Close my Transport Business

Rescue, Recovery, and Closure Options for Transport Companies

A reliable and stable transport infrastructure is vital to the smooth running of business; it allows people to get to work, companies to receive deliveries, and operations to flow. However, a cultural shift towards working from home, a shortage in drivers, and an economically uncertain environment is presenting challenges to the industry like never before.

If your transport business is struggling either operationally or financially, seeking expert insolvency and restructuring advice should be done as a matter of priority. This will not only help to expediate a turnaround if the business is viable, but will also help you to understand your personal position should be company not be able to continue.

Close my transport company via liquidation

Whether you run a taxi firm, operate public transport services, or host coach tours, if your transport company is experiencing a drop in demand, it is likely you are considering what the future holds. Depending on the financial position of your transport company, you may be considering placing it into liquidation if the situation does not improve soon.

Liquidation may be an appropriate step to take if the company is insolvent and you do not see any realistic chance of its fortunes improving in the near future. If you know your transport company to be insolvent, you have certain legal obligations as its directors. One of these is to place the interests of the company’s creditors above those of its shareholders in order to mitigate them suffering any further financial losses.

Insolvent company is done through a formal process known as a Creditors’ Voluntary Liquidation – or CVL and can only be entered into under the guidance of a licensed insolvency practitioner who will act as the company’s liquidator.

“Spoke with Chris who put me at ease straight away. He was very knowledgeable and listened intently to all my worries and concerns. Will definitely be using Real Business Rescue and advise anyone with business issues to give them a call.”

Diana

 

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Chris Bristow
Business Debt Expert

The insolvency practitioner will have several main responsibilities during the course of a CVL. They will take over all communication with creditors, and they will also be responsible for identifying all assets belonging to your transport company. Due to the nature of your business it is likely these will predominantly take the form of vehicles. These assets will be independently valued before being sold typically through an auction process. The money raised from the sale of company assets will be divided between creditors, before the company is wound down in an orderly way. At this point it will cease to exist as a legal entity and will be removed from the Companies House register

Any company debt which remains outstanding at the point of liquidation will be written off unless you have secured this borrowing by way of a personal guarantee. If a personal guarantee is in place, this will crystalise upon liquidation and responsibility for ensuring repayment will transfer from the company to you personally. If you believe you may have given a personal guarantee for company borrowing you will need to discuss this with your insolvency practitioner to ensure you understand the ramifications of liquidating in this situation and what your options are if you are unable to repay this borrowing.

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Rescue my transport business

When it comes to rescuing a financially distressed transport company, there are a host of options which can be considered. What may work for one company, may be wholly unsuitable for another. At Real Business Rescue, our team of licensed insolvency practitioners and business turnaround experts, will take the time to fully understand your company, its current challenges, and the circumstances which led up to these difficulties. By adopting this personal approach, we can ensure we are putting a plan in place which will help stabilise your business now, while also being appropriate for your future aspirations regardless of what they may be.

If you are confident for the future, obtaining a commercial loan may be what you need to bridge the cash flow gap caused by the previous months of business interruption. Funding can be sourced either through a government-backed loan such as a CBILS or Bounce Back Loan, or alternatively through a form of asset-based lending or invoice discounting arrangement. Real Business Rescue have a team of commercial finance experts who can help you navigate the commercial lending arena, helping you to source the most appropriate and cost-effective form of funding for your transport business.

Depending on how serious your current financial worries are, your transport company may have fallen into arrears with creditors. If this is the case, your best move may be to enter into discussions with your creditors and arrange an affordable and sustainable way of repaying the money you owe.

This can be done through informal discussions, or alternatively through a formal negotiation process assisted by an insolvency practitioner. For those with a number of outstanding creditors, yet see their business as ultimately viable over the long-term, a Company Voluntary Arrangement (CVA) may be suitable.

A CVA is a formal insolvency process which, once approved by creditors, becomes legally-binding on all parties. CVAs usually run for anywhere between 3-5 years, and during this time, the indebted company will make a series of agreed monthly repayments towards its debts which will be supervised by the appointed licensed insolvency practitioner. Depending on what the company can afford to repay, some debt may be written off as part of the process, with the rest being structured into a more affordable payment plan.

Although CVAs can give companies the time and financial breathing space needed to return to a position of profitability, it must be stated that they are not suitable for all companies. In order for a CVA to be implemented, at least 75% (by value) of creditors must give their consent. This is only likely to happen if creditors can be convinced of the future prospects of the company, and are confident that the proposed repayments will be able to be paid for the duration of the CVA. If creditors feel your company is likely to fail, they will not allow the CVA to progress.