is facing financial difficulties and believes liquidation is now the only viable option, then get in contact with us. At Ballard Business Recovery, our business rescue experts have extensive experience in all of the alternatives to company liquidation outlined in this guide, and can talk you through the options applicable to your scenario to ensure you are moving forward in the best way.
