If you are experiencing financial difficulties, obtaining early professional advice is essential. Of course, reasons for experiencing financial difficulty can be wide ranging, and whether you are struggling to make payments, suffering bad debts or experiencing the loss of a major contract, you shouldn’t have to do it alone. We are here to help, and depending on the severity of the situation, we can offer a few different options to give you or your company the best possible chance of avoiding formal insolvency. Read on if you are here to take back control of the situation and put the worry behind you.
Here at Connect Insolvency, we have three rescue options: Administration, Company Voluntary Arrangement (CVA) or Informal Arrangement/ Time to Pay. The right option for you however will all depend on the seriousness of your situation. Here we will take you through them.
Going into administration is when a company is put under the management of a licensed insolvency practitioner, and takes control of the company’s affairs from its directors. It is a powerful process for gaining control, allowing the company time to reorganise its affairs or realise its assets in a more orderly fashion than a closure option. However, to be able to go into administration, the proposed administrator has to be satisfied that the current objectives can be achieved:
- Rescue the company
- Achieve a better result for the company’s creditors
- Distribute the proceeds to preferential creditors
Administration is one of the first options to consider before Company Voluntary Arrangement or liquidation, and whilst the administrator will take over management they will do it in the best interests for your company.
Company Voluntary Arrangement (CVA)
If your situation is a bit more serious, then Company Voluntary Arrangement may be the way forward for you. It is seen as the best rescue tool for a company that is viable for going forward, but burdened with debt. Often referred to as a CVA, it allows the directors of a company to remain in control and put forward a proposal to its creditors, addressing the problems and highlighting that you will be able to pay off debts in the future. The proposal will be considered by both the company and its creditors. It is typically agreed for the company to make monthly contributions of any agreed amount and period. In a nutshell, the company is in a legally binding agreement with the creditors, paying off its debts over a certain period of time. This can last anywhere from 3-5 years. There can be multiple benefits of CVA, for instance:
- Stop pressure from Tax, VAT and PAYE
- You do not have to say your company is in a CVA with your customers
- Improves cash flow quickly
- Not publicly announced
Informal Arrangement. Time to Pay
Last of all, the Time to Pay arrangement will only be accepted if HMRC is satisfied with a proposal you have negotiated. In other words, a debt repayment plan for your outstanding taxes and debt. The proposal should support evidence that the business is able to pay off the debts in time, as well as a steady cash-flow, a viable business model and no previous history of not making tax payments. Here at Connect Insolvency we can help you assess whether your proposal is viable, assist in drafting the proposal and also negotiate with creditors such as HMRC on your behalf. If successful, it will be agreed that you can pay back debts and taxes over 6-12 months. However, not all businesses will be accepted, and it is understandable that HMRC is not willing to offer payment plans to high risk businesses.
So, give us a call or get in contact with one of our team members if you feel that one of these options is suited for you. Many companies suffer through financial difficulties, and we strive to be the best insolvency practitioners Newcastle has to offer and help you through this hard time.