There are lots of websites out there that offer advice on insolvency options for businesses.
It should be remembered that there is less legal protection for businesses than there is for consumers as business owners are expected to be able to make informed decisions. Unfortunately, when businesses find themselves in distress the directors may make decisions in haste.
So what do you need to look for when looking for advice?
Who are they?
Perhaps the most important thing is check that you can see exactly who they are. Some websites do not have any details about who works there and are not an actual company at all. What they may do is sell your lead onto someone else who may end up charging you more than was originally expected and you know nothing about them.
They approach you direct
There is nothing wrong with this in theory as directors do sometimes need to be persuaded to take action but do bear in mind the points covered before deciding to go with them.
Don't ask enough questions
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 without knowing enough about the facts and will discount other options out of hand.
Say it won't cost you
Obviously if a company is short of money then promises of help not costing you anything is tempting i.e the creditors pay? Be honest and think is this too good to be true?? Err 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. We offer a free examination of the options of course. Also in some cases advisers will say that any payments to creditors and fees should be personally guaranteed. So if the business fails in its turnaround the adviser gets paid out of personal monies. Do you want to take that risk? The incentives for getting a working solution are not there.
How long have they been in business?
Check the company, if they have one, on companies house or www.duedil.com 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 do administrations, pre packs and liquidations. They also need to be the supervisors and nominee of any CVA proposal. Anyone who claims that you shouldn't go 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 and etiquette to protect the interests of stakeholders. Instead come to me with no protection or recourse! Fortunately these claims are less frequent these days. You can check to see if a firm have insolvency practitioners at https://www.gov.uk/find-an-insolvency-practitioner. 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!
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.
Categories: Insolvency process