We owe thousands on a startup loan that was put on the backburner recently because we have had so many increases in operating costs. I never thought that putting this loan off would come back to haunt me like this, but apparently the lender has now started turning to legal action as a means to collect. We’ve been told by the lender that we have one month to make a payment or they will be pursuing liquidation as a means of recovery. Is it possible to stop liquidation at this stage?
Fortunately, since your creditor has not yet petitioned the court to wind up your company, it is still possible to stop liquidation at this stage. However, if you wait until you are served a winding up petition then it may be too late, as the bank could freeze your accounts at that time.
The most efficient way to stop liquidation in its tracks is to enter into administration voluntarily. Once an administration order is granted all legal actions taken against your company are halted. This, in effect, means liquidation is postponed while the administrator performs their job of running the company with the goal of satisfying creditors. In the field, we say it draws a ‘ring fence’ around your company to keep creditors from pursuing further action as a statutory moratorium is created.
Real Business Rescue will look at options such as sale of assets, finance and funding, restructuring of your business model or perhaps a negotiated Company Voluntary Arrangement wherein your creditors accept a monthly repayment plan. Often a CVA will wipe out a good portion of your outstanding debt if negotiated by an expert insolvency specialist!
Yes, creditors are willing to settle for a portion of outstanding debt because the alternative isn’t always great for them. They know that compulsory liquidation doesn’t always work to their advantage because of the costs associated with the process which take priority over paymrnt to creditors.
Unfortunately, if you wait until the liquidation is underway then the liquidator appointed by the court or your creditor will probably not be too concerned with the preservation of your company.
12th December 2018
Small and medium-sized enterprises (SMEs) across the UK are paying increasingly large sums of money to collect amounts owed to them by their clients and customers.Read More
4th December 2018
The number of independent retailers who closed down outlets during the first half of this year reached a record high level for any comparable period.Read More