When you’re struggling financially and you’re unsure about what to do next, it can be an incredibly stressful time. You will need more information and may need advice from an insolvency solicitor near me.
There is plenty of information available but getting advice on your specific situation can make all the difference when it comes to navigating these tricky waters.
If you already have an accountant or financial adviser that you work with, it’d be wise to ask for their advice on the situation before you do anything else.
Insolvency might be the best option, but you may have alternative options too. In this article we will explore your options.
Insolvency Services Offered
Insolvency solicitors work with businesses that are facing the prospect of insolvency to help rescue the insolvent business if possible.
Of course, that might not be a realistic option for you but it will depend on your circumstances and how the business is structured, as well as the reasons for the financial difficulties.
The reality is that closing the business down in the most efficient and beneficial way is an incredibly important part of the insolvency process and one that solicitors can assist you with. The first conversation is usually free, so it is very worthwhile seeking early insolvency legal advice to ensure that you do not fall foul of any insolvency laws which could cost you financially or legally.
There are a wide range of insolvency services that solicitors can assist with, including:
- Compulsory Liquidation
- Company Voluntary Arrangement (CVA)
- Creditors Voluntary Liquidation (CVL)
- Administrative Receiverships
Each of these is a different option with different outcomes and it’s worth knowing what they mean.
A CVA must be implemented by an insolvency practitioner such as your solicitor and it’s an agreement between your business and its creditors to plan a reorganisation that includes either a reduced or delayed payment of debts. Many businesses opt for a CVA because it allows them to continue trading while ensuring the creditors receive payment, even if it’s delayed or reduced.
A CVL usually occurs when you realise that your business is unable to pay debts when they’re due. In essence, it’s a voluntary winding up of the company that is prompted by the directors and shareholders. It means that the company will cease trading, which is a significant decision to make.
Administration occurs when a licenced insolvency practitioner is appointed by the business, the directors or by creditors to preserve the business or ensure a greater return for creditors than liquidation would yield. Although administration could result in liquidation, the idea is that if successful it can lead to the survival of the company and hopefully a brighter future following a period of recovery.
Compulsory Liquidation is exactly what it says on the tin – when the court has issued a winding up order. To obtain a compulsory liquidation order, you must prove to the court that the business is unable to pay its debts and that it would be the best option for all involved.
Administrative receivership requires the appointment of an insolvency practitioner (often a solicitor) by a lender that holds a debenture. It effectively transfers control of the business to the solicitor or practitioner who attempts to secure the required funding to pay off any debts and move forwards. The reality is that it might require assets to be sold or the business to be restructured to proceed as a business.
Bankruptcy is a personal declaration rather than a business declaration, as when a business is facing financial struggles, it’s classed as declaring insolvency.
You might hear businesses referring to bankruptcy but that’s usually because bankruptcy and insolvency are often used interchangeably in casual conversation…
But from a legal perspective, businesses declare insolvency.
Winding Up Petitions
A winding up petition (WUP) is a legal action that is taken by a creditor against a company that owes them money.
If the creditor is owed £750 or more, then they can issue a petition in court that will include a hearing date. It’s often an expensive option for creditors to take so it’s usually a decision that has taken a lot of thought before being made and it’s usually only done when all other avenues have been exhausted.
The court doesn’t treat a winding-up petition as debt recovery and instead concludes that if the company is unable to pay its debts, it should be wound up so that the liquidation process can collect the company’s assets and distribute them among the creditors.
A statutory demand is usually the step before a winding-up petition is issued.
It’s a written warning from a creditor stating that if the debt isn’t paid or an arrangement isn’t agreed upon that they deem acceptable, they will start court proceedings that will result in insolvency for the business.
At Solicitors Near Me, we understand that financial problems are complex and can be incredibly difficult to manage.
When creditors are owed money and you’re unable to pay your debts, it can be hard to know what to do next.
But that’s where our expert insolvency solicitors can help.
Insolvency Solicitors Near Me
We connect you with insolvency solicitors near to where you live or work for FREE so you can access the best advice for your situation.
You’re under no obligation to proceed with them and until you agree to do so, you won’t pay a single penny.