Recruitment Agency Closure and Rescue Options
Economic uncertainty, online competition, loss of contracts, and companies implementing hiring freezes can all negatively impact recruitment agencies. If you find your recruitment agency is struggling to repay its liabilities as they fall due, you should speak to us for tailored, impartial, confidential advice. We understand each company requires a nuanced approach, and if you act quickly by speaking to us, you can help turn the tide in your company’s favour.
This guide is designed to help you navigate the complexities of insolvency with practical advice specifically tailored for recruitment agencies. With the right knowledge, you can make informed decisions about the future of your company, whether it involves restructuring, refinancing, or winding down operations.
Common financial challenges for recruitment agencies
We can help advise on specific financial issues your recruitment agency could face, including but not limited to:
- Asset considerations
While other companies rely on physical assets, recruitment agencies rely on their client lists and databases. While these assets could hold value, that doesn’t mean your company is immune from financial issues. If your recruitment agency is facing financial challenges and has a valuable client database or other company assets, contact us to assess your situation and discuss your options. - Managing brand reputation
Maintaining your brand’s reputation is important for your recruitment agency as it can influence your company’s market advantage, trust from clients, and its ability to attract new ones. Our advisers will consider this when assessing your company’s circumstances and proposing a tailored solution. - A changing market
The recruitment sector is constantly evolving as work patterns and trends change. Talent once looking for a permanent position may be embracing shorter-term contracts, reducing the appeal of recruitment agencies. If a change in the market or a loss of clients has reduced your recruitment agency’s viability, speak to us for advice on your best route forward. - Bounce Back Loans (BBL)
The government’s Bounce Back Loan initiative was very important during the pandemic. However, companies are now having trouble repaying them. We can give you advice on what options you have when it comes to repaying the loan and how a BBL would be treated in various insolvency options.
How we can help rescue your recruitment agency
Below are two formal insolvency procedures that would allow your recruitment agency to continue trading while protected from creditor action:
- Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA)
A CVA is a formal payment plan that allows companies to repay their unsecured debts in instalments tailored to what your company can afford monthly. It would allow your recruitment agency to continue trading and to retain all your company’s goodwill and reputation with customers, whilst being protected from any creditors who are in the payment plan. CVAs typically last for up to five years and once concluded any remaining unsecured debt in the plan is written off.
More on a Company Voluntary Arrangement - Restructuring your recruitment agency through administration
Administration is an insolvency procedure for companies. Entering the procedure, your recruitment agency would be in a temporary state of protection by a moratorium that halts creditor action, 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.
More on administration
How we can help close and liquidate your recruitment agency
If your recruitment agency is insolvent and creditor pressure has reached a level where the business cannot continue trading, liquidating your company would draw a line under its operations and write off its unsecured debts.
- Close down your recruitment agency via a Creditors Voluntary Liquidation (CVL)
A CVL is a liquidation procedure for companies that are insolvent and have unmanageable levels of debt. By entering this process, your recruitment agency would close, ceasing its trading operations, stopping any further payments and removing the threat of legal action. If eligible, employees and directors will be able to apply for statutory entitlements through the Redundancy Payment Services. Once the process is completed, all of your company’s unsecured debt will be written off and the company will be dissolved.
More on a Creditors Voluntary Liquidation - Close down your recruitment agency and start again via a pre-pack liquidation
A pre-pack liquidation is an informal term for a type of liquidation where one company pre-purchases the assets of an existing company that is then liquidated. This allows you to close your recruitment agency while continuing its business under a new company without any unsecured historical debts. You can transfer your employees under TUPE regulations, contracts and essential agreements can also be included as part of a sale, ensuring minimal disruption to your business operations. You may be able to reuse your company’s trading name, but this can be complex. We can advise you on these processes and how it works.
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Commercial finance for recruitment agencies
If the company has an otherwise healthy cash flow, but a large, upcoming payment risks its future, commercial finance could be a viable solution. There are a range of finance options potentially available that can help cover a one-off expense or a gap in the company’s incoming payments. Speak to us for a more detailed breakdown of which commercial finance options best fit your recruitment agency.
More on commercial financeHow to get in touch with us: The next steps
If your recruitment agency is facing financial challenges, it’s important to understand the different closure and recovery options available. Our initial advisers will offer a comprehensive explanation of the different options available to you and our experienced consultants will look at tailoring our processes to your recruitment agency’s circumstances.
Contact our initial advisers, who can advise you on your recruitment agency’s solvent position and outline the options best suited to its circumstances.
- Speak with our initial advisers
Contact our team via phone, by 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.
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