My company is insolvent – what can I do?
If your company is insolvent, or you believe has financial difficulties and is facing the prospect of insolvency. You can consider the formal insolvency options below:
- Company Voluntary Arrangement (CVA).
- Administration.
- Creditors Voluntary Liquidation (CVL).
How to tell if your company is insolvent
If you’re unsure if your company is insolvent, there are ways to identify its solvent position, allowing you to take the action best for its situation.
- Check the company’s cash flow, and make sure it has enough funds to cover its bills as and when they fall due.
- Ensure the company’s liabilities don’t exceed the value of its assets on its balance sheet.
- Check for legal action from creditors, including County Court Judgments (CCJs).
More on how to determine if your company is solvent or insolvent
Company recovery options
If you find your company is insolvent, you should consider whether the business is viable and whether it has good prospects. If you think you can overcome the adversities currently holding your business back and wish to keep the company trading, there are options to consider.
- Time to Pay and informal arrangements
If your company is in short-term financial difficulties with HMRC, you may be able to reach an agreement if you approach them with an acceptable repayment scheme. A Time to Pay Arrangement is a type of informal agreement with HMRC, usually lasting six or twelve months, with the entire debt being repaid by the time of its conclusion.
More on Time to Pay Arrangements with HMRC - Raising finance
If your company’s core business is sound in structure but needs to raise or restructure its borrowings or other financial standings, your options could include:- Restructure existing finance.
- B2B businesses – invoice finance (this may be helpful if the issues were caused by rapid growth).
- Refinance plant, equipment, vehicles, etc.
- Commercial mortgage / re-mortgaging.
More commercial finance options
- Repay company debts through a Company Voluntary Arrangement (CVA)
A CVA is a formal repayment arrangement allowing you to consolidate your company’s unsecured debts and repay them monthly over five years. Any unsecured debts left at the end of the CVA are written off, and the company can continue to trade throughout the arrangement. You retain control of the company’s day-to-day operations. A financially troubled company can get back on its feet while paying back something to unsecured creditors, avoiding winding-up petitions.
We can assess your company’s financial situation and offer guidance on whether a CVA would be appropriate, completely free of charge.
More information about Company Voluntary Arrangements
- Restructure the company through administration
If the company’s core business model is sound, but historical debts are burdening the company, it could benefit more from restructuring.
Administration offers directors protection from creditor pressure while the insolvency practitioner restructures the company to attempt to rescue it as a going concern and return it to a profitable state, making it more appealing to potential buyers.
Speak with one of our experienced advisors who can advise if administration is suitable for your business model.
More information on administration
Company closure options
If the company is insolvent and it looks unlikely it will recover from its financial problems, contact us for advice on ceasing to trade. Doing so allows you to formally close the company in an orderly manner, avoids worsening your creditors position, putting a stop to all further legal action and ensuring your responsibilities as director are met.
- Close the company via a Creditors Voluntary Liquidation (CVL)
Sometimes, the company’s debt can be of such a level that company isn’t viable going forward, and the directors would be better off closing and walking away. In this case, the insolvency practitioner may suggest that the company enters Creditors Voluntary Liquidation (CVL). This closes the insolvent company and writes off its unsecured debts.
More details about Creditors Voluntary Liquidation - Close the company down and start again via a Pre-pack liquidation
In some cases, it may be possible to purchase assets from the liquidator and continue running the business in the name of a new limited company. This can be done through a pre-pack liquidation, a form of CVL, wherein a newly formed company purchases the old, insolvent company’s assets, and it is then liquidated.
More on pre-pack liquidation
How we can help
If you’re unsure which option would be best for your company, we can help you decide. Our advisors are friendly, understanding, and available to offer you free, non-obligatory initial advice, guidance, clarity, and direction.
- Speak with our initial advisers via phone or online chat. If we can help, we will arrange a free consultation with a consultant to further discuss your situation.
- During the consultation, we will advise which option would be best for your company.
- After your consultation, if there is an appropriate route forward, we will issue the relevant documentation to start a formal engagement.
We can provide the necessary expertise to advise you on which process would be best for your company.
In summary
You have several options if you find your company is insolvent. Which option you should take depends on your own assessment of the company. If continuing to trade is an option, it could enter a Company Voluntary Arrangement (CVA). If more substantial restructuring is required, then administration might be more appropriate. If the debts are of such a level that the company would be better off closing, then a Creditors Voluntary Liquidation (CVL) can put the company to bed.
