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My business is unable to pay its bills

My business cannot pay its bills on time. Many small companies suffer from financial issues, especially during the Coronavirus COVID-19 pandemic.

If my business can’t pay its creditors, you must act quickly and seek advice from an Insolvency practitioner.

When a business can’t pay its creditors, suppliers stop supplying, impacting the business’ cash flow. However, there is still hope. A licensed Insolvency Practitioner can keep your business on track. A Company Voluntary Arrangement (CVA) allows directors to avoid closure and retain control of their business.

Evaluate your business circumstances

Review your business and its finances.

If you answer ‘yes’ to any of the following scenarios for your business, please contact HBG Advisory for immediate guidance:

Is fighting with business cash flow temporary? If not, do you require a creditor voluntary liquidation, as the business is no longer viable?

Seeking help and support from a licensed Insolvency Practitioner protects you, your business, and your business creditors.

The Licensed Insolvency Pratitioners  at HBG Advisory are regulated bt the Insolvency Practitioners Association. (IPA)

My business is unable to pay its bills due to temporary cash flow difficulties

There may be some bills that you can postpone, giving you breathing space. Creditors might be understanding if you have a good relationship and explain your situation. You may establish a payment plan together.

Directors must monitor creditors “responses and their own reactions. Creditors may react aggressively, fearing your business’ failure and their consequent loss. If your creditors seek legal advice on obtaining payments, they may proceed via the courts or even apply to wind you up. Many choose a form of leverage, particularly if the creditor believes some wrongful trading has happened. This is allowed to allow compulsory liquidation, and the official receiver appointed to act as temporary liquidator, and investigate the company and how directors managed it.

Therefore, contact the team at HBG Advisory for advice on the contact details as below.

Consequences of ignoring your temporary cash flow issues?

If you ignore your company cash flow problems hoping they solve themselves, you will likely be disappointed, and hence get into a more complex situation.

Creditors are likely to stop services quickly. The effect on your business will depend on the goods or services you provide.

Annoyed creditors may petition the court to wind up your company to recover money owed. Therefore, this could result in your business shutting down and being forced to liquidate. Avoiding this will stop the following:

  • Any credit term needed in the future is affected. 
  • You and your business will be considered unreliable and untrustworthy;

Compulsory liquidation and avoiding one.

To avoid compulsory liquidation of your company. Directors must seek support from a licensed insolvency practitioner to propose an arrangement with creditors and avoid closure. The procedure is known as a ‘Company Voluntary Arrangement‘ (CVA).

Subject to having a viable company moving forward.

A CVA continues business while repaying company creditors. Usually, payments made monthly once agreed upon by the creditors. Sometimes creditors agree to write off a proportion of the outstanding debt, believing it is better to receive something than nothing, as is often the case in liquidation.

My business is unable to pay its bills. – Problems are not temporary

If you believe the situation is permanent and you will not catch up on debts and bills you therefore, most commence Creditors’ Voluntary Liquidation (CVL).

Directors of the company can recommend a CVL if: =

  • Once established, the business can’t pay its debts as and when due. Therefore, it is insolvent on a cash flow basis.
  • Therefore, shareholders of the limited company (the business) need to hold a meeting and agree and pass a ‘winding-up resolution for the company.

If a company goes into CVL, it stops trading – i.e. ‘wound up’ and closed.

All directors duties cease once the liquidator is appointed. Then allow you to move on with your life and not worry anymore about the company’s creditors.

Since the recent changes in UK corporate law in 2020 and the outbreak of the coronavirus COVOD19 pandemic, Physical attendance meetings remain no longer. The process can be done online or over the phone, with written communication being the safest way to handle liquidation.

CVL may not be the best option for your company and creditors. A Licensed Insolvency Practitioner will explore your available options.

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