INSOLVENCY OPTIONS FOR LIMITED COMPANIES AND LIMITED LIABILITY PARTNERSHIPS
- Liquidation – Which means deciding to put the company into liquidation with the help of a licensed insolvency practitioner who will act as liquidator
- Administration – Which means getting the business protected by a Court order whilst it is wound down or sold to a new owner
- A Company Voluntary Arrangement (“CVA”) where a proposal is put to creditors to freeze the debt and a three to five year period is usually agreed in order to repay only part of the debt
If there is no money available at all to close the business then you may need to ask a supplier if they want to push you into compulsory liquidation( (as it is at no cost to you) but often directors want to avoid this route. Of course if you cannot pay a supplier, even if you don’t want to go into liquidation they can force you into it.
INSOLVENCY OPTIONS FOR SOLE TRADERS AND PARTNERSHIPS
- If you don’t want to carry on or there is not a viable business then usually it means bankruptcy However, where there are only a small number of creditors a deal can be reached to part settle and write off the balance of debts
- If you want to carry on, then negotiate early and agree a ‘time to pay’ plan with creditors such as suppliers, HM Revenue and Customs and the bank or consider an individual or partnership voluntary arrangement (“IVA” or “PVA”).
- If you cannot pay suppliers and just ignore them they are very likely to make you bankrupt or in the case of a partnership force it into liquidation.
“THE EARLIER YOU FACE THE REALITY OF AN IMPENDING INSOLVENCY AND TAKE ADVICE THE MORE OPTIONS YOU WILL HAVE.”