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Close My Construction Company

If your building or construction company is experiencing financial or operational distress, taking swift action at the earliest signs of trouble could be difference between your business being able to be rescued, or having to close down for good.

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Despite being an industry often in great demand, construction businesses face a number of challenges to survive. From the VAT reverse charge, through to late payment of invoices something which is hugely prevalent in the industry. This has the potential to stretch cash flow to breaking point for even the most profitable of companies; during times of greater than average financial pressures, however, the result can be catastrophic.

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Close your building and construction company via liquidation

If your construction company has been hit with operational disruption, or halted projects has caused your cash flow to take a hit, you may be considering your options. If your construction company is insolvent – or you believe it is in danger of becoming insolvent in the near future – it is vital you understand your options for closing down the company in order to protect creditors.

Once your construction company becomes insolvent, your mindset must switch. You are no longer able to priorities the interests of the company and its shareholders/directors; instead you have a legal obligation to protect the interests of your outstanding creditors and ensure their expose to financial loss is not exacerbated any further.

In the event of your construction company becoming insolvent, you should make it your priority to enlist the advice and guidance of a licensed insolvency practitioner. An insolvency practitioner will be able to take an objective view of your construction company, including its financial position, and advise whether closure would be in the best interests of those involved. If so, this can be achieved by voluntary placing the company into liquidation via formal insolvency procedure known as a Creditors’ Voluntary Liquidation – or CVL.

The liquidation of a construction company can only be entered into under the supervision of a licensed insolvency practitioner, and doing this will bring about the ultimate end of the company. All staff will be made redundant, company assets will be sold for the benefit of creditors, and any remaining debt will be written off unless you have secured this by providing a personal guarantee for the borrowing.  

Although liquidation is a last resort, if your construction company is unlikely to be able to turn around its fortunes in a timely manner, it may be the most appropriate option and can ultimately end up being the best result for both your employees and creditors who will be able to either claim redundancy or recover some of the funds they are owed respectively.

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Rescue your building and construction company

If you would like to look at ways to save your construction company, a licensed insolvency practitioner will be able to talk you through your options. Just because your business may be experiencing a number of financial and operational challenges, this does not automatically mean that it cannot be turned around.

An insolvency practitioner will first have to understand whether your construction company is viable, and if so, they will take the time to appreciate the challenges which have led up to your current position and look at ways of mitigating this. If your problems stem from irregular and unpredictable cash flow making it difficult for you to keep up with your payments to staff, creditors, and HMRC, plans can be put in place to ease this burden.

Many in the construction industry face problems with late payments of invoices, which can be an annoyance at best, and financially ruinous at worst. A form of invoice financing could be the ideal solution for you, as long as the business is otherwise operating successful. Invoice finance allows you to access an agreed portion of your unpaid invoices immediately; this can be done for invoices which are already outstanding as well as those you issue going forwards.

Although the invoice factoring company will retain a portion of the funds as payment for their services, the reassurance and predictability this type of arrangement can give to your company could be well worth it. Knowing exactly what you will get paid and when, allows for better forward planning, particularly when it comes to purchasing stock and ensuring you have adequate cash reserves to cover the business’s outgoings. 

If your construction company has suffered financially due to rising costs, and you have fallen into arrears with your creditors, entering into formal negotiations with them could allow you to restructure your existing debt to a more manageable level.  

This can be achieved through a legally-binding insolvency solution known as a Company Voluntary Arrangement (CVA). This type of arrangement will usually run for anywhere between 3-5 years and give a viable business the opportunity to renegotiate payment terms and existing lease agreements to give the company the best chance possible of survival. This type of arrangement can benefit both company and creditors alike. Companies can significantly lower their monthly payments, while creditors get reassurance that they will be able to recover a significant amount of the money owed even if this will happen over a longer period of time.

We can also consider the merits of placing your construction company into administration if it is deemed that more time is needed to formulate a robust plan going forward. This may entail the company going through a process of business simplification, particularly if it has a complex operation structure which needs to be streamlined in order to improve overall efficiency.

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