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Partnerships

Partnership Trading Out

in Partnerships

It must be better to trade out than to do a formal insolvency? This is a regular question we face and understandable though it is it is not always the correct way.

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Partnership Trading Out

LLP or Company Lawyers Cashflow Problems

in Law Partnerships

We are a firm of very worried solicitors. Our legal practice is a LLP, company or plc. We are under growing pressure from all sides. How can you help us solve these problems, restructure and survive? Help my struggling law firm Read my recent article on LinkedIn about our rescue service for lawyers and how to avoid SRA intervention into your distressed law firm.What should you do if the practice is struggling? First thing to do is to establish if you are insolvent. See the 3 tests below: The Cashflow Test Simply, can your practice pay its debts as and when they fall due for payment? Is the company in arrears with HMRC or trade creditors and not up to date with the bank?For example, if you are not paying the deductions from employees for NIC and Income Tax across to HMRC on the 19th of the month following the month they were deducted, then your company may be insolvent. Have you met loan repayment dates for practice loans or bank loans? Is the VAT late?If your trade creditors sell to you on say 30 days terms and you regularly pay on 90+ days, then the company may be insolvent. The Balance Sheet Test Simply, does your company owe more than it owns, or are your business assets exceeded by your business liabilities? If yes, then the company is insolvent.It is important to point out that this test should include contingent or prospective liabilities. (If you need advice on these issues email us). The Legal Action Test If a creditor has obtained a County Court Judgment, this may demonstrate your company's insolvency and the creditor may petition to wind up the company.If a creditor has obtained a statutory demand for greater than £5000 (from 1st October 2015 - previously the threshold was £750) and it remains unpaid for more than 21 days, then the creditor may petition to wind up the company. What Next? Second thing to do is to use our free daily cashflow spreadsheet (EASY TO USE) and set out the expected cashflow in and out of the company over the next few months.This tool will set out what the likely cash position is in the business over the next few months and will help YOU decide which is the most appropriate option. If cash is drying up and there is no way to fix it then pre-pack administration or liquidation are the two main options available.If cash is tight but still flowing then Plan A or B should be considered. If you know that good cashflow is coming through in the next few months then Plan A can be a powerful way to buy that time.Plan B is a company voluntary arrangement, this powerful restructuring technique can help the company survive and make deep seated changes to lead back to profitability in future.Thirdly please read our guides toPlan A trading out and refinancing (avoid insolvency)Plan B Company Voluntary Arrangement (CVA)Plan C Pre-pack administration, liquidation and possible linked personal BankruptcySee how we have helped other law firms!

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LLP or Company Lawyers Cashflow Problems

Plan A for Companies or Partnerships; Avoid Insolvency

in Partnerships

Is there a way that I can avoid formal insolvency? Yes, Plan A for companies or partnerships; An informal deal with creditors, coupled with possible refinancing Using the threat of the insolvency options can be like the proverbial Sword of Damocles , you can wind the company up, possibly go personally bankrupt or enter an IVA but the creditors would undoubtedly see a compromise or even complete discount of their debts if that occurred.Being prepared to argue with creditors that the informal route means at least some if not all of their debt is recovered and that this approach will allow you to practice in future, is the common sense solution.KSA Group will always however make sure that the options of company voluntary arrangement and liquidation have been assessed, a statement of affairs prepared and valuations of any properties obtained to counter the why wait for money what if we simply wind the company up? question. The main thing to remember is we are prepared for their aggressive questioning.So pointing this out bluntly, allows us to prepare a plan for the recovery of the creditors monies over a considerable period of time say 8-12 months. Yes even if HMRC has rejected YOUR suggested time to pay proposals.We would generally insist on the following work being part of our restructuring brief;Detailed DAILY CASHFLOW we can provide the tools and assess this for the company. But this MUST be introduced and to help survival you or your admin people must update every day. Statement of affairs for the company. Probably requires a desk top valuation of any corporate property. KSA will do this confidentially as part of the brief. Detailed financial forecasts for the partnership business. What if scenario planning ie what if turnover falls, WIP is not all collected for example? Negotiations with the creditors (usually HMRC and the bank) in person and where required in writing led by KSAs experienced debt negotiators. Possible assessment of your personal property and assess possibility of new debt from property(ies)This process can be delivered in 1-3 weeks from engagement and is led by very pragmatic experts in this field. Before commencing we will set out the strategy plan in writing. This work is always costed in writing in our unique solutions report which is provided FREE after your first meeting with a KSA Director or Regional Manager.Call KSA Group on 08009700539 for detailsA word of warning. If your company or limited liability partnership has relied upon multiple time to pay deals over recent years with HMRC and these deals have regularly not been adhered to, then this first option may not succeed, but we believe it is still worth trying.

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Plan A for Companies or Partnerships; Avoid Insolvency

Partnership Voluntary Arrangement or PVA

in Partnerships

A PVA is formal arrangement between creditors and the partnership, allowing a proportion of debt to be paid back over time. If the partners believe in the fundamental viability of the business and are determined to fight for the business to help survival, then a PVA can be a powerful tool or framework for the restructuring of the business.

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Partnership Voluntary Arrangement or PVA

Individual Voluntary Arrangement For Partners

in Partnerships

An individual voluntary arrangement is a formal deal between the individual (debtor) and the lender or business (creditor). If the individual is in debt and can’t pay payments when they fall due, he or she is insolvent. An IVA can protect debtors against legal actions while a suitable repayment plan is put in place.

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Individual Voluntary Arrangement For Partners

Lawyer Partnership Cashflow Problems

in Law Partnerships

If you are practicing as a partnership you are of course jointly and severally liable for the business and personal debts you have built up. What should you do if the practice is struggling and facing cashflow problems?

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Lawyer Partnership Cashflow Problems

Lawyers Partnership Plan A

in Law Partnerships

Clearly, any risk of insolvency or cash-flow problems is heightened by the lack of limited liability and the risk of the practice closing. It may impact you all personally. So we need to try and protect you and your partners as much as possible.

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Lawyers Partnership Plan A