It is never an easy decision for directors to sit down and agree to meet with a licensed insolvency practitioner but it shouldn’t necessarily be seen as though the game is up and the company must cease to trade. They may well be regarded as corporate undertakers but many people may be surprised at the roll they can play in turning around the fortunes of an insolvent company.
Often times the first time a director considers meeting a Blackpool Insolvency Practitioner is when the company accountant thinks the directors need to seek professional advice beyond the normal capability and experience of the accountant. It may even come as a shock to direcotrs to have their trusted accountant suggest meeting with an insolvency specialist but directors must always remember their duties to act in the best interests of company creditors. If the accountant is concerned that debts are mounting up and the company is failing to make payments on time then finding out how someone skilled in insolvency procedures can help is highly advisable.
Is your company insolvent?
If you as a director are worried that all an insolvency practitioner (IP) wants to do is to put your company into liquidation for a large fee then think agan. There are some IPs that tend to spend most of their days doing just that but a good insolvency practitoner Blackpool will take stock of the company’s position overall and see whether the company can still be saved. They will prepare what is called a statement of affairs which details all the company’s assets and liabilities. Some people see it is as being similar to a balance sheet but the figure at the bottom of the statement of affairs will show whether the company has a surplus or deficit of assets over liabilities. In that sense it captures, at one moment in time, whether the company is solvent or insolvent on a asset/liability basis.
We should point out right now that insolvency is not only measured on an asset/liability basis. Your company may even pass the solvency test on that basis but if it can’t pay it’s bills as and when they fall due for payment then the company can still be considered to be insolvent. The IP will therefore take a look not just at assets and liabilities but the liquidity position of the business and whether its inability to pay its bills when they drop on the doormat is a short-term liquidity problem or something more serious.
Insolvency Practitioners’ Advice
Now that the IP has a good picture of the state of your company’s position he will then advice on the best course of action. If The business has a realistic chance of survival the insolvency practitioner in Blackpool could recommend a range of options. These may include a Company Voluntary Arrangement under which the company’s creditor payments are restructured into more manageable payments. It isn’t even always required that all debts are repaid in full in a CVA and if it is the best course of action to maximise repayment to creditors AND save the business then it may be an attractive option to you as directors and to creditors. Prepack administration may be another way of keeping the business going and avoiding liquidation.
In summary, don’t merely assume just because your Blackpool company is iinsolvent that it can’t be saved or restructured in some way. Take professional advice as soon as you realise you have a problem.