No-one likes to think of their business is in real financial difficulty but there are times when it’s necessary to face up to the fact that things have spiraled out of control.
There’s a difference between having a few cash flow hiccups to being unable to meet your liabilities; so when things reach the latter stage, it’s time to take action.
If you aren’t sure what a company insolvency practitioner does, or when you need to call them in, this guide is for you.
It Doesn’t Have To Mean The End
Appointing an insolvency practitioner isn’t a pleasant decision to make, and it’s something every business owner hopes they will never have to face.
However, if you are faced with the inevitable, it won’t necessarily mean that your business will collapse; a company insolvency practitioner has many different options open to them.
If your difficulties in meeting your financial obligations are more than a temporary blip, you may need to consider appointing a company insolvency practitioner. In fact, any directors of a limited company have a legal responsibility to do so; even if insolvency is looking like a potential outcome, they are required by law to take action to protect the interests of the creditors.
A company insolvency practitioner will work to help ensure the liabilities to the creditors are met as far as possible and will balance up all the claims against the business before deciding on a course of action.
Much depends on the level of debt, the reason for the financial difficulties and the state of the underlying business. Unfortunately, administration and insolvency are solutions which will have to be considered.
However, there are many other outcomes which the insolvency practitioner can consider too, and these could mean your business is able to carry on. An insolvency practitioner would prefer to rescue the business wherever possible and may suggest pre-pack administration, the formation of a phoenix company or even the sale of your assets.
Delaying calling in an insolvency practitioner can mean your options are more limited, and liquidation and insolvency may be the only viable outcome.
As a general rule, as soon as you are aware that your financial problems are more serious than just a passing cash flow issue, you shouldn’t delay calling in expert help. By getting advice from an insolvency practitioner straight away, your business may have a better chance of being rescued and a more acceptable outcome found.
What To Look For
Appointing an insolvency practitioner isn’t like recruiting members of staff; it’s not a task that is desirable and as such, many business owners put little thought into the process. However, the attitude, experience, and role of the insolvency practitioner can have a very significant impact on what ultimately happens to your business.
You can expect to find that the insolvency practitioner is either an accountant or a lawyer; this is a role which is highly technical and tightly regulated, so experience and knowledge are key to success.
Although the insolvency practitioner is there to try and protect the creditor’s investment, that doesn’t mean they can’t empathize with you too. Trying to find someone who considers your best interests and takes them into account as much as possible will be a huge help in trying to secure the most acceptable outcome for your business.
It’s worth asking a few questions before you appoint an insolvency practitioner. Some points to consider include finding out how much experience they have, and what outcomes they have secured in situations which are similar to yours. If an insolvency practitioner has only had experience in taking cases through liquidation, you might want to consider finding another individual who could have more success in rescuing your business.
An insolvency practitioner might not be the most popular appointment in the world of business and commerce but when a company looks like it’s about to go under, an expert pair of eyes is essential. Although the outcome might be a liquidation, there is the chance the business could be rescued, particularly with early intervention. Even if the business is ultimately shut down, the process will be as smooth and easy as possible with the assistance of the right person working with you.