When do I need an insolvency practitioner?
You should speak to a licensed and regulated insolvency practitioner (IP) if your company is experiencing financial difficulty, or if you’re concerned about its financial position and believe that it may soon become insolvent. Taking advice from an IP early can help protect your company from creditor pressure and allow you to work towards the best outcome.
Additionally, IPs can assist directors of solvent companies who are looking to liquidate.
Signs that you may need an IP’s advice
As a director, you must always be aware of your company’s solvent position and watch out for signs of deterioration. You should take advice from an insolvency practitioner as soon as you become concerned about your company’s financial position.
Common warning signs that your company is struggling and may become insolvent include, but are not limited to:
- Cash flow pressure
A lack of funds to support growth and daily operations, as well as other cash flow-related problems, are among the first signs that your company could soon be, or is already, insolvent. - Creditor pressure
Your company’s creditors are pressuring it to repay its debts. This could include sending repayment reminders, filing legal action, and even sending debt collectors or enforcement agents. - Falling profits
A decline in revenue and profits could indicate more imminent, pressing financial difficulties. - HMRC Arrears
You should take advice early if you have unpaid debts to HMRC and address them in a timely manner. - Inability to pay liabilities
If your company cannot repay its liabilities as and when they fall due, your company is insolvent. You can contact us for free, impartial, confidential advice.
Only licensed and regulated IPs can carry out formal insolvency procedures. Make sure you’re taking advice from a licensed and regulated IP and not a third party who may charge you before referring you to one.
Why taking advice early matters
By taking professional advice from a licensed IP once you’re aware of any possible financial issues, you’ll receive free, impartial, confidential, non-obligatory advice you can trust. This can help manage potential risks and give you a better understanding of your position while exploring your company’s options.
As licensed insolvency practitioners, we can:
- Review your company’s position
- Explain your options and the associated costs
- Help you understand your duties as a director
- Assist you with the implementation of the appropriate formal process where required
Ignoring potential early warning signs of financial issues in your company can lead to:
- Allegations of wrongful trading
- Challenges to transactions (for example, preferences or transactions at undervalue)
- Investigation into your conduct as a director during a subsequent liquidation
- Personal liability for the company’s debts in some circumstances
Do I need an insolvency practitioner to close my company through a solvent liquidation?
A company can enter a solvent Members Voluntary Liquidation (MVL) if, as the director, you no longer wish to run the company, and that company has sufficient assets to make the process worthwhile. An MVL can be useful if you’re looking to close your company in a structured and legally compliant way while extracting the company’s maximum value. As with an insolvent liquidation, this must be carried out by a licensed and regulated IP.
Even if your company is solvent, you may be anticipating financial issues. We can advise you on what actions you can take to minimise potential damage from a possible insolvency. Taking advice won’t discredit your company, harm your credit rating, or influence creditors.
More on a solvent Members Voluntary Liquidation (MVL)How our insolvency practitioners can help your company
As licensed insolvency practitioners, we can offer free confidential advice and can carry out the following formal insolvency procedures to help you and your company.
- Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA)
A CVA is a payment plan between a company and its creditors that allows you to restructure your company’s unsecured debts, while continuing to trade, by making affordable monthly payments over a fixed period. We start by assessing your company’s financial position, determining a realistic repayment amount. These terms are then proposed to your creditors and if approved, your company enters the repayment plan. When in place, all interest and charges are dropped and creditors in the arrangement cannot take further legal action. The process lasts for up to 5 years and on successful completion, any remaining unsecured debt in the arrangement is written off.
- Restructure your company through administration
Administration is an insolvency procedure for companies. Entering the procedure, your company will be in a temporary state of protection by a moratorium that halts creditor action, including legal proceedings, giving your company the breathing space to continue trading. We will act as administrator and our primary purpose is to rescue your company as a going concern, attempting to restructure and turn it into a leaner, more profitable organisation. If rescuing the company isn’t a viable option we will also look at the most appropriate exit strategies from administration, whether that be a potential sale of the business, assets, the whole company, or transitioning to an alternative insolvency procedure.
- Close your company down via a Creditors Voluntary Liquidation (CVL)
A CVL is a liquidation procedure for companies that are insolvent. The process will formally close and liquidate your company, ceasing its trading operations, realising any assets, and removing the threat of creditor legal action. If your company has employees, they can claim for redundancy and other statutory entitlements through the government’s Redundancy Payment Service (RPS). The process is final and irreversible. Once completed, your company’s unsecured debt will be written off and the company is dissolved, allowing you, the director, to move on.
