Company Restructure
The term “business restructuring” can encompass various meanings, but in challenging situations, it typically refers to establishing a new company with the same directors and shareholders. This new entity operates and conducts business, while the old company, burdened with debt, is closed. This approach is taken when the business itself is feasible, but the existing company is not.
Why Restructure a Business
Is Restructuring Right for You?
It is crucial to follow the appropriate procedures, and time is typically of the essence. Therefore, it is advisable to gain a clear understanding of your options and how they can impact you, particularly if you intend to utilize the trading name of the current (insolvent) company or a similar name. Incorrect actions in this regard can result in significant personal consequences, potentially violating regulations such as Section 216 of the Insolvency Act.
We encourage you to reach out to our team today for a comprehensive discussion of your options if you are considering this course of action.
Is Restructuring Right for You?
It is crucial to follow the appropriate procedures, and time is typically of the essence. Therefore, it is advisable to gain a clear understanding of your options and how they can impact you, particularly if you intend to utilize the trading name of the current (insolvent) company or a similar name. Incorrect actions in this regard can result in significant personal consequences, potentially violating regulations such as Section 216 of the Insolvency Act.
We encourage you to reach out to our team today for a comprehensive discussion of your options if you are considering this course of action.
Company Voluntary Arrangement
What is a Company Voluntary Arrangement?
It is a debtor-in-possession process with minimal court involvement whereby the directors of the company stay in control of the business.
The purpose of a CVA is to allow a company to negotiate with unsecured creditors, including but not limited to suppliers, HMRC, employees and landlords, with the purpose to generate liquidity whilst maintaining the business as going concern.
If your limited company is insolvent, it can use a Company Voluntary Arrangement (CVA) to pay creditors over a fixed period. If creditors agree, your limited company can continue trading.
How does it work?
As part of the process, all unsecured creditors are allowed to vote on the CVA proposal and in order to process it must satisfy two criteria:
- 75% of creditors* who vote must approve the CVA
- No more than 50% of unconnected creditors may vote against the CVA
- The insolvency practitioner will work out an ‘arrangement’ covering the amount of debt you can pay and a payment schedule. They must do this within a month of being appointed.
- They’ll write to creditors about the arrangement and invite them to vote on it.
- The CVA is approved if 75% (by debt value) of the creditors who vote agree.
You’ll need to make the scheduled payments to creditors through the insolvency practitioner until these are paid off.
Unless three quarters of those who vote approve the CVA, your company could face voluntary liquidation.
Administration
What is administration?
Administration is a ‘holding position.’ which provides the company with immediate legal protection from its creditors. The objective is to devise a plan for the company resulting in a company restructure.
At the point of putting a business into administration, an insolvency practitioner is appointed as an administrator and takes active control of all further future steps for that business.
The company will be granted a moratorium. A moratorium halts any further legal proceedings being taken against the company at this time.
Why would you consider administration?
One of the benefits of placing a company into administration is that as a director and with either personal funds or investment, you can purchase the assets and goodwill of the business and transfer any future business to a newly set-up company, known as a Pre-pack Administration.
- Gives immediate protection from creditors
- Provides the director(s) with time to devise a plan of action to solve the business issues
In the event of a business not being saved or restructured, liquidating the company will then be considered the insolvency will be advertised publicly in the London
Business Financial Health Check
Why complete a business health check?
One of the main reasons for failed businesses is due to the accounts / money management not being managed in the right way.
Before deciding about the future of your business, we would highly recommend you complete a Business Financial Health Check.
A Business Financial Health Check is an assessment of your business and its sustainability, it will give you, the director a further insight into the spending habits of your business.
The Business Financial Health Check will challenge your business by stripping back all expenses, staffing costs and creditor commitments.
Completing a free and impartial Business Financial Health Check will give you the ability to see your business from a bird’s eye view, giving you the confidence and knowledge to make the right decisions.
In the event of ‘pressing the reset button’ and closing the business, the Business Financial Health Check will give you further tools to support your future success in your next venture.
- Book-keeping skills
- Basic managed account templates and the ability to use it to your advantage
- The knowledge and ability to use daily a profit and loss balance sheet
- How to manage VAT & Corporation tax accounts
The Business Financial Health Check objective is to support your future success, be it in your existing business or future businesses.