Dealing with a business that is in financial distress can feel overwhelming but the key to minimising losses is to seek timely, expert advice.
When an individual or a business cannot repay the debts it owes to creditors bankruptcy proceedings may follow.
Bankruptcy is a formal court procedure which you can start when one or more of your creditors is owed at least £750.
At Accountx, we can assist in filing for bankruptcy and provide the best solution in order to reduce your debts in the most amicable and cost effective way.
Liquidation is the process by which a company is brought to an end, with the redistribution of its assets and property.
Liquidation may either be compulsory (a creditors’ liquidation) or voluntary (a shareholders’ liquidation) although some voluntary liquidations are controlled by the creditors.
Company Voluntary Arrangement (CVA)
A CVA is a contract between the company and its creditors. If a company is a viable business looking to return to profitability, it can enter into a CVA.
Such arrangements are particularly useful when a company that is basically profitable suffers a one-off difficulty, such as a large bad debt.
CVAs are used as a way of getting the company back on its feet. In addition, a CVA can sometimes be an alternative to liquidation, even if the company is not looking to return to profitability, providing that it offers a better return for creditors.
A CVA involves putting a proposal to the creditors of the company to settle the company’s debts, in full or in part, over a period of time.
It will bind creditors even if all of them do not agree with the process, providing that the relevant majority agree.
This court-approved agreement with creditors enables the company to keep trading while also agreeing terms with the creditors to settle its debts. At the end of the agreed period, the company exits the CVA, with its creditors having either received full or part payment, depending on the terms agreed.
Accountx is able to assist by managing the CVA and helping with the negotiation of terms with creditors.