Limited Company Rescue & Recovery
Companies who may demonstrate a viable future have limited company rescue and recovery options to continue trading, despite financial issues.
Providing your limited company holds a viable future, the directors affirm the need for change, are prepared to work for its continuation, and relevant funding obtained? Then you might be amazed by the options possible.
Firstly, create a well-constructed business recovery plan that helps a company manage its cash flow and trade out of Insolvency.
So, let’s look at the critical areas of recovery planning;
A business recovery plan, or a business turnaround, requires accurate figures, so it indicates the current status of the company. Usually then clearing the air and providing the company with a new focus. It may be prudent, however, and even cost-effective, to use the assistance of Insolvency Practitioners, like HBG Advisory.
There are serious legal matters to be considered, and areas (like tax savings) identified. The costs of an external recovery plan remain usually compensated by the new cost savings.
If your business is struggling and you haven’t yet created a business recovery plan, you might however still have time to do so. HBG Advisory helps discover methods to cut costs and then take advantage of insolvency laws. We analyse every aspect of your company and help complete an immediate and effective action plan. Therefore, allowing a state of assurance moving forward.
What to incorporate in your company’s recovery plan? It needs to recognise the critical sections of your company.
- Which departments are required to keep your company operating?
- Required vital documents and other items do those departments need to operate in the short term?
- Define the vital equipment. Including software and hardware for the technology department;
- Generate a “necessary cost” operating budget showing all expenses;
- Find out the least financing your company requires to keep your business operating.
Then, establish an action plan for your company’s turnaround.
- Define each task, items required, department, the responsible parties and their contact information.
- Designate an individual responsible for taking care of each area should trouble hit. This way, there is no trouble during a crisis, and your business can take swift and decisive action.
A business recovery plan creates a chance therefore to start again. Once you have evaluated your business’s vulnerabilities and potential for change. Then opting for such a move remains, therefore, an efficient way to:
- Modify management plans;
- Access problems from a new perspective;
- Adjust the systems in which goods and services are rendered;
- Or generally, stimulate business and revive interest.
In instances where severe financial problems exist, risking the future of the company. Then there are powerful legal ways to ring-fence a business, whilst a solution is found.
Companies who may demonstrate a viable future may then consider a Company Voluntary Arrangement (CVA). Considered a powerful tool to aid a company viable while steering clear of a liquidation. CVAs focus on paying creditors what you can afford out of future profits.
A Company Rescue will use a CVA if possible. So what then is one?
Company Voluntary Arrangement CVA remains a formal arrangement with a limited company and its creditors. The arrangement protects the financial circumstances of the company, while unable to pay creditors as and when due. The company may though pay creditors out of profits in the future. The company pays a proportion, if not whole, of its debts over a pre-agreed time to the company’s creditors. Then any remaining debt left after is then written off.
Vital Elements of an approved Company Voluntary Arrangement (CVA):
- A viable business capable of returning to profitability.
- Commercially structured – can succeed without over-promising creditors;
- Introduction of sustainable working capital in addition to the restructuring of debt;
- Management believes reform is necessary;
- The determination required during the term of the CVA;
- Directors need an Insolvency Practitioner;
- Accurate, realistic forecasting.
Limited Company Rescue & Recovery & who proposes a CVA?
The directors of the company may propose a CVA. When the company is in administration, the administrator can propose a CVA. A CVA proposal may only happen if the company is insolvent or contingently insolvent.
The time required to set a CVA up?
Usually, a CVA takes between six and twelve weeks to set up. However, the summary detailed below remains feasible pending information readily available.
Limited Company Rescue & Recovery – Summary
Please note, a CVA is not a solution or remedy for all your companies’ difficulties. It remains a structure for change within the company, while protecting a distressed, though viable, company. In reality, although challenging, proposing and get approved. Gaining CVA approval is the most straightforward part of a rescue/turnaround. Then executing a turnaround, ensuring its success, remains more complicated and needs professional help. The CVA should aim to:
- Maximise creditors’ interests;
- Maintain viable but distressed companies;
- Continue the business activity and secure jobs;
- Return value to the creditors;
- Give the shareholders a chance of a return.
For further help, and details of free company debt advice. Please contact us:
All meetings remain confidential.
HBG Advisory are on hand to deal with every aspect of such a decision, and can offer answers to your queries and doubts.
The Insolvency Practitioners Association regulates all licensed Insolvency Practitioners in HBG Advisory.