How DIP Insolvency can help you
There is nearly always more than one option open to a business as a strategy for survival. Choices do, however, become more limited the longer the situation is allowed to stagnate. Take advice early!!
Different strategies, different ways to see the future
A voluntary arrangement:
This process is open to sole traders, limited companies or partnerships.
The Arrangement process involves the licensed practitioner learning the full story about the issues being faced by your business, assessing details of your liabilities - secured and unsecured creditors - and advising you on proposals that will most likely be acceptable to your creditors.
The end result of your voluntary arrangement might be to pay all of your creditors back in full over a longer period (usually no more than 5 years) or it might mean offering to pay your creditors less than full payment by changing your trading strategies and, reducing overheads.
For a sole trader or a partnership the Court can grant an interim order which gains time whilst the proposals are put together to offer to the creditors. This interim order stays all proceedings whist the process is put in place (a moratorium) and helps considerably if there are creditors threatening to take action.
A Court-ordered moratorium such as this can put creditor actions - such as summonses, CCJs and winding up petitions - on hold temporarily.
For a limited company there is a moratorium procedure, but it is only open to eligible small companies in fairly specific circumstances. Alternatively an administration order might be needed if a more immediate stay of proceedings is required.
The administration order puts the licensed practitioner in control of your business whilst a strategy is put in place. The strategy might be the sale of your business to a third party, it might be to facilitate a management buy-out or it might enable the closure of distressed sections of the business and the streamlining and restructuring of the remainder. Under an administration there are various options that can be explored with the practitioner.
You may decide that what you have as a business cannot be brought back to profitability and that you need to start again. Under the right circumstances and with clear advice from a practitioner it is acceptable to start again, to buy back assets from the practitioner acting as administrator or liquidator and to open a new but similar business.
Taking advice from a practitioner is essential however, because if the transaction is not dealt with correctly you may commit offences under the Companies Act and the Court can order that you be made responsible for the liabilities of your failed company.
Take advice at the earliest opportunity to avoid costly mistakes!