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 details
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.
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.