Directors Duties in Insolvency and their Implications

My Business Is Making Me Depressed

in Directors Duties in Insolvency and their Implications

What can I do if my business is making me depressed? Depression is a mental state of unhappiness which can bring psychological, emotional and physical effects to daily life. We have recently seen a rise of mental health in the UK, interestingly a rise in work related mental health issues. It was found in the 2023/24 Labour Force Survey, that there were over 800,000 workers suffering from work-related stress, depression or anxiety. Therefore, becoming depressed due to work is not uncommon. You are not alone. Often, businesses can make employees and directors depressed, by many ways, for example:Workplace Disputes Pressure from External/Internal Contacts Costs Rising Sales Falling Profits becoming Losses Competition Loss of Control Poor Workplace Environment Too Much Being Demanded of You Deadlines Decisions to Be Made Working Alone Loss of Enthusiasm DebtsOf course, these are not the only ways!If you’re a depressed employee, the options for you may be easier – you can get therapy or leave – you have less responsibility for the business. However, if you’re a business owner, then options may seem more limited. When business owners get depressed, there is more risk for the company to run into financial problems as the owner tends to lose motivation to manage the accounts and general business activities, hence poor management results in unpaid bills, heavy debts and can be the recipe to business disaster. Conversely, the poor debts and finances can cause the depression. No matter what…you have options. Debts? Financial troubles? How do I solve this? If you’re facing pressure and the company is failing financially, you can call us today on 0800 970 0539. We can help you with your issues. Whether you just need someone to speak to, or just need advice and input – we can assist. Some of what we can offer is contacts who can help you raise finance, help to assess your financial position and talk through options to better manage your situation. You don’t know unless you try – this could save your business from going under…as well as your health! Further advice if your business is making you depressedDo something now, before it is too late – don’t dig yourself a deeper hole. Speak up! Keep things in perspective: if your business is performing poorly, then this isn’t the end of the world every business experiences good periods and bad periods, so let the bad period occur and wait for the good. Don’t be ashamed. Your business may be failing, but it doesn’t mean you are a failure. The business is not a reflection on you as a person. Try to schedule your daily life, ensure you have a work-life balance – this will help you to reduce the depressive symptoms and ensure the work is not taking over and bringing you down even more. Look after yourself physically. Do not be afraid to ask for help or support. This can be in terms of professional support, medical support, business support or even family and friends support – there are plenty of people out there both online and face to face! Talking is proven to be the best therapy!!!

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My Business Is Making Me Depressed

What Is A Phoenix Company And How Do They Work?

in Directors Duties in Insolvency and their Implications Pre Pack Administration Process and Procedures

A phoenix company is a new company that rises "from the ashes" of a previously insolvent company It is achieved by having the assets and goodwill of the company being transferred to a new company under the same set of directors. The process is completely legal as long as the assets are fairly valued.

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What Is A Phoenix Company And How Do They Work?

Company Rescue Website has been advising directors for 20 Years

in Directors Duties in Insolvency and their Implications

The Story So FarBack in 2000, Keith Steven was frustrated about the inability to reach distressed company directors and debtors. So in spring 2001, he purchased the domain name companyrescue.co.uk.The first website in 2001 was built in a spare bedroom using an off-the-shelf package called 1&1, which incidently is also still going today - what an achievement!  You can see how it looked in the video below.  Websites in those early days were pretty clunky, with ours being no exception!  That same year, Wikipedia was founded, which aimed to educate and distribute knowledge for free - something we also felt was important.  How could directors make informed decisions when faced with insolvency, without understanding anything about what the terminology meant and what the options were? Watch how our website has changed over the last two decades, along with major events over that period 2003 saw the first properly designed website which featured a picture of Keith with a full head of black hair!  Worried directors started to call us when they were struggling to pay creditors.  In fact, one of our first clients was a manned guarding company that was trying to get a time to pay arrangement with the Inland Revenue ( as it was back then ) who were refusing, but suggested that he looked at our website to learn about CVAs!2007 saw the site go through another redesign and by now it had over 500 pages and hundreds of hits a day from worried business people.  This was the year that the iPhone was launched and the conditions for the credit crunch were being created.  During that credit crunch in 2009, we helped and advised sometimes hundreds of people every month. There were many we couldn't help, or had no money, but we wanted to help.In 2010 we designed our next website which was a big jump in technological and design terms.  KSA Group merged with Marlor Walls to provide a full service insolvency practice with www.companyrescue.co.uk and a team of regional managers who could travel the country meeting worried directors at its core.As Google became more sophisticated at understanding what searchers (worried directors) were looking for, we made our most current site, one more user friendly with a guides and knowledge section and a no nonsense clear design in 2017.Over the last 20 years we have been the most visible website on the internet with our free advice, free detailed guides, industry news and research on all matters relating to insolvency and turnaround.Many hundreds of companies have been saved and many more closed correctly through liquidations. As we enter our third decade of supporting struggling directors, you can trust our twenty years of online advice to get the RIGHT solution for your company. Don’t delay, call us today, a friendly team is ready to help you with your options and your plans. Call  0800 9700539 soon

