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Pre Liquidation Solvency Planning 

Pre Liquidation Solvency Planning. Written by John A Waller, Director. Reviewed November 8th,2022.

Professional Review Pre Liquidation – 

Planning ahead of a potential liquidation – Insolvency planning & evaluation

 Pressures from creditors, banks, and HMRC often force company directors into impossible situations.

When directors are unable to manage their situation, they must take quick and decisive action. However, they must consider the impact of liquidation.

Directors must consider the planning or evaluation of solvency before liquidation. If a company is insolvent and no longer viable, directors can use this process to understand and agree on the company’s future.

Therefore, company directors must comprehend why such a meeting is necessary. A licensed professional may be able to offer more help than you realise; all may not be lost.

Apart from closing your company down, using a liquidation. HBG Advisory may prepare a company voluntary arrangement or company administration to allow the survival of a viable business.

For further assistance, please contact the team at HBG Advisory on 0330 056 3120. 

Therefore, a detailed and accurate assessment of your company’s financial situation must be conducted before any decisions are made regarding commencing a Creditors Voluntary Liquidation.

Pre Liquidation Solvency Planning & Director support

In the UK. If you are a company director registered in England and Wales, you must conduct yourself legally and morally when in office. 

The role of Company Director is often abused and can be a minefield for those who are new to the position. However, those who accept a directorship should be aware of the potential risks and liabilities. The company’s directors must however, act in the company’s best interests, shareholders, and, importantly, creditors when producing decisions that affect the company.

Company Directors have a lot of responsibilities and must be kept up-to-date with all of their options while also having access to accurate information so that they can plan for the company’s long-term solvency.

As a company director, it is important to understand your potential liabilities in regards to business debt. If your limited company faces financial distress or insolvency, you could be facing penalties or disqualifications.

The UK government is currently challenged with overcoming the negative effects of the present pandemic. In June 2020, the Corporate Insolvency and Governance Act (CIG Act) came into effect. The act designed to maintain businesses trading has had a significant impact on how insolvency operates in the UK.

With ever-changing rules and regulations, the UK economy and the rest of the world face incalculable events financially. So seek robust independent business advice from the team at HBG Advisory and consider essential directors liability review.

Pre Liquidation Solvency Planning – So what is next? 

HBG Advisory provides a complete snapshot of your business at a date to establish its viability and solvency during pre-liquidation solvency planning.

We understand that approaching licensed insolvency practitioners concerns many individuals, as it is a worrying time.

However, all is not lost. Indeed, our primary objective is to secure the business while protecting the interest, especially of creditors.

So, to understand your business and any issues, we need openness by both parties to deal with the facts. Only then can we put matters right.

  • Firstly, ensure completion of our initial request pack;
  • Then, examine the company’s accounts over the past five years, along with actual performance to protected budgets:
  • Establish charges registered against the company and its assets;
  • Review customers/clients of the company;
  • What are the directors planned exit routes for the sale of the business or their retirement?
  • Evaluate the strength of the market sector the company operates in;
  • Strengths and weaknesses of company operation/management/workforce;
  • Any succession plans.

Our snapshot often reveals an unexpected answer. The company is viable, and a Creditors Voluntary Liquidation (“CVL”) is unsuited for your limited company. 

Pre-liquidation solvency planning is necessary to achieve the best possible outcome for your business and the creditors of the company.

Pre Liquidation Solvency PlanningFinally

Having a review gives directors assurance when considering creditors’ voluntary liquidation or not. Suppose the view is a liquidation is the only option. In that case, the directors will have a clearer vision of matters about to unfold and may derive comfort from the final decision, allowing them to trust the nominated liquidator.

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