Expert Advice for the Self Employed
At Money Advice & Debt Help we understand the difficulties businesses are facing at the moment and that is why we have a dedicated team that deals exclusively with the self employed. We provide a free consultation which will examine all the options available to you and your business.
Those options depend largely on the nature of the business. If you are a sole trader then the chances are the debts are in your name and by law you are responsible for them. Whilst we can help with tax problems and offer advice on how to turn the business around the debts themselves will need to dealt with separately e.g. through an IVA.
If you are director and run a limited company then the situation is slightly more complicated and you should always seek professional advice. The following options can then be considered:
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Recovery Plan
A well constructed business recovery plan can improve the cash flow situation and enable the company to trade out of insolvency. Clearly this is the ideal scenario and is always considered first. The directors could create an internal action plan themselves if areas for improvement are apparent.
This new financial strategy should then be communicated to the companies’ creditors so that they are aware of the situation. This can immediately improve relations and give the company a new focus. As there are important legal issues to be considered it may be best to use an Insolvency Practitioner as areas (such as tax savings) that may not have been considered are often identified.
The costs of the plan are normally offset by the costs savings that are made. Our insolvency team specialise in constructing business recovery plans and could help to save your business.
Company Voluntary Arrangement (CVA)
If it is clear that the business could survive if debt repayments were reduced then a CVA could be the answer. It is a formal arrangement between the company and its creditors that is arranged and managed by an Insolvency Practitioner.
The Insolvency Practitioner will negotiate with your creditors and explain why the arrangement is the best course of action for everyone. For creditors a CVA is usually a better outcome than liquidation and as such they are normally receptive to the idea and willing to write off a proportion of the debt if the agreement is maintained. A CVA will normally write off over 50% of the debt and interest and charges are frozen.
This can seem too good to be true but surprisingly the CVA has been largely overlooked and most directors have never heard of them. At Money Advice & Debt Help we are experts in CVAs and can explain how it will be received by your bank and suppliers.
Administration
On entering administration a company is immediately protected from creditors and legal action. It buys the company time and allows an emergency plan to be formulated. A Licensed Insolvency Practitioner is appointed and has the job of deciding the company’s future. If the company is fundamentally sound a recovery plan could be the answer but if it is obvious the company has no future then it is normally sold or liquidation commences.
At Money Advice & Debt Help we can even guide you through the process of Pre Pack Sale which is an incredibly effective form of administration that allows the transfer of assets to a new company (or 3rd party) with the old company liquidated.
Liquidation
This is obviously the last resort but in the existing economic climate liquidation is becoming more and more common. It involves the sale of the company’s assets in order to settle debts and ultimately leads to the closure of the business. Liquidation comes in two forms; a creditor’s voluntary liquidation is instigated by the company itself and is overseen by a qualified Insolvency Practitioner.
A compulsory liquidation on the other hand is brought about by an order of the court and can be conducted by the Official Receiver or a Licensed Insolvency Practitioner. Any creditor owed £750 or more (e.g. HMRC) can petition for liquidation via a winding up order. This type of compulsory liquidation can be very damaging and it should always be avoided.
If done properly liquidation can actually protect your interests, clear all outstanding debts and allow you to move on. As such If you own an insolvent business and need some free advice then please get in touch today. Our team are experts in company law and can even deal with tax and VAT arrears on your behalf.
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