How can I consolidate my business debt?
Consolidating business debt involves combining multiple business debts and finding the best means to simplify repayments, reduce interest, and improve cash flow. The process includes assessing all outstanding debts, evaluating your financial situation, and exploring various consolidation and insolvency options.
Your company could consolidate its business debt if it encounters cash flow difficulties. Consolidating a company’s debt can help reduce creditor pressure, make payments easier and give the business a higher chance of success.
Read more about limited company debt
What are my options to consolidate my business debt?
Depending on your business’s structure and financial situation, there are several options to consider when you are looking to consolidate your business debt:
- Repay company debts through a Company Voluntary Arrangement (CVA)
This formal procedure allows limited companies to consolidate business debt, repaying unsecured debts over the CVA’s term (usually five years) and to continue to trade. It is a rescue device for insolvent companies, and if creditors agree to the terms of the CVA, it can be a great way to ensure a company stays open and operating. It also provides the directors with the time and security to investigate restructuring.
Read more on Company Voluntary Arrangement - Restructuring through administration
Alternatively, company administration might be a more suitable solution to consolidate business debt. Administration can work if your company is experiencing high levels of creditor pressure, and some breathing space could help buy time for restructuring. Administration isn’t viable for every insolvent company, so speak to us to discuss your situation and potential options.
Read more on company administration - Commercial Finance
Refinancing involves consolidating all business debts into a single debt. Or it can involve various debts being restructured with a view to making repayments more affordable. It can allow a business to find a more favourable rate and focus on one repayment rather than multiple ones.
Refinancing can also provide directors with the opportunity to renegotiate the terms of their debts, to lengthen or shorten the term, depending on the business’ needs. This can help a business to deal with their cash flow and the debts that they have much better. However, the business will need to be able to afford repayments, and lenders may refuse to lend to a business in some situations.
Read more on commercial finance - Invoice finance
If you run a B2B business, this is a great way of funding cash flow shortages caused by business growth. There are a number of products suited to a variety of business situations.
Read more on invoice finance
What if I can’t consolidate my business debts?
If your business’ debt has reached such a level that there’s little chance it can realistically recover, there are insolvency options to help you deal with the debt and close the company while providing some return to your creditors.
- Close the company via a Creditors Voluntary Liquidation (CVL)
A CVL is a formal insolvency procedure, which closes the company in an orderly manner, writing off the company’s unsecured debts, allowing the directors to walk away. With the unsecured debts written off, it allows the directors to start afresh should they wish to.
Read more on Creditors Voluntary Liquidation
How we can help
If you are struggling to manage business debt and are worried about pressure from creditors, then get in touch with one of our experienced advisors as soon as possible. We can help talk you through the most suitable options for your business and the most effective ways of consolidating your business debt.
- Speak with our initial advisers via phone or online chat. If we can help, we will arrange a free consultation with one of our consultants to discuss your situation in more depth.
- During the consultation, we will advise you which procedure is the best route forward.
- After your consultation, if there is an appropriate route forward, we will issue the relevant documentation for you to formally engage us.
In summary
If you want to manage or consolidate a business’ debt, there can be several rescue procedures which allow you to ease creditor pressure, but these can only be utilised if the business is genuinely viable.
For limited companies, the most efficient form of consolidating business debt is through the form of a CVA, which allows you to bring all unsecured creditor debts together, gradually paying them off in monthly amounts, over the course of the procedure.
Case Studies
Designer Recliners Limited
Kelly Burton • Manufacturing • Administration, Company Voluntary Arrangement (CVA)
A Sheffield furniture manufacturer and upholster has relaunched offering a smaller, more specialised range of products.
Anico Interiors Limited, which included reclining chairs for the elderly, had suffered cash flow problems and issues with profitability.
Designer Recliners Limited, managed by director Nick Wall, has purchased the assets and business of Anico saving all 11 jobs.
Andy Wood and Robert Dymond from Sheffield business turnaround experts Wilson Field were appointed joint liquidators on 8 June and advised on the sale of the 14-year-old company, based on Orgreave Crescent at Orgreave Industrial Estate, as a going concern.
Andy Wood, associate director and insolvency practitioner at Wilson Field said:
“Historically, the company offered a wide range of products but has now streamlined its offer to customers and cut out some unprofitable lines, as well as re-vamped its web site.
“Directors took advice from Wilson Field with the business sold to new company Designer Recliners Limited as a going concern, safeguarding all 11 employees’ jobs. The new company will offer the same service and standards under the same management team but focus on a smaller range of specialised products.”
The company employs skilled staff including upholsterers, seamstresses and cutters and was set up in 2002 by Nick Wall.
Silcox Coach Company
Kelly Burton • Automotive • Company Voluntary Arrangement (CVA)
Pembrokeshire-based Silcox Coach Company, which operates school transport as well as local bus services, has been placed into administration today.
Despite attempts by administrators from Sheffield-based Wilson Field to secure a buyer with various interested parties, the 134-year-old company, which operated a fleet of 65 coaches and buses from its base in Pembroke Dock, has now ceased trading.
Insolvency practitioners Kelly Burton and Joanne Wright from Wilson Field Limited were appointed by shareholders after the company experienced financial difficulties and as a result all 92 staff jobs have been made redundant.
However, in the region of 50 staff have been re-employed by Edwards Coaches of Pontypridd who have been granted the local authority contracts previously operated by Silcox.
Kelly Burton, director and insolvency practitioner at Wilson Field said:
“Silcox Coaches was a fourth generation bus and coach operator and over the years provided various forms of transport services latterly focussing local authority community bus routes, school services, coach hire and coaching holidays.
“The company had an excellent reputation within the industry, the local community and its clients. Initially there were a number of parties interested in buying the business and assets and we had hoped to save all the jobs of the loyal workforce. Sadly, despite our best efforts none of these came to fruition. On the positive side, Edwards Coaches of Pontypridd have re-employed approximately 50 of those staff.”
As well as office accommodation in Pembroke Dock, Silcox also occupied a small travel office in Tenby and a large bus and coach compound near the offices in Pembroke Dock.
Edwards Coaches is the largest family owned coach company in Wales employing over 500 staff and operating 260 vehicles. It currently operates National Express coaches from Haverfordwest departing daily to Cardiff, Heathrow, Gatwick London and various other destinations plus transportation for over 8000 students to school or college each day from bus depots all over South Wales.
It also operates coach holidays for 80,000 passengers a year across the UK and Europe and operates The Edwards’ Red Dragon coach which is the official carrier of the Wales Rugby Team.
Travellers who have booked and pre-paid for a holiday with Silcox may be entitled to a refund and should contact either Bonded Coach Holidays (BCH) e-mail: bch@cpt-uk.org or The Confederation of Passenger Holidays UK (CPT) Tel: 020 7240 3131.
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