Are you a firm of very worried solicitors? Is your legal practice in a company or LLP and under growing pressure from all sides?
Often cashflow is very poor but we can help you solve these problems, restructure and survive.
Informal deals and refinancing for solicitors trading as companies and LLPs
Plan A: This is a non formal deal with creditors, coupled with possible refinancing. There is no need for formal insolvency actions such as administration, company voluntary arrangement or liquidation. But it gives no formal protection.
Using the threat of the insolvency options can be like the proverbial Sword of Damocles, you can threaten to wind the company up, sell it through administration or possibly go personally bankrupt or enter an IVA but the creditors would get very little back. Surely an informal deal that pays everything back, in full, over a long period is better than writing the debt off?
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. Solicitors may still be able to practice if in an IVA but cannot when bankrupt.
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 creditors aggression. They may ask “why wait for money what if we simply wind the company up”? question. The main thing to remember is with our help you are well prepared with a statement of affairs and with expert advisors you can often negate their aggressive questioning.
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 may be able to get a further TTP in place with detailed work backing it up.
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 or LLP. But this MUST be introduced and to help survival you or your admin people must update every day
- A statement of affairs for the company or LLPs. In our experience this probably requires a desk top valuation of any corporate or individual’s property. KSA agents can will do this confidentially as part of the brief. A sofa sets out asset and liabilities and the likely outcomes in terminal insolvency like liquidation. It doesn’t look good for creditors recoveries which is an all to accurate portrayal of what happens in liquidation.
- A detailed financial forecast for the solicitors business. This should include “what if scenario planning” ie what if fee income falls, WIP is not all collected for example?
- KSA led negotiations with the creditors (usually HMRC, trade 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 raising 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. Our fees usually come from cashflow savings that we can create for you as part of this process.
What now? If your business has cashflow problems you must act or the creditors will, sooner or later act aggressively against you.
Call KSA Group's DEDICATED LAWYERS LINE now on 0845 519 4930
A 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.
What if Plan A does not work?
Of course, acquisition by another firm is a possibility too. Will this acquiror pick up all of the liabilities of your firm?
Call KSA Group's DEDICATED LAWYERS LINE now on 08455194930
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.