The quick answer
The earlier that you face the reality of an impending insolvency and take advice, the more options you will have. You may not have to be declared bankrupt or forced into liquidation if you do not want to be.
In more detail
INSOLVENCY OPTIONS FOR LIMITED COMPANIES AND LIMITED LIABILITY PARTNERSHIPS
The number of options open to you depends on how soon you deal with the impending insolvency and how viable your business is in a new shape or form.
If you are certain that it is not viable to continue and you want to close then there are three main options:
- Liquidation – which means deciding to put the company into liquidation with the help of a Licensed Insolvency Practitioner like us who will act as liquidator.
- Administration – which means getting the business protected by a Court order whilst it is wound down or sold to a new owner.
- A Company Voluntary Arrangement (“CVA”) where a proposal is put to creditors to freeze the debt and a three to five year period is usually agreed in order to repay only part of the debt.
If there is no money available at all to close the business then you may need to ask a supplier if they want to push you into compulsory liquidation (as it costs you nothing) but often directors want to avoid this route.
INSOLVENCY OPTIONS FOR SOLE TRADERS AND PARTNERSHIPS
Again, the earlier you realise that serious financial problems are coming the more options and control you will have over the outcome.
The options for sole traders or partnerships are:
- If you do not want to carry on or there is not a viable business then usually it means bankruptcy. However, where there are only a small number of creditors, maybe a deal can be reached to part settle and write off the balance of debts.
- If you want to carry on, then negotiate early and agree a ‘time to pay’ plan with creditors such as suppliers, HM Revenue and Customs and the bank or consider an Individual or Partnership Voluntary Arrangement (“IVA” or “PVA”).
- If you cannot pay suppliers and just ignore them then they are very likely to make you bankrupt or, in the case of a partnership, force it into liquidation.
The earlier that you seek help and advice on insolvency the more options you will have.
Contact Us Today
As experienced Licensed Insolvency Practitioners we can help your business through a Creditors Voluntary Liquidation or other options. Please contact me today for a free consultation. We can talk on the phone or by Zoom or Skype or meet.