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Bankruptcy is a no-brainer if you have no assets and lots of debts

Considering the state of the UK economy, it should come as no great surprise if there’s an increase in the number of bankrupts and bankruptcy procedures in 2021. In the vast majority of cases, the main causes of bankruptcy are: Loan defaults Unemployment Business failures A downward trend in the economy    If you have…

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Creditors in a creditors' voluntary liquidation (CVL) gain leverage by uniting. But they must be proactive

In a creditors’ voluntary liquidation (CVL), the liquidator / insolvency practitioner (IP) turns the insolvent company’s assets into cash, and pays their own expenses before distributing revenue to creditors. As in all statutory insolvency procedures, secured creditors receive payment before preferential creditors. Any revenue that remains after preferential creditors have been paid is distributed equally…

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administrations are usually longer and more expensive than CVLs

When directors resolve not to rescue an insolvent company, an insolvency practitioner (IP) may recommend placing the company into administration. However, in many instances a creditors’ voluntary liquidation (CVL) would be a more suitable insolvency procedure. Whereas companies remain in administration for at least 12 months, CVLs usually take less time and therefore incur fewer…

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Benefits of a creditors committee

Creditors in a statutory insolvency procedure should establish a creditors’ committee if they want to influence proceedings, set the basis for the insolvency practitioner’s fees, and increase dividends for the general body of creditors. A creditors’ committee consists of 3 to 5 people who are responsible for setting the basis of the insolvency practitioner (IP)’s…

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Seek advice from an independent professional when considering any insolvency procedure

It’s fair to say the laws surrounding the insolvency regime were written largely by and for insolvency practitioners (IPs). The legislation governing insolvencies throughout England and Wales came into force with the passing of the Insolvency Act 1986. These laws were updated 30 years later with the enactment of the Insolvency Rules 2016. The 2016…

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Creditors must be proactive in creditors' meetings

Creditors in a statutory insolvency procedure must request and attend a physical creditors’ meeting if they want to assert any significant influence. A meeting of creditors normally takes place shortly after a company becomes insolvent. There creditors get the chance to: Hear an explanation of why the business failed   Appoint an insolvency practitioner (IP) Agree…

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