Although the process of administration is not the only way to accomplish corporate restructuring, if creditors are threatening a winding up petition, administration just may be the salvation of your company. Real Business Rescue will help analyse your current financial situation to see if your company has hopes of being solvent in the future, and if there is any possibility at all of rescuing the business then corporate restructuring through company administration may be a prime consideration. It is our goal to help you survive your current financial crisis, so that you can continue trading for years to come. It may not be an easy road to follow, and you will need to relinquish control to a professional Administrator, but in the end the results will be well worth the effort.
There are a number of reasons why corporate restructuring could be necessary, even for companies that have been in business for decades. It isn’t always the directors who have fallen down on the job, in some cases a changing market is to blame, and/or specific products or services that once had a high demand have become obsolete. Also, other companies are experiencing cash flow problems as well during these harsh economic times, which may mean that your approach to collecting debts will need to change. Over time, business models need to be revamped in keeping with trends and this is one of the things corporate restructuring will help you accomplish. From the newest hourly employee to the company’s directors, everyone’s role will be looked at to see whether there is a loose link in the chain.
Once an administration order is granted, all legal proceedings against the insolvent company are stayed for a period of up to 8-10 weeks, so creditors can no longer threaten receivership or any other action during that time. In addition, being that the administrator is required by law to be a licensed insolvency practitioner (IP), they will be well-trained in how to conduct negotiations and proposals. The IP may sell some of the companies assets to raise funds. The primary aim of the administration will be to free the company of as much debt as possible while repaying creditors without preference. At the end of the administration, the company will either be dissolved, go into liquidation or a CVA in order to distribute funds to the creditors.
In the event that the company’s liabilities exceed its assets and returning to solvency seems to be impossible, the IP may sell the assets to another company. This would effectively allow the business to carry on operations under a new company name while keeping the same assets, including employees, equipment, and contracts. If the directors of the old company are able to afford the assets of the company this maybe a good way to start again when restructuring is not feasible.
If you’d like to learn more about corporate debt restructuring options for your company, call us today on 0800 644 6080 for a free in-depth consultation.
25th April 2019
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