Case Studies
Statestrong Limited
Kelly Burton • Manufacturing • Administration, Creditors Voluntary Liquidation (CVL)
Insolvency experts Wilson Field has helped turnaround the fortunes of a loss-making manufacturing company in Lancashire providing a new future for its 80 employees.
Businessman Russell Blaikie acquired the struggling 40-year-old Statestrong Limited, headquartered in Lytham St Annes, through a pre-pack sale and has been able to help the company immediately utilising his expertise in manufacturing and management.
Arrangements for the purchase of Statestrong’s business and assets were negotiated by Sheffield business specialists Wilson Field who affected the sale shortly after being appointed.
The company, which manufactures and supplies aerosol and liquid products for use in health and beauty, household, automotive and industry globally, posted sales of £12m last financial year, but had suffered pressure from creditors with outstanding arrears.
The total value of the deal is undisclosed but includes the business and the assets of the company based on Boundary Road in Lytham St Annes and Tarporley in Cheshire, which will now trade as Statestrong Products Limited.
Mr Blaikie said:
“Transactions of this nature are sensitive and require careful handling. The team at Wilson Field provided exactly the right professional approach.”
Wilson Field’s insolvency practitioners Kelly Burton and Joanne Wright worked closely with Mr Blaikie along with senior corporate case administrator Gareth Kinneavy.
Kelly Burton, said:
“The company had a wealth of expertise but was straddled with financial liabilities which ultimately made its future questionable. Looking forward, a previously distressed business now has a viable future.”
Principal Packaging Ltd
Kelly Burton • Service Agency • Administration
Sheffield administrators Wilson Field has helped save all 14 jobs at a Lancashire packaging supplier and manufacturer after it was bought out of administration.
Administrators Kelly Burton and Joanne Wright from business turnaround experts Wilson Field were appointed joint administrators on 17 February after Principal Packaging Ltd suffered cash flow problems.
The company, based at Pit Hey Place in Skelmersdale, was one of the main independent providers of quality packaging for the retail food industry, and major food and dairy suppliers.
Directors Tracy and Richard Sharratt took early advice and the business was sold to new company Surepac Ltd as a going concern saving all 14 employees’ jobs.
Kelly Burton from Wilson Field said:
“Historically, the company offered a holding service to its customers. This meant that it held a significant amount of stock at any one time, which tied up a substantial amount of cash.
“This created cash flow problems and was exacerbated in the early part of 2016 when the amount available on the company’s funding facility was reduced.
“Directors took early advice from Wilson Field with the business sold to Surepac Ltd as a going concern, safeguarding all 14 employees’ jobs. The new company will offer the same service and standards and will operate under the same management team”.
Principal Packaging, started in 2006, served packaging needs for meat, fish, horticulture and poultry sectors throughout the United Kingdom and Ireland and traded successfully in the early years.
It gained a reputation for being one of the most professional, yet affordable, companies in a competitive market with its high-quality paper, plastic or board packaging, custom print services and high customer service levels.
Aristocrat Pet Supplies
Kelly Burton • Retail • Administration
The business and assets belonging to a Sheffield online pet supplies company are up for sale. Aristocrat Pet Supplies, a family owned and run business, milled its own feed and seed on-site in Sheffield and has been trading for over 25 years selling agricultural raw materials, livestock, textile raw materials and semi-finished goods.
Sheffield-based insolvency specialists Wilson Field were called into the firm after it experienced increasing pressure and competition online. Andy Wood and Lisa Hogg were appointed as joint administrators for the company on January 26.
Wilson Field is trading the business in the short term with a view to finding a potential buyer for the company based on Holbrook Green Industrial Estate near Sheffield.
Andy Wood, associate director and insolvency practitioner at Wilson Field said:
“The business has encountered increased competition in recent years, principally from discount stores which have reduced margins.
“It has been on the market for several months but has not attracted any significant interest so far. As administrators, Wilson Field is trading the business in the short term to maximise realisations on a reduced staff base of seven.”
Aristocrat, which employed 19 staff, offered a range of pet supplies including dog and cat treats, chews, small animal bedding, wild bird supplies, poultry and aquatic food.
💬 Live Chat - Available
✅ Free confidential help & advice
If you or your company is in financial difficulty, I may be able to help you. Our phone lines operate 9am until 9pm - 7 days a week.
Chat With MeFor immediate help & free advice, please freephone:
Free Consultation
Request a free confidential telephone consultation from 9am - 8pm, 7 days a week.
Call Now
