When a
company finds itself in serious financial difficulty, they have serious
questions that they need to face up to. The most sensible option regarding
what to do next may be to call in specialist insolvency practitioners to
confront the challenges ahead.
However,
for many companies there is confusion surrounding their options. What will
happen to the company assets? Which option is the most sensible one for my
business? How much control will I still have? We have looked at a few of the
most common options that a struggling business can pursue:
Administration
Administration
is a process that protects a business from creditors whilst the process of
restructuring takes place. The process can involve a reduction of overheads,
re-financing or key changes to the management structure.
Liquidation
Liquidation
becomes the most likely option if the company is unable to continue running
and, as a result, administration is not possible. The central objective of
liquidation is to ensure the release of as many assets as possible to pay off
creditors.
CVA
Alternatively,
creditors may agree to the installation of a Company Voluntary Arrangement (CVA) if they are
convinced that this will achieve a better long-term result than liquidation.
A CVA is a legally binding agreement that allows a company to freeze any
unsecured debts and repay them over a specified period of time.
Compulsory
Liquidation
Compulsory
liquidation can only happen when a court order is issued to wind up a company
completely. It can be one of the most complex options for a company which is
in trouble due to the potentially lengthy nature of the process. Once the
court has appointed a local Official Receiver then a corporate insolvency
service can become involved.
Corporate
insolvency specialists
A corporate insolvency specialist can assist
business leaders, financial directors and stakeholders to deliver pro-active
solutions for their business. They can also offer insightful advice regarding
how to proceed in the unstable economic climate of 2013.
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Monday 25 February 2013
What are the options for a struggling business?
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