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Company Rescue Website has been advising directors for 20 Years

What is a Zombie Company?

in Directors Duties in Insolvency and their Implications

A zombie company is simply a company that is neither dead or alive. In other words, it is in so much debt that any cash generated is being used to pay off the interest on the debt or not actually reduce it. The company must cut back as much as they can. This means that there is no spare cash or capacity for the company to invest or grow. This means that is unable to employ more staff but on the flip side as long as the company is not actually losing money on an operational basis it does not need to make further redundancies either.Many economists are arguing that the presence of some estimated 150,000 of these companies are taking market share and locking up talent that should be available to more dynamic and less indebted firms.There are some obvious reasons:Interest ratesInterest rates have been very low for some time now so if you are in debt then interest rate payments are pretty low as well. What is more, interest rates have remained stable. This has given the impression that there is no crunch round the corner and has allowed companies to extend and pretend.Bounce Back Loans and CBILSCompanies will be paying back these loans over the next 6-10 years at low interest rates BUT will the repayments allow them any headroom to invest?Banks not wanting to call in loansSince the financial crisis some 12 years ago new liquidity rules and the presence of the Special Liquidity Scheme, and other lending initiatives, means that banks are reluctant to call in loans .If the banks really want to lend to companies then they can go cap in hand to the Bank of England. What is more asset values are depressed and there are not many buyers out there so some banks will wait before calling in administrators in the hope that any recovery will be better in the future.HMRC and the GovernmentHMRC have been concentrating on trying to keep companies afloat during the pandemic.  It is right that economic damage is tackled but HMRC has not been very tough on companies that are trading but are building up tax liabilities that they are unlikely to be able to recover. The government are also preferring the devil they know scenario. They do not want to "rock the boat" as it were so there is a bit of a culture of indecision. They worry, perhaps correctly, that any radical action is going to cause short term pain and exacabate the situation.Are you a zombie company and what should you do about it? Simply, you need to ensure that your debts are paid off quickly, repayments are reduced, or a proportion of them are written off. This will allow you to grow. If you are beginning to run up unsecured debts, ie trade creditors and HMRC then you need to act and perhaps a CVA or a Plan A could be an option. What are the risks? Any sudden change in the business or economic environment could be the catalyst for change. An increase in interest rates is being touted as the likeliest "zombie killer" but a change in the banks or Government's attitude to these companies could be equally dangerous. A strong improvement in the economy could also be their deathnell as quicker and more nimble companies will take advantage of the new opportunities presented leaving the zombies behind.The main thing about interest rates is that it will affect thousands of people on mortgages as well which will depress demand for companies goods and services so "zombies" will be hit by a double whammy!

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What is a Zombie Company?

My Company’s Bank Account Has Been Frozen What Can We Do?

