Companies have struggled during the recent CV19 lockdown and will find trade different now that lockdown is easing.
This is particularly true in the retail and leisure sectors where social distancing measure limit the number of people in a shop or restaurant
Other sectors are struggling in the delay to life returning to normal and also finding that the business world has changed over the last 4 months
In a previous article HERE we talked about spotting the issues in your business and ways to resolve them, but what if they don’t or wont work and your company is going to fail?
During lockdown there have been changes to legislation that may help save your business or maximise value for you and your creditors.
The most common insolvency solutions that can help you are
1) Administration
This is a process that can be used to rescue the company, ensure a better result than liquidation and make a payment to secured or preferential creditors.
This may mean that any guarantees given by you to banks and suppliers may be repaid or reduced from company assets.
Lots of administrations will be ‘Pre-packs’ which look to market the business prior to administration to help maximise value by finding a buyer, usually through discreet marketing, before the issue of insolvency starts to reduce the value of the business significantly.
In a pre pack a buyer is identified and the deal is done which is completed immediately upon entering administration.
Selling a business after administration happens less frequently as value tends to be lost by the company entering an insolvency process and the marketing of the business being a more publicly known process
Starting the administration process can allow the company to trade for a 10-day period but with a moratorium in place that stops creditors taking action against the company.
The new ‘administration lite’ process gives the directors more control of the business while a rescue plan is put together
2) New moratorium
Part of the new Corporate Insolvency & Governance Bill introduced during lockdown,
this Lasts initially for 20 days and provides the company with protection from its creditors allowing the breathing space to put a rescue deal together or to fully consider the options available to the company which can include an insolvency route
3) Company Voluntary Arrangement – CVA
CVA’s usually feature in the news when linked to large retail outlets and usually involve reducing the rent to landlords in the exit plan.
They are however available to all companies and are a very useful flexible tool to help save the business or company
They can be used following the new moratorium to help safeguard the company from creditor actions while a CVA is agreed
4) Liquidation
Utilised for the closure of a company rather than its rescue but can be used to save the business of the company by selling it as part of the liquidation process.
This can allow the business to start again without the burden of historic debt
Harrisons Business Rescue can help you identify solutions to your business problems and can help you with the process that works best for you
Contact us HERE or phone 01476 574149 for a free meeting to discuss your business problems
