Helping directors for over 23 years.

Talk to us today in confidence:

Insolvency Advisors? Know who you are dealing with!

17th November, 2020
Keith Steven

Written ByKeith Steven

Managing Director

07879 555349

Keith is the author of the content on this comprehensive rescue, turnaround and insolvency website. He has expert knowledge on the company voluntary arrangement (CVA) mechanism

Keith Steven
  • Who is behind the website – who are they?
  • They approach you direct
  • They don’t ask enough questions and suggest liquidation FIRST
  • They tell you that any and all advice is free
  • How long have they been in business?
  • Are they licensed?
  • Do they have examples of their work and or testimonials

There is a large number of websites on the internet offering turnaround advice and insolvency advice on the options available for all types of businesses.

Usually there is less legal protection for businesses – especially companies – than there is for consumers. The general rule is that business owners are expected to be able to make informed decisions.

Unfortunately, when businesses find themselves in distress the directors, or partners, may make decisions in haste and working with advisors who are not what they seem initially.

A good rule of thumb to begin with is this… all quality advisors in the insolvency world have to be regulated by a regulatory body or group.

So, what do you need to look for when looking for turnaround and insolvency advice?

Who is behind the website – who are they?

Perhaps the most important thing is check that you can see exactly who the advisors are, where they are based and which regulators they have.

Websites are required in law to have a trading and contact address so that you can check these contact details. If there is no company name, no trading name and no contact details DO NOT CONTINUE TO USE THEIR SITE. We have found that too often these sites are giving incorrect advice or answers.

We have found a large number of apparently decent websites that do not have any details about who works there, who is providing the guidance, who is their regulator and who runs the business. Many are not an actual professional advisory company at all.

No, they’re trying to get your contact details as a lead, to then sell. What they may do is sell your lead onto someone else who may be a regulated and quality advisor, but this is usually for a fee. Overall this may end up costing you, the customer, more than was originally expected as you may have to pay a commission and professional fees.

Our advice is to always ask “are you a regulated firm of insolvency and turnaround advisors or a web marketing company”? If they are both that’s fine usually.

They approach you direct

There is nothing wrong with this in theory as directors do sometimes need to be persuaded to take action quickly when stress and insolvency worries loom. Please do bear in mind the point above before deciding to go with them. Again, ask them who they are and who their regulator is.

They don’t ask enough questions and suggest liquidation FIRST

After talking to tens of thousands of worried directors and sole traders since 1995 we know that every case is different and there are different solutions for different problems. Some advisers will send you down a particular path such as liquidation or pre pack administration without knowing enough about the facts and will discount other options out of hand. They will not consider the objectives you have and then suggest the most appropriate range of options. A rescue could be more suited to your company, so ask “what about rescue options”. Again this is because they’re trying to sell your lead.

They tell you that any and all advice is free

Obviously if a company is short of money then promises of help not costing anything is tempting i.e the creditors pay?

Be honest and think this through. Is it too good to be true?? Most likely! Even if they do some work for free it is likely to be of low quality and may well expose you to personal risk. As regulated advisors we have to discuss all options with you as part of our compliance requirements. We always offer a free discussion by telephone of the options of course,  and we also set out the costs that will need to be paid for professional advisors, or insolvency practitioners to act for the company; in writing.

Also in some cases advisors will say that any payments of say turnaround or CVA fees should be personally guaranteed. So, if the business fails in its turnaround the insolvency advisor gets paid out of YOUR personal monies. Do you want to take that risk? Being blunt the incentives for getting a working solution are not there.

Do not agree to give personal guarantees for insolvency advice or fees.

How long have they been in business?

Check the company, if they have one, on Companies House or for a proper trading record. Especially if they claim to have been in business for years. We have nothing against new start ups as we all have to start somewhere!

Are they licensed?

This is a crucial point as only licensed insolvency practitioners can act as officers for company voluntary arrangements, administrations, pre packs and all types of liquidations.

Anyone who claims that you shouldn’t speak to insolvency practitioners is basically saying don’t go to someone who is overseen by a regulatory authority and has to abide with strict rules to protect the interests of stakeholders. Instead come to me with no protection or recourse!

In truth though we see less of this poor practice nowadays. You can check to see if a firm employs licensed insolvency practitioners. Bear in mind that as long as the firm has insolvency practitioners in it, then they can take appointments. If there are no insolvency practitioners in the business then they will obviously have to pass the enquiry onto to someone else outside! This could cost you more.

Do they have examples of their work and or testimonials

This is sometimes difficult to obtain. However, case studies are a good indicator of legitimacy. See our huge list of case studies here

KSA Group which operates is a long established company dating back to 1997. We have worked with thousands of people to rescue their business or help put it to sleep if it is no longer viable.

superdry logo

Superdry Maybe Looking At A CVA

Update : 15 April 2024It hits the news today that landlords of Superdry are considering a restructuring deal that would result in steep rent cuts at a large proportion of its 94 British shops. The scale of the rent cuts would be dependent on the financial performance of each site.According to City sources, the fashion retailer is not planning on any permanent closures, but landlords would have the option to terminate any leases if they were not satisfied with the terms of the deal.Superdry has been facing red for some time. Most recently there were talks with founder, Julian Dunkerton regarding a takeover, but such talks were then aborted.Sky News share more. Update : 29 January 2024In line with other retailers Superdry has been finding trading difficult due to the cost of living crisis.  It has also been cutting back its store count. The clothing brand has 104 stores in the UK and started closing some back in July 2023.  The company also announced that it was looking at costs savings of some £40m.  This is an increase from the £35m they announced recently.  There are now rumours circulating that the company is looking at a Company Voluntary Arrangement (CVA) as a way of cutting costs.The CVA is a powerful rescue tool that is particularly favoured by retailers due to is ability to allow companies to vacate properties and determine their lease obligations.  The cost of high rent shops on long leases can be a heavy burden on retailers.The following case law has been used for some years now to terminate leases with no cash cost to the company.Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease.Re: Cancol Ltd (1995) BCC 1133 that the word ‘creditor’ in r1.17(1) IR 86 was wide enough to include a landlord with a right to future rent i.e. the ability to include future rent extends to CVAs as well as Individual Voluntary Arrangements.Furthermore, where the unliquidated or unascertained claim in a CVA involves future rents accruing to a landlord, the case of Re Park Air Services [1996] BCC 556) gives the CVA meeting   chairman some considerable guidance as to quantifying the claim at the meeting.Another reason that Superdry is finding itself in difficulty is that it rapidly expanded to try and become a global super brand.  No doubt much of this expanision was fueled by cheap debt and as many companies are now finding out when interest rates rise and customers pull back the going gets very tough.  As such the shares have lost almost 90% of their value in the last 12 monthsSky News has reported that PWC are the advisors that are looking at restructuring options.It is quite standard practice to put out stories about a possible CVA as this does prepare the ground for negotiations with landlords.  They will be asking the landlords for substantial rent reductions in order for them to survive.  If landlords refuse then they can usually get other suppliers and trade creditors to support a CVA proposal and out vote them.Landlords have tried to challenge CVAs in the courts on the grounds that they unfairly prejudice their position but have so far failed to succeed. 

Superdry Maybe Looking At A CVA

Related Guides

Related News

Worried Director? We Can Save Or Restructure Your Company!

Call now for free and confidential advice