in Directors Duties in Insolvency and their Implications Winding Up Petitions

If your company’s bank account has been frozen, it’s likely the bank has seen a winding up petition advertised in the London Gazette or has found out the company is going into an insolvency procedure like a company voluntary arrangement (CVA) or administration.  It is rare however for the bank to freeze the account if it is in CVA.Banks have to take necessary steps to prevent what is called the "disposition of assets"  i.e. the bank doesn't want to see large sums of money being withdrawn as they are liable for any money taken out if the company is insolvent. Once the account is frozen, there are very limited options for company directors. You can prevent this from happening by seeking insolvency or restructuring advice as soon as financial issues arise. Get help with debt before a creditor can issue a winding up petition. Apply for a Validation Order A validation order can be used to gain access to the bank account.  A validation order is an expensive process but it should not be necessary if the account has been frozen due to misunderstanding etc.  It is really where a judge has to be persuaded that the company will not withdraw all the money as they fear insolvency. In the instance where a winding up petition has been served, they need to be persuaded that the company will be able to pay its debts or that an deal with its creditors can be done.  This will mean that a draft CVA is most likely needed.Seek guidance from an insolvency practitioner or turnaround advisor. If the company is viable, it may be eligible to enter a company voluntary arrangement. If the company is no longer viable and you want to close it down, consider the creditors voluntary liquidation option.My company has gone into a CVA and now the bank has frozen the account.  Why? This is actually very rare.  The bank may have received wrong or misguided information about the company and, if this is the case, you must act quickly to rectify the problem by telling the bank to contact us or your chosen advisor. The supervisor dealing with the CVA will need to explain the situation and stress the company is still trading and needs access to funding to survive the CVA. A CVA can only go ahead if 75% of creditors (by value) have approved the proposals. Regardless of whether they approved the CVA or not, if there was a majority vote to proceed, the bank should not freeze the account.If your company’s bank account has been frozen or you need some advice about your company, call us now on 0800 9700 539. One of our advisors can talk you through all the options available to your specific situation.

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My Company’s Bank Account Has Been Frozen What Can We Do?

HMRC To Become Preferential Creditors

in Directors Duties in Insolvency and their Implications Directors Personal Guarantee – What Happens In Insolvency or Liquidation? News

Since 1 December 2020 a change in the law has meant that the way in which some liabilities due to H M Revenue & Customs (“HMRC”) are dealt with in an insolvency situation has changed. Previously, monies due to HMRC are dealt with in exactly the same way as monies due to trade suppliers, landlords, utility companies and so on. However, as of 1 December 2020 this changed and some monies due to HMRC will become “preferential” and will therefore come before other creditors.The reform only applies to taxes which are collected and held by businesses on behalf of other taxpayers, i.e VAT, PAYE, Income Tax. For taxes owed by businesses, the changes are non-applicable i.e for corporation tax and employer’s national insurance contributions.It’s believed that this decision will add £185 million to the treasury’s overall tax intake, over a year.HMRC will continue to offer time to pay arrangements if viable businesses with tax debts need to avoid insolvency. The measure is expected to combat tax avoidance. But doubts arise in that it will transfer the losses to the private sector, have a knock-on effect of borrowing costs and leave employees and suppliers with smaller pots when businesses go bust. However, the Treasury states that most unsecured creditors are unable to recover their debts anyway, so will be unaffected.On the face of it, this might not seem too important, but it could really impact on both your company and any personal guarantees you may have given to say banks or other lenders. What are the implications for directors that have given personal guarantees? The issue is that many banks and other lenders rely on what is called a debenture, which creates fixed and floating charges, to give them security over the assets of a company. In essence, this means that in a formal insolvency, such as liquidation or administration, monies realised from the sale of assets, or the collection of book debts, go to repay any sums due to the bank or other lender. However, where the assets are covered by a floating charge (usually plant, machinery, vehicles, stock, cash balances, book debts which are not subject to a factoring agreement), then any monies realised from those assets MUST first go to pay any preferential creditors.At the moment, the only preferential creditors are certain employee claims which are usually fairly modest, so the bank or lender gets most (c80%) of the money realised after payment of the modest preferential claims and after providing a percentage of the monies to deal with the claims of all other creditors. This is known as the Prescribed Part, it is set down in statute and usually equates to somewhere just over 20% of the monies realised.However, after 1 December 2020, the claims of the preferential creditors might be significantly higher due to monies due to HMRC. This would therefore mean that the monies paid to the bank or other lender might be significantly reduced. If this results in a shortfall to the bank or lender which you as a director have personally guaranteed, this could be a MAJOR concern. It might also result in significant concerns for your bank or other lender!Obviously, not all companies are the same and each companies' individual circumstances may vary. However, this could be quite a problem for some companies and directors. See Below Creditors Priority

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HMRC To Become Preferential Creditors