Does My Business Need an Insolvency Practitioner?

A common misconception is that a business only needs the assistance of Licensed Insolvency Practitioners once the company has already become insolvent (unable to meet long-term debts and other financial obligations), however, whilst this can be true, it is not always the case.

An Insolvency Practitioner (or IP) can be brought in at the early stages of a business showing signs of financial struggle, or signs that they are soon to be struggling. At this stage, seeking professional help and advice can play a key role in the future of a company.

It can be difficult to know exactly when to seek professional help, but the experience and knowledge of insolvency practitioners helps businesses to stand a better chance of survival, as opposed to attempting to trade their way out of financial struggles.

Signs your business needs an Insolvency Practitioner

If your business is facing financial difficulties, you should speak to an IP as soon as possible - seeking professional advice can help you understand whether your business is insolvent or at risk of insolvency.

You should seek help from Licensed Insolvency specialists if you are experiencing financial difficulties including:

  • Unexpected cash flow problems

  • Sudden loss of a customer

  • Falling profits

  • Debts with HMRC

  • Inability to pay liabilities when they are due

  • Lack of finance to support company growth

Ignoring early signs of financial difficulties could lead to serious issues for company directors in the future, including disqualification and personal liability for some, or even all of the business’s debts. Licensed Insolvency Practitioners can determine whether your business is solvent or insolvent and then act on your behalf for the best possible outcome.

Acting early, as soon as you detect financial difficulties, can provide options to save your business that may not be available further down the line. The longer financial difficulties are ignored, the likelihood of a business being forced into liquidation increases. 

What does an IP do for you?

An Insolvency Practitioner’s role depends on the circumstances of the company in question. In simple terms, an IP puts forward all the options available to you, along with the recommended course of action to take. An IP will also negotiate with creditors on your behalf in order to instill confidence in the business’s ability to pay bills in the long term - as a result of their financial knowledge and credibility, IPs can gain more respect and trust from creditors.

Options can include:

  • Company restructuring - Company Voluntary Arrangement (CVA) allows for company Directors to keep control of a business whilst ending legal action against them, and also allowing for restructuring or a change of approach. CVA is a suitable approach for businesses who have suffered financial difficulties, but still have a viable business in place that could be solvent and profitable should debt be released.

  • Sale of assets - Company assets can be sold to inject cash back into the business and escape debt.

  • Voluntary liquidation - If a company is struggling to pay its debts when they are due, a Creditors Voluntary Liquidation (CVL) may be necessary. A CVL can help a business to be placed into liquidation in order to allow for the orderly wind up of the company’s affairs, helping to protect directors from becoming personally liable for company debts. 

  • Sale of the business

Learn more here about business and company insolvency solutions.

Contact an Insolvency Practitioner Today

If your business is experiencing financial difficulties, but was previously profitable and sound, then calling a licensed Insolvency Practitioner offers the best possibility for the survival of your business in the long term.

For help escaping financial problems, negotiating with HMRC and creditors and making the right steps for your business and to protect you from personal liability, call BEACON LIP today. 

We understand just how difficult it can be to seek help and will work with you to ensure the best outcome for you and all concerned with your business. Call 02380 6511441 or email us to discuss your business - we will be happy to offer assistance.

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