The longer you leave it those doors will begin to close.
Prompt action can prevent creditors from losing patience and issuing you with a winding up petition; leaving your business at the mercy of creditors and courts, which could lead to compulsory liquidation.
If you act fast, one of your gateways could be a Company Voluntary Arrangement (CVA).
A CVA allows you to approach creditors and receive what’s called debt forgiveness, which means writing-off 60 to 70 per cent of the money you owe. You can make an agreement to pay the remaining balance over a four to five-year period.
To creditors, a CVA is usually the best offer on the table. If a debtor is liquidated, a creditor will probably get 1p in the £1. With a CVA, they’d get around 4p in the £1.
An insolvency practitioner (IP) can prepare a CVA on your behalf, but you can only write-off your liability if 75pc of the debt value of creditors agree to the proposal.
The beauty of approaching creditors early is that you can still be left with a viable business.
Another early debt solution is to incorporate a new company, and arrange a deal where you sell your old company’s assets and buy them for your new business; then terminate the old company.
In this instance, all creditors would lose out, but you’d be saving your business and employees’ jobs in the process.
This arrangement is usually made via a pre-pack, but there are other – and cheaper – options available.
Act now, and contact our experts at Insolvency and Law for professional advice on how to deal with your debt in the most beneficial and cost-effective way.
No matter how minor your situation, it’s better to take action as soon as you realise you have a problem.
If you’re not in control, your debts could build up and you could end up watching your company be decimated before your eyes. Call 02 7504 1300.