Insolvency and Restructuring Services for Businesses
Here at Isadore Goldman we understand that being a stakeholder in a business with financial difficulties, whether as a director, partner or sole trader, is a very lonely and distressing place. The temptation can be to bury your head in the sand or to simply pass the papers to your accountant in the hope that the problems will go away.
All too often we see one or more of the following scenarios. A stakeholder might pump their own money or their family’s money into a venture with little hope of being repaid, or give personal guarantees to the bank and other creditors. Alternatively, they might try to quickly recover monies owed to them by their failing business, leaving them vulnerable to future proceedings by an “office holder”, whether a liquidator or an administrator.
Most stakeholders have good relationships with their accountants who can be a reassuring face in troubled times and will help with cash flow forecasting and other activities. However, unless your accountant is an insolvency practitioner, or has ready access to a firm like Isadore Goldman specialising in insolvency and restructuring, the chances are that they do not have the knowledge required to steer you through the bumpy road ahead. One thing you will need to consider straight away is whether you need help for your business, or for yourself as the owner of that business. This is an important distinction that can lead to unfortunate consequences if ignored.
If you are a director of a company in financial trouble, and want help for the company, you will need advice on the restructuring/rescue options available to it, for example refinancing, informal restructuring, or Administration or a Company Voluntary Arrangement. You may also need the help of an Insolvency Practitioner (IP). We have long-standing relationships with many IPs all over the UK and can point you in the right direction.
If you are a partner in a large or small business in difficulties, or a sole trader, there are a number of rescue options available including a Partnership Voluntary Arrangement or an Individual Voluntary Arrangement, about which we have considerable expertise.
Whatever your business, you will also need to understand the rights and enforcement strategies of its secured and unsecured creditors (especially the banks and HMRC). We can help if direct negotiations with creditors are the best way to resolve your problems.
If you are looking for advice about your personal position, please be aware that IPs (or “office holders”) are usually only paid from the assets and money they recover, so they will have every incentive to pursue claims against you personally if they feel a claim can be maintained. If you are faced with this type of threat, visit our page devoted to business owners: Claims against Directors, and in particular the section dealing with Office Holder Claims. If you are facing directors disqualification proceedings, visit the our page devoted to that subject.
In many cases a stakeholder will want to retain the assets of the business, its clients or the name. Our specialist team can help you.
The earlier you seek advice from a specialist the better it is for you. The temptation is to ignore the warning signs that your business is in trouble and then delay until every other option you have explored has failed. However, the earlier you seek advice the more options will be available to you and the more you will be in control of your destiny.
At Isadore Goldman we understand what you are going through. We have access to a bank of Insolvency Practitioners and funders who may be able to assist. Likewise we are able to advise you on the formal insolvency procedures most commonly used, namely Liquidation, Administration, Company Voluntary Arrangements and Individual Voluntary Arrangements and their impact upon you.
Company Voluntary Arrangement
A company voluntary arrangement (CVA) is a formal agreement between a company and its creditors (i.e. people who are owed money) and is typically suitable where you have a viable underlying business and it simply needs time to repay some historical debt that has built up and which can be repaid over time - generally in a lesser amount than originally owed. The debts can be repaid in installments (typically monthly) or via a sale of company assets.
Administration
Administration is a company rescue process in which an insolvency practitioner (IP) is appointed to manage the company’s business with the aim of helping it to restructure, recover or regain control after a period of financial stress. The primary aim of administration is to rescue the company so it can continue trading as a going concern. If that is not possible, a secondary purpose is to achieve a better result for the company’s creditors (i.e. the people owed money) than would be achievable in a liquidation. If neither of these purposes can be achieved, its third aim is to collect in the company’s assets for distribution to its creditors.
Liquidation
Liquidation (or a winding-up) is a formal process in which a company’s business is brought to an end and an insolvency practitioner (called a liquidator) is appointed to oversee that process. The closure process involves a number of steps including the collection of all available assets and subsequent sale and distribution to creditors (the people owed money by the company). At the end of the liquidation the company is dissolved which means that its name is removed from the public register of companies.
Partnership Voluntary Arrangement
A Partnership Voluntary Arrangement is a formal agreement between a partnership, its partners and their creditors that is monitored by a third party Insolvency Practitioner called a supervisor. Alternatively individual partners might enter into ‘inter-locking IVAs’ (see our separate section on IVAs here).