If your business is in distress or insolvent and it needs to be turned around, then the process will involve your business going through a period of huge change.
The process and types of change that your business may experience depend of the situation, severity and the solutions that are implemented to turn your business around.
If you find yourself in this situation is it a good idea to speak to a business turnaround specialist to determine what your options are.
To give you an idea of what some the procedures, here are some of the options:
Administration is a constructive process that aims to rescue your company; it is seen as a positive option for failing small to medium businesses. The process of administration includes putting the company’s debts on hold whilst protecting its assets. This gives the business some space to try and resolve the difficulties that it is experiencing. During this process, an administrator will take over the financial management of the business and will put in place appropriate business turnaround measures.
- Administrative Receivership
If a business becomes insolvent and it cannot keep up the terms of a secured loan, then it is possible for the lender to call in an administrative receiver. An administrative receiver is a business insolvency practitioner who takes over the finances of the business. The role of the administrative receiver is to primarily recover the money owed to the secured lender; they may do this by selling some of the assets or even the whole business to cover the costs. However administrative receivership is usually only available to lenders who have a debenture on the business dated prior to 15th September 2003.
- Creditors Voluntary Liquidation
Is when the shareholders decide to fold the business, because the business does not have sufficient assets to cover its debts. If a business decides to fold, the Directors usually call a meeting of the shareholders and creditors; they then appoint a liquidator to covert the businesses assets into cash. Payments are then made to the creditors in order of priority.
- Company Voluntary Arrangement
If a business has temporary cash flow problems and can demonstrate that it will be able to trade successfully again and repay its creditors over time then this is an option. A company voluntary Agreement is where an arrangement is negotiated with the company’s creditors in which they agree to accept a reduced payments for what they are owed over a period of up to 5 years. This enables the business to survive whilst the creditors receive what they are owed.
To understand the whole range of options and to get help choosing the right options you should contact a business turnaround specialist or contact us on 0800 597 4757 or apply online using the form opposite.
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