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Lawyers Partnership Plan A

8th April, 2019
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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 is the managing director of KSA Group Ltd - a specialist firm of turnaround and licensed insolvency practitioners. Keith was nominated for Turnaround Practitioner of the Year 2014 at the National Insolvency and Rescue Awards in 2014.

Keith Steven
  • Help for lawyers – Plan A, informal deals and refinancing
  • There are three options to deal with severe cashflow problems
  • What if Plan A does not work?

We are a firm of very worried solicitors. Our legal practice is a partnership. We are under growing pressure from all sides. How can you help us solve these problems, restructure and survive?

Help for lawyers – Plan A, informal deals and refinancing

Clearly, any risk of insolvency or cashflow 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.

There are three options to deal with severe cashflow problems

Plan A 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 partnership up, go personally bankrupt or enter a PVA /IVA (see below) 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. It is the ‘common sense’ solution.

KSA will always however make sure that the options of partnership voluntary arrangement (PVA) or IVA/ personal bankruptcy have been assessed, a statement of affairs prepared and valuations of properties obtained to counter the why wait for money what if we simply wind the partnership up and make the chaps bankrupt? questions. The motto is we are prepared for their aggressive questioning.

If you or your partners have a lot of property equity personally and the practice closes then be prepared as HMRC in particular go after that. Like most people though you probably have little liquidity, having not drawn much recently from the practice, equity is tied up and your spouses are entitled to half anyway. 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 always insist on the following work being part of our restructuring brief.

  • Detailed DAILY CASHFLOW we can provide the tools and assess this for the partnership. But this MUST be introduced and to help survival you or your admin people must update every day.
  • Statement of affairs for the partnership and probably for your own assets. Probably requires a desk top valuation of any partnership or personal property. KSA will do this confidentially as part of the brief
  • Detailed financial forecasts for the partnership business. What if scenario planning, i.e. what if fee income 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.
  • Assessment of your personal property and assess possibility of new debt from property(s)

This process can be delivered in 1-4 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.

A word of warning. If your 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?

Plan B is to propose a partnership voluntary arrangement paying creditors 100p in £1 or less with linked individual voluntary arrangement

Plan C partnership liquidation and probable personal bankruptcy, where the practice closes and you go personally bankrupt

Of course, acquisition by another firm is a possibility too. Will this acquiror pick up all of the liabilities of your firm?

Worried about the SRA?  Look at our CVA worries page where we refer to regulators.  They do not need to be informed if the business is simply doing a Plan A or Time to Pay Arrangement

Call KSA Group’s DEDICATED LAWYERS LINE now 0845 5194930

Worried Director What Will Happen To Me After Liquidation?

in Company Liquidation What is …?

"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"Actually, this statement is entirely false! Misconceptions like this frequently arise from individuals with limited understanding of the subject matter. Such misinformation can cause undue anxiety for directors considering liquidation, fearing it might personally affect them. Guess what? Listening to bar room experts, inexperienced accountants, or no insolvency specialist lawyers can stop decisions being made, this failure to make a decision is really what could land you in trouble. So how will liquidation affect me and how long does it take? Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. What is more, if as a director, you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk of personal financial loss or worse such as losing your house. So, act now and get help for your company and more importantly start reducing your own risks.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years. This is known as a conduct report on each director.  If the OR can prove there was wrongful trading where, for instance, you have taken credit from a supplier or took deposits from customers when you knew that it was highly unlikely that you could pay them back, then you could be made personally liable.This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. If this happens then you could made liable for PAYE, VAT and creditors monies from the time that you should have known the company had no reasonable prospect of surviving the problems it faced.Additionally, the directors may face disqualification proceedings under the Company Directors Disqualification Act 1986 for up to 15 years, they can be fined and may face the loss of personal assets like your home, or even personal bankruptcy.Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved. What is Creditors Voluntary Liquidation and what does it mean for me? In short, liquidation usually means, the company's trading stops and it's assets are turned into cash or "liquidated".All other possible liabilities, like employment liabilities, landlord's rent or payments to lease companies are stopped. It really is the end of the company, but the "business" may survive if a phoenix is organised. Liquidation is a powerful way to END creditor pressure and let you get on with your life. What if I have signed personal guarantees? If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in: just think what ALL of the company's debts landing on your shoulders would do. Also it should be noted that HMRC now rank ahead of floating charge holders in any liquidation since December 2020.  Consequently, this may well mean that lenders that you have personally guaranteed will get less recovery hence exposing you more.All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.One great piece of FREE advice - always make sure that ALL tax returns, VAT returns and annual returns have been completed and sent in and that other "compliance" issues are dealt with wherever possible. These are important processes and will help protect you as individual directors. It shows that you have been acting properly.  I have heard about directors being able to claim redundancy in liquidation If you have been employed by the company and made payments via PAYE then you will be able to claim redundancy from the government and this is in fact a very simple process (20 minutes to fill out a form and we can help with that) so there is no need really to employ a third party to make a claim.  This process has been open to fraud so the HMRC are cracking down on operators that claim to be able to get money back when there is not enough "paperwork".  It isn't worth the risk.  If it sounds too good to be true then it probably is!You need to learn more about the options. This is clearly a general guide so, if you have any worries at all, please, just call us and we will talk you through the situation free and with expert guidance for your situation. Call one of our advisors or if you prefer, call our IPs (insolvency practitioners) now:Just one CALL will help relieve the stress and get you out of the mess.Why not call 08009700539 or 020 7887 2667 now?We could help you start the liquidation process today.(8.15am till 5.00pm; Out of hours call on 07833 240747, Wayne Harrison (IP)  or Eric Walls (IP) on 07787 278527)Finally, please remember this: NO BUSINESS is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go and you can focus on other things that are more important.Want more information on liquidation? Get our new free 2023 Experts Complete Guide to Creditors Voluntary Liquidation that covers Bounce Back LoansWe are experts in liquidation, voluntary liquidation, administration, pre-pack administration, business rescue, corporate rescue and company rescue, we can help solve your problems but only if you talk to us. Call 0800 9700539 for help.or email us your worries at help@ksagroup.co.uk 

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