When do I need an insolvency practitioner?
Many people mistakenly assume that an insolvency practitioner’s (IP) role is designed to come into practice when a company has become insolvent, and while this is true to an extent, it isn’t the rule. The question ‘do I need an insolvency practitioner?’ should cross your mind as soon as you foresee any signs of financial difficulty.
Signs of deterioration
As a director, you must be aware of your company’s financial position at all times and watch out for signs of deterioration. Common warning signs of a struggling (or soon-to-be struggling) business include, but are not limited to:
- Lack of finance to support your company’s growth strategy.
- Cashflow problems.
- Falling profits.
- Accrued debts with HMRC.
- Inability to pay liabilities when they fall due.
Act fast
Detecting issues early can open up a range of avenues available to you. These might not be available to you further down the line. Nipping a potentially disastrous situation in the bud can mean you have access to a range of procedures, such as commercial financing, payment arrangements, or restructuring solutions. We outline options based on an assessment of your business and preferences.
What does an insolvency practitioner do?
Insolvency practitioners or IPs, are licensed to carry out tasks relating to insolvent companies and individuals. They can also deal with personal bankruptcy, perform administration and liquidation duties for businesses, and supervise through the process.
IPs must have a licence to practice and must comply with the regulations laid down in the Insolvency Act 1986.
While IPs deal with sole-traders and partnerships, much of their work involves dealing with limited companies.
Once you appoint an IP, their role will be dependent on the circumstances of the company in question. IPs can negotiate with, and report to creditors, carry out statutory duties and offer advice.
Is your company solvent or insolvent?
If you’re experiencing financial difficulties and you think your company may be insolvent, speak to us as soon as possible. By speaking to one of our advisors, we can help you determine whether your company is at risk of, or is actually insolvent.
If your company becomes insolvent
When a company becomes insolvent, it cannot afford to pay its debts, and won’t be able to in the foreseeable future. Creditors may force the company into liquidation; assets may be seized and sold off, and the company closed. Company directors are obliged to make the necessary preparations and act appropriately. If you’re worried your company will fall into insolvency, we’d advise you to act straight away. Get in touch with us, and we can provide you with free advice and work with you to decide what to do next to address your financial issues.
My business isn’t insolvent. Do I still need an insolvency practitioner?
Although IPs specialise in companies already in insolvency, if your company is experiencing financial issues or is anticipating any, it would be advisable to contact an IP to take appropriate action as quickly as possible.
Even if your company is not insolvent, getting advice from an IP won’t discredit your company, harm your credit rating or influence any creditors. If you’re experiencing financial difficulties, contact us now for free, confidential advice.
Is an insolvency practitioner the same as a liquidator?
An IP can act as a company’s liquidator, but can also take on other appointments including a company’s administrator or act as a supervisor in a voluntary arrangement.
While IPs can be assigned to liquidate a company if necessary, their role is more expansive than just carrying out liquidation and bringing a company to a close. Before liquidation, an IP can advise company directors on potential solutions to salvage the business. If it is decided that liquidation is the only option, they can act as the liquidator.
Does insolvency mean the end of my company?
Insolvency doesn’t always lead to liquidation. Depending on the severity and circumstances of the financial problems, it may be possible for a company to continue trading after a period of insolvency. Generally, the earlier you choose to act, the better the chances of your company surviving, and more options will be available to resolve the matter.
An IP may be able to agree on a company rescue plan. These could include negotiating a Company Voluntary Agreement (CVA) or, if necessary, put the company into administration.
I’ve received a winding-up petition. What can an insolvency practitioner do?
If your company is issued with a winding-up petition (WUP), contact us immediately. We can review the available options and advise you.
Depending on the company’s circumstances, an IP can possibly offer solutions such as a CVA, Creditors Voluntary Liquidation (CVL), administration, or pre-pack administration.
What to be careful of
When undergoing insolvency procedures, it can be easy for the uninitiated to fall for advice from unlicensed firms.
Avoid wrongful trading
Wrongful trading exists when you, as director, allow a company to continue trading while insolvent, thus worsening your creditor’s position. Your company would be taking on more debts and credit that it likely won’t be able to pay back. It can result in you as the director, being held personally liable for company debt. It can even lead to prosecution in some cases.
Acting as soon as you’re aware that the company is in difficulty means you aren’t risking these possible wrongful trading accusations.
Beware of ‘introducers’ and middlemen
There are middlemen out there who act as ‘introducers’, putting you in touch with an insolvency practitioner and charging you for their trouble. Do your research and ensure you’re directly in touch with an authorised insolvency practice. It will save you money, time and hassle. Only licensed IPs, such as ourselves, are authorised to conduct legal insolvency proceedings.
Free consultation & advice
All our initial advice and assessment is completely free and without obligation. It is better to check up on your business’s health rather than turning a blind eye until issues escalate.
By this point, your available options may be greatly reduced. Contact us with any worries you have, for free, regulated, professional advice.
In summary
Be vigilant as a director to spot problems, and act swiftly to prevent issues from spiralling. If you let it deteriorate, your ability to turn the company around becomes restricted, and you risk personal liability. The earlier you act, the more we can potentially do to help.
IPs will attempt to keep the company operating and stop it from becoming insolvent.
While insolvency doesn’t always mean the end of your company, if you’re experiencing financial problems, or you’re worried it’s heading for insolvency, you should contact us as soon as possible. Be aware that the insolvency industry is heavily regulated. Not doing your research and going through an ‘introducer’ can cost you much more in the long run.
How we can help
We have a team of licensed insolvency practitioners, and we operate across the UK. We can assess your business and identify any issues, construct a plan for survival and guide you through to recovery or restructure. All while bearing the brunt of stressful creditor pressure.
As licensed insolvency practitioners, you can trust that our advice is authorised and always in the best interests of your company and its creditors. Our empathetic team of consultants are on hand to provide you with free initial advice, completely without obligation.
If you have any questions or are unsure whether you need an insolvency practitioner, call us and have a free chat with one of our advisors.
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.
Print On Solutions Limited
Kelly Burton • Service Agency • Administration
A Leeds print company has been bought out of administration saving all 54 jobs.
Print On Solutions Limited was set up in 1999 years ago and went from start-up business to the largest envelope overprinter in the UK with offices in Leeds and Bury, 12 litho presses and six digital presses.
Administrators Kelly Burton and Joanne Wright from Sheffield business turnaround experts Wilson Field were appointed joint administrators on 11 April after the company, based in Century House, Holbeck, ran into financial difficulties following an ongoing dispute relating to a significant contract.
The directors took early advice and the business was sold to new company WEPOS Limited as a going concern saving all 54 employees’ jobs.
Kelly Burton from Wilson Field said:
“Following discussions with the directors, the business was sold to WEPOS Limited as a going concern, safeguarding all 54 employees’ jobs. The new company will offer the same service and standards and will operate under the same management team.”
In 2003 Print On expanded by moving to a 12,000 sq ft, purpose-built factory in Leeds, designed to offer the business a state-of-the-art platform for growth.
The expansion of the group was through strategic acquisitions and mergers of envelope manufacturers. Tower Envelopes in Bury merged with Print On in 2010 and became the Lancashire division.
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