The decision to close down a business is difficult because not only does it have ramifications for ourselves but also our family and the people who work for us.
It’s a decision that should not be taken lightly. If your business is going through severe financial difficulty, don’t assume it is destined to close. Seek expert help as soon as possible to save your company because those who are experienced in business rescue can identify and solve the issue in the most efficient manner.
Often, an early diagnosis can lead to positive outcomes via a process known as Administration.
What is Administration?
Administration is an option available to Limited Companies whereby the Company Director(s) relinquish control of their business operations to an Administrator (Insolvency Practitioner) experienced in rescuing and saving poor performing businesses by identifying and changing the way the business is run or structured.
If Administrators are called in early enough, they can rearrange the pieces of the business puzzle to ensure that it thrives and runs efficiently once again.
The main advantage of going into Administration is that it keeps your creditors at bay. Creditors cannot pursue other legal means of extracting money out of you, whilst you are in Administration. Essentially, it’s a way of buying time to work out how to fix the business without creditor pressure.
Delays in taking action to address cash flow issues could result in your creditors imposing legal action against you. It’s always better to start the procedure in your own terms and be in control of your own circumstances.
A competent Insolvency Practitioner (IP) would always focus on saving the business, failing this, the next step would be to Liquidate the company.
What is Liquidation?
Liquidation is the process by which a company formally ceases to exist. A Liquidation is also managed by an IP, either hired independently or assigned by the court. In this scenario the IP’s job is to sell the company assets to make sure as many creditors as possible are paid off. Any debts that remain, once all assets are sold, are written off. Be aware that any personal debts you owe are not included and must be paid.
The IP will handle all the other affairs of your company too, such as redundancies, and will close the business in a way that causes the least damage as possible.
Next steps
As I said, financial difficulty for your business is not necessarily the end of the road. If you have hit a rocky road please call me on 0330 236 9930, 0330 236 9938 or 07961 116321. The first conversation is free of charge and all conversations are in strict confidence. You can also email me on vee@navigatebr.com
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