- Close your company down and start again via a pre-pack liquidation
A pre-pack liquidation is a type of CVL where the sale of your company’s assets is arranged before liquidation, allowing business operations to continue seamlessly under the purchasing company. The company name may be reused, and employees can transfer under TUPE. Contracts and essential agreements can also be included as part of a sale, ensuring minimal disruption to your business operations. This process eliminates the unsecured debts of your previous company, providing a fresh start free from previous unsecured liabilities.
- Close and liquidate your solvent company via a Members Voluntary Liquidation (MVL)
An MVL is the liquidation and closure of a solvent company. The procedure will formally wind up and close your company, whilst extracting the company’s maximum value, through its various tax benefits. The company’s assets, including any premises, are realised, with the remaining funds distributed to shareholders once creditors are satisfied.
How do I know if an insolvency practitioner is licensed?
All insolvency procedures, including liquidation, CVA, and administration, can only be carried out by a licensed IP. All IPs must be licensed and regulated by a regulatory body, and must follow the regulations in the Insolvency Act and the Insolvency Rules.
You can check if an IP is licensed via the government website.
Wilson Field’s insolvency practitioners are licensed by the Institute of Chartered Accountants in England and Wales (ICAEW) and licensed to provide advice and undertake insolvency appointments.
View our licenses on the ICAEW’s websiteWhy speak to us?
We have years of experience, advising directors on company rescue, turnaround, and closure solutions across the UK since 2001.
We understand the stresses associated with financial pressure and that every company has different circumstances. By speaking to us, you’ll receive:
- A straightforward approach
- Clear, regulated advice from licensed professionals
- A transparent breakdown of your options
- Solutions tailored to your situation
- Confidential initial discussions with no obligation
How to get in touch with us: The next steps
- Speak with our initial advisers
Make contact with our team via phone, filling in a form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation. - Initial assessment
During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or whether alternative solutions better suit your company’s problems. - Formally engage with Wilson Field
If there is an appropriate insolvency solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us.
In summary
You’ll need to speak to a licensed insolvency practitioner (IP) if your company is experiencing financial pressure or you’re concerned that it could soon become insolvent. By speaking to an IP, you’ll receive advice from licensed and regulated professionals, allowing you to make informed decisions and keep as many options open as possible. You should also speak to an IP if you’re planning to liquidate a solvent company or you require advice in anticipation of potential financial issues.
Case Studies
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.
Precision Engineering Business
Kelly Burton • Construction & Engineering • Administration
A bespoke precision engineering business, working predominantly in the automotive and aeronautical sectors, found itself experiencing cashflow difficulties caused by an increase in costs due to the uncertainties surrounding Brexit, and the loss of a key member of the sales team.
When the company’s largest customer reduced its spending by 50%, the director felt the business couldn’t continue and sought advice from the team at Wilson Field.
Wilson Field marketed the business and assets for sale, and a sale of the tangible assets was completed immediately following the administrators appointment, to an unconnected third party.
Kelly Burton, insolvency practitioner and director at Wilson Field, said:
“With so many complications surrounding Brexit, coupled with the loss of some key staff, the company experienced some cashflow difficulties it could not get out of.
There was a positive outcome in the end as some of the tangible assets within the company were sold, which meant a good return for creditors.”
ARB (Sound Vision Light Power) Limited
Kelly Burton • Leisure & Hospitality • Administration
Wilson Field has secured a new future for a Banbury headquartered events management company, which boasted clients including Crufts, Tour of Britain and Virgin London Marathon after it was bought out of administration.
ARB (Sound Vision Light Power) Limited was established in September 2014 and specialised in event hire including providing audio visual solutions equipment, hire and installation.
The company, which traded from Coton Cottage, Chacombe near Banbury, called in administrators from Sheffield-headquartered Wilson Field for formal insolvency advice.
The company, which has an impressive client list and relied solely on sub-contractors as and when needed, suffered VAT and HMRC issues as a result of a period of illness.
Kelly Burton and Lisa Hogg from Wilson Field were appointed as joint administrators on February 20 and concluded a pre-packaged sale of the business and assets for an undisclosed sum to ARB Motors Limited, lead by the same management team.
Kelly Burton, director and licensed insolvency practitioner at Wilson Field said:
Wilson Field was brought in to look at the situation of the business.
The focus on the company had diluted during a period of illness of one of the two directors. A debt was due to HMRC and a repayment proposal was rejected resulting in the need to protect the business and assets via a formal insolvency procedure.
The pre-packaged sale means the business, which was an established player in event management at large scale events, has a bright future moving forward.
The loss of a major employee’s input through illness can harm an organisation and it is important for businesses to seek help should this arise. Timing is essential to keep focus on the business.
ARB has combined experience of more than 100 years and provided hire equipment such as indoor and outdoor PA systems, single and double-decker commentary units, street sound vehicles, exhibition TVs, stage lighting and mobile power in both primary and secondary distribution.
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