Updated: 8th January 2020
It is common to hear directors claim that their companies are on the edge of bankruptcy (whilst you need to remember that a company cannot go bankrupt only an individual) and of course they are concerned. Today’s economy is forcing greater numbers of businesses into insolvency but part of that problem is that action wasn’t taken soon enough to avoid formal proceedings. Is your company going bankrupt? What happens and what does it mean depends on how quickly you respond at the very first sign of cash flow problems. There are ways to prevent formal insolvency but you must act quickly and Real Business Rescue can help. In fact, even if creditors have petitioned the court, we may be able to intervene on your behalf.
The first thing we will need to accomplish is determining whether or not your company is truly ‘bankrupt.’ Are you behind on most of your bills, including taxes? Are you continuing to operate at a deficit and going deeper into the hole? It could be that your company is only in a temporary bind which a quick injection of capital could fix. Naturally, it may be hard to find funding or financing if your business is not doing well, but that can be overcome as well in many cases. The point is, being ‘bankrupt’ and having ‘cashflow problems’ are two different things and before steps can be taken, we need to decide which category your worries fall into.
If it is found that your company is truly insolvent (bankrupt) a creditor may petition for compulsory winding up. On the other hand, if the directors meet and vote that the company is irrevocably insolvent, then they can commence the process for a Voluntary Creditors Liquidation. In either case, compulsory or voluntary, there are strict regulations which must be adhered to although the court will only be involved in a compulsory liquidation . There will be meetings with members and creditors, publication in the Gazette and everything follows a pre-defined set of guidelines. The focus will be on your creditors and only your creditors. When a company is bankrupt, creditors, shareholders and directors ‘eat the loss.’
We are often asked if even a bankrupt company can be turned around. Believe it or not, we have indeed salvaged many, many companies that were literally bankrupt. Sometimes it is through pre pack administration whilst other times Administration is the preferred way to restructure and reorganise a company. Keep in mind that a winding up petition can be stopped if acceptable arrangements can be made with creditors but a winding up order is final! Don’t let it get that far if you have any hope of saving your company. Sometimes it is just a matter of finding funding to put you on the path to recovery or making formalised payment arrangements with HMRC and your other creditors.
Real Business Rescue is here to help you understand your options and if there are none open to you, we can help mitigate the repercussions of bankruptcy. There is no way to know what can be done until we have had a chance to go over your books, talk to your directors and perhaps analyse your current business model. If there is any hope of rescue, we will find it for you. We can’t help if you don’t ask for it, so talk to one of our experienced insolvency specialists today. What happens next is up to you. With 77 offices across the UK, you’re never far away from expert and confidential advice.
5th August 2020
The British Chambers of Commerce (BCC) has called on the chancellor of the exchequer Rishi Sunak to change his approach to providing support to businesses across the UK economy.Read More
5th August 2020
A growing number of companies have been announcing their intention to make significant cuts to their workforces as the coronavirus crisis continues and the UK economy struggles to rebound.Read More