When businesses become financially distressed, it can seem like the end of the road for directors. In many cases, though, it can be turned around, and the business can begin flourishing again. For the best chances of doing so, you should bring on board a licensed insolvency practitioner to help you with your business rescue.
What Is An Insolvency Practitioner?
So, what do insolvency practitioners do? An insolvency practitioner is a licensed professional trained to act on behalf of a business undergoing an insolvency process. It’s their job to assess the whole situation thoroughly, determine the best course of action for the business with a view to maximising the result to benefit the company’s creditors and execute the given plan in a timely and professional manner. While their role might often be associated with company closure via liquidation, a licensed insolvency practitioner can also play a critical role in formal insolvency processes that result in business rescue.
How To Rescue A Business
If you’re a director or shareholder of a business that’s struggling financially, then it can be difficult to come up with an effective strategy for recovery alone. However, there are various formal processes that a licensed insolvency practitioner can work with you on to help you rescue your business.
Company Administration
Company administration is an extremely useful process that allows you to protect your business from increasing legal pressure from creditors. It creates an automatic stay on any legal action and provides the company with the chance to restructure as needed and sell any assets or the business on a going-concern basis. Once an insolvency practitioner has been appointed as the administrator, they will take control of the company and make changes to provide the best possible outcome for the company’s creditors.
Pre-Pack Administration
Pre-pack administration is very similar in concept and execution to company administration. An insolvency practitioner will still be appointed as administrator, but in this case, it will have been determined in advance that the business will be sold. The sale will be properly implemented shortly after the administrator is appointed, and the insolvency practitioner will work to ensure the best possible deal, which will in turn secure the interests of the creditors.
Creditors Voluntary Arrangement
Alternatively, you could attempt to negotiate a creditors’ voluntary arrangement, or CVA. A CVA is a contract between and company and its creditors where an agreed plan to pay off a portion or all of the company’s debt. At least 75% of the creditors (by value, rather than numerically) must agree to the CVA before it is put in place. An insolvency practitioner would act in the role of nominee, reviewing the proposal and providing insight into its likelihood of success.
Liqudiation
If all else fails, then the best course of action is to go into liquidation. While this may feel like admitting failure, a well-handled liquidation process from an experienced insolvency practitioner can maximise returns for the company’s creditors, reduce any risk of personal liability for directors and close the business in an entirely legal and professional manner.
If you’re looking for an insolvency practitioner to help rescue your company from financial distress, then you’ll want to get in contact with us at Ballard’s Business Recovery as quickly as you can. We pride ourselves on delivering tailored business rescue services in a timely and simple manner, and the sooner you get in touch, the more likely it is that we can turn your situation around.
