Having identified the right rescue solution for your business, our team will explain the procedure and what you can expect.
The following procedures are available as ‘rescue’ solutions:
An Administration is a process which effectively provides breathing space from any actions by creditors. It essentially ‘freezes’ creditor actions to give Directors the time needed to consider alternatives and to put a potential rescue plan in place. This means that without ‘leave of the court’:
- Landlords are unable to distrain on your company’s assets
- Creditors cannot pursue any court judgements against your company
- Winding up petitions cannot be issued against your business
- Bailiffs cannot seize assets or take ‘walking possession’
- Hire Purchase companies cannot recover their assets
An Administration can be used to:
- Rescue the company as a going concern
- Maximise recoveries for secured and preferential creditors
- Get a better result for creditors than could otherwise be obtained by liquidation
Further examples of how this process can be used are:
- To provide the company with protection from creditors to effect a rescue plan e.g. by refinancing funding
- For the sale of part or the whole of the business
- To implement a Company Voluntary Arrangement to reconstruct the company’s finances
- To allow the company to continue to trade to make the most of the realisable value of assets for the benefit of creditors
Company Voluntary Arrangement
If your company is unable to meet its debts as and when they fall due, a Company Voluntary Arrangement may be an option for you.
The purpose of a Company Voluntary Arrangement (CVA) is to propose a ‘deal’ with your creditors. Once a deal is agreed, this prevents the creditors taking any enforcement action against the company.
- Enables the company to negotiate a debt rescheduling plan with creditors
- Can be very flexible
- Can either pay creditors in full or in part, over an agreed period of time
- Is often used where a company has resolved problems, allowing future profits to pay the debts
- Can be used to renegotiate terms with suppliers, landlords, contract employers etc.
Partnership Voluntary Arrangement
This is a legally binding agreement between a partnership and its creditors. It can be drafted in very flexible terms to agree a return of debt to creditors.
That return will depend upon the firm’s circumstances but could result in a deferment of debt, time to pay the debts or a compromise of both.
It is used as an alternative to liquidation to enhance recovery prospects for creditors.
Individual Voluntary Arrangement
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between an individual and his/her creditors which can be drafted in very flexible terms to agree a return of debt to creditors. That return will depend on the individual’s circumstances but could result in a deferment of debt, time to pay the debts or a compromise of both.
An IVA is used as an alternative to Bankruptcy to enhance recovery prospects for creditors while at the same time avoiding the stigma and consequences associated with individuals in Bankruptcy.