Phil MeekinView Profile
Unless you work in an insolvency-related career or have been unfortunate enough to experience severe financial problems in the past, you may have limited knowledge of what services are available from an insolvency practitioner.
Headlines about football clubs, or large companies, going into Administration or Liquidation are common place. There are also often mentions of winding-up orders, LPA Receiverships and voluntary arrangements, it all sounds pretty grim and terminal.
Some of it is – particularly if business owners fail to take early advice when they face financial difficulty. Not only can a business end up going into liquidation, but if there are personal guarantees signed, owners can suffer from personal insolvency.
More than just “going bust”
The insolvency industry deals with much more than “bust” companies. Many insolvent businesses and individuals take action before things have gone past the point of no return, and they’ve recognised the need for an arrangement to prevent either Liquidation or bankruptcy. Fittingly, there are multiple arrangements allowing companies and individuals to repay their debts in instalments, as well as options for company restructuring if necessary.
Lots of financial pressures
Running a business is not easy – particularly in the current climate. Companies depending on public sector contracts or operating in industries such as retail, leisure, construction or haulage are probably concerned about future sales. They could also wonder if their bank will support them if they hit a snag, and businesses with heavy amounts of borrowing will have worries about a possible increase in interest rates.
Insolvency practitioners have several tools at their disposal, including access to private investors, sources of finance and equity in certain circumstances.
A success story:
Recently, the prompt, pro-active actions of a business director seeking advice from Wilson Field had far-reaching consequences and was able to see a positive side of insolvency.
The company provided care assistants for vulnerable people. Faced with being unable to trade profitably, the director could have walked away from the company, and the main creditor (the taxman) would have received nothing. Instead, the company was placed into Administration until its sale as a going concern could be arranged.
As a result, 60 staff retained their jobs, numerous vulnerable clients continued receiving care and HM Revenue & Customs (HMRC), while not fully repaid did receive a significant amount. The director gained nothing other than the knowledge that his staff and clients had not simply been abandoned.
Insolvency practitioners are sometimes seen as the bringers of doom for businesses, with no hope of recovery after they’re called in. Insolvency procedures actually deal with more than just closing companies, providing recovery solutions for companies and individuals where viable, so there can be a positive side of insolvency. Many companies have been rescued from closure, saving multiple employees’ positions and allowing businesses to continue providing services for customers.
Behind every business is a person – or people. If you’re running a business and worried about the issues mentioned above, the worst thing you can do is nothing. Discuss the problems without delay with a licensed insolvency practitioner; the sooner you take advice, the more options are usually available, and the better the chances of your business surviving.