Debt Helpline offers a range of clear and confidential services to businesses struggling to pay their debts.
Is your business having trouble to paying off debts on time?
Have you been given demands from creditors but no idea how to meet them?
Has a bad debt or some other one-off event left you with short-term financial difficulties?
Trying to clear historic arrears which are causing problems?
Whichever scenario you find your business unfortunate enough to be facing, we can offer a range of options that can help your business tackle the financial problems. The quicker you look for our help, the quicker we can help you get your company back on its feet.
Many of our business clients are surprised by the volume of viable options that we can offer and are open to them. We can even usually help you continue trading if that’s what you believe that is best for your business.
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Our team of experts have a broad range of experience in commercial liquidations. For a free and strictly confidential consultation contact a member of the team.
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Creditors Voluntary Liquidation (CVL)
Creditors Voluntary Liquidation (CVL) is a legal process for voluntarily winding up a company when it is insolvent (defined as when a company cannot pay its debts as and when they fall due or where assets total less than liabilities).
To liquidate under these conditions, shareholders must agree to pass the necessary resolution and to appoint a licensed insolvency practitioner to take control of the liquidation process.
Once appointed, the liquidator will realise any company assets for the benefit of the company’s creditors.
The liquidated company will cease trading and the liquidator will handle all outstanding matters including dealing with all employee and creditor queries.
Members Voluntary Liquidation (MVL)
Members Voluntary Liquidation is the legal process to wind up a limited company with the assets distributed to shareholders after the liquidator has settled any outstanding debts.
This option is only available to companies that are solvent (i.e. have enough assets to repay all of its debts in full).
There are tax advantages to this method of liquidation because any money extracted from the company is classified as a capital distribution rather than an income distribution, meaning it can be subject to a lower rate of tax.
MVL is normally pursued when one of the following applies:
- The owner wishes to retire
- The owner wishes to step down from a family business and nobody else wishes to take over
- The owner no longer wishes to run the business
- Shareholders wish to realise their interest in an owner managed business
Company Voluntary Arrangement (CVA)
With a Company Voluntary Arrangement (CVA), an insolvent company can reach an agreement with commercial creditors to repay all or part of a debt for an agreed period (usually 5 years). The legal agreement will stop your creditors from hassling you and can assist with cashflow.
Similar to an Individual Voluntary Arrangement for personal consumers, a CVA can help an insolvent company tackle their debt problems in a productive way. CVAs have to be set up and managed by a qualified insolvency practitioner. This party will review the company’s finances before submitting a proposal to the company’s creditors. The CVA proposal will include details of the all liabilities and assets. It will make an offer for repayment and propose for the payback of all or part of the debt. 75% of creditors (by debt value) of those creditors who decide to vote must agree to the terms for the CVA to be accepted. This will be decided at a creditors meeting, after which the arrangement will become binding on all parties.
CVAs offer a number of advantages and legal protections for indebted companies. The benefits include:
- The company only has to make one payment each month. The payment is made directly to Umbrella who will then distribute the payments to creditors in line with the arrangement.
- The payment will be more affordable.
- Once approved, a CVA makes business more stable and can help boost cashflow.
- A CVA prohibits creditors from continuing or initiating legal action against a company.
- A CVA can restrict interest and other charges added to historical debts from the date of approval.
- After the payback term is finished, any outstanding unpaid debt is written off. This includes debt owed to HMRC.
Putting a company or limited liability partnership into Once an licensed insolvency practitioner has been appointed as administrator, they will take control of the company and all of its assets.
During this time, creditors will not be able to take any further action against the company whilst the administrator prepares a plan to rescue, sell or liquidate the company.
Administrators have a number of options open to them including:
- Negotiating a Company Voluntary Arrangement (CVA) with creditors enabling the company to keep trading.
- Selling the business as a ‘going concern.’ The business can be sold back to management meaning it can continue trading in a different form.
- Selling company assets as part of a Creditors’ Voluntary Liquidation (CVL) with any money raised going to creditors.
A pre-pack administration is an arrangement under which the sale of all or part of a company’s business and assets is negotiated with a purchaser prior to the appointment of an administrator, following which the administrator effects a sale immediately upon appointment.
This option provides a seamless transfer from one business entity to another. It can help preserve value in a business and maintain continuity with customers and staff.