Our Services
Turnaround and RecoveryIt is vital if a company is struggling to seek professional advice sooner rather than later. Rod Butcher and Adrian Woods have been involved in many rescue situations and have the experience to offer advice on what can be done, what can’t be done, and what should be done, either as a pragmatic approach to an existing business or with the benefit of a formal insolvency procedure.
This is a procedure designed to allow a company a breathing space whereby it is protected from most actions by creditors. During this hiatus period the company will prepare and present proposals to enable to company to:
- Survive in whole or in part as an ongoing business.
- Organise a voluntary arrangement or compromise with its creditors
- Get a better realisation of assets than would be possible if the company went into liquidation.
Company Voluntary Arrangement (CVA)
If the core of a company is viable but finds itself insolvent by reason of say, a bad debt, then it can call a meeting of its creditors to consider proposals for a partial repayment to its creditors in respect of historic debt and the company would normally continue to trade.
The holder of a charge being either fixed, floating or both, created specifically to secure a debt has the power to appoint an insolvency practitioner as receiver to recover the debt. This would normally entail the receiver acting as an agent of the company, and either selling the business as a going concern or closing it and realising the assets.
Creditors Voluntary Liquidation
If directors of the company believe that the company is insolvent and that there is no prospect of rescuing the company under another insolvency procedure, then in conjunction with the insolvency practitioner, the company is closed. A creditors meeting is called to consider the acts and dealings of its directors and a liquidator is appointed to realise the assets and distribute the available funds in accordance with the law.
The company may have ceased to trade, however, sufficient funds allow creditors to be paid in full and a distribution to the shareholders. This is a tax efficient way in which funds are transferred to shareholders as the Revenue will usually treat a distribution in a member’s voluntary liquidation as a return of capital rather than income, resulting in a lower tax charge.
Individual Voluntary Arrangement (IVA)
This is a formal proposal to an individual’s creditors to pay all or part of the debt over a specified period of time either by a one-off payment or a series of payments. The proposals are considered at a meeting of creditors and it is up to the creditors to modify, approve or otherwise. The scheme is then supervised by an insolvency practitioner.
In the event that an individual does not wish to propose an IVA, or a creditor is pursuing a valid debt which the individual can not repay, then bankruptcy is an option. Current legislation allows the bankrupt to continue a modest lifestyle with any significant assets being realised for the benefit of creditors. Virtually all debts of the individual would be dealt with by the Trustee in bankruptcy. In normal circumstances the individual would be bankrupt for a period of 12 months.
Partnership Voluntary Arrangement (PVA)
Very similar to a CVA however the partners may propose interlocking voluntary arrangements with each partner making proposals for their own debts and the debts of the partnership. Alternatively the partnership may propose a PVA usually accompanied by voluntary arrangements for each partner.
