Limited Companies and PLCs
Insolvency procedures
are varied and complex. The sooner we are consulted, the
more options are likely to
be available. The P&A Partnership understands the anxiety
which financial problems can cause and is committed to finding
a speedy solution.
The services we offer include the following:
Managing
Recovery Report
A strategic review of a business with particular
emphasis on managing a return to profitability. This can include
a budgeted
profit and loss and cash flow forecast so that actual performance
can be measured against plan.
Turnaround
The strategic review may reveal
that there are aspects of the companies activity that requires
a level of expertise beyond
the capabilities of the current directors and that some outside
experience, on a full time basis is needed to manager the way
forward in the short term. We can provide that service covering
all aspects of the business activity.
Financial Reorganisation
or Sale
It may be possible to reorganise a company's
affairs without the need for formal insolvency procedures.
We can help
formulate
a strategic plan and negotiate with principal creditors. If
necessary, we can advise on a sale of the whole or uneconomic
parts of the business.
Administration Order
An Administration Order
is an insolvency process that is sanctioned by the Court
and gives a company protection from its creditors
whilst it reorganises its affairs.
Company Voluntary Arrangement
Often used in
conjunction with an Administration Order to reorganise a company's
affairs. In simple terms, it is a contract entered
into with creditors in satisfaction of their debts. It can
often result in creditors accepting a fraction of what they
are owed in settlement of all claims against the company.
Liquidation
Where a business cannot be saved,
it may be necessary to liquidate it. We can advise the directors,
shareholders and their advisors
on the procedures and also act as Liquidators.
Advice on Directors'
Responsibilities
Directors' responsibilities can be extremely
onerous in insolvency situations including personal liability
for a company's debts.
We can advise directors on the steps necessary to protect their
interests as well as those of their creditors.
Court Appointments
Our partners can act as
special managers of companies in Provisional Liquidation and
Court Appointed Receivers in disputes, investigations
and other situations.
P&A is committed to providing professional
and courteous advice and an initial consultation without charging.
Directors are reminded that the company is
insolvent if,
The company is insolvent if:
- it is unable to pay its debts as they
fall due, or;
- the value of its assets is less than the
amount of its liabilities, taking into account its contingent
and prospective liabilities
Responsibilities if the company is insolvent
The directors' primary duty is to avoid further
potential loss to the company's creditors.
Personal liability of directors
If a director has failed to take "every
step" they ought to have taken, with a view to minimising
the potential loss to the company's creditors, they could incur
personal liability. They may also be disqualified from acting
as a director.
Steps necessary once insolvency is identified
- Establish an up to date financial position.
- Consider prospects for survival, taking
care not to be over optimistic or unduly pessimistic.
Where viability is not in doubt:
- keep full and proper minutes of reasons
for this conclusion and of decisions which are believed to
be in the best interests of the company and its creditors;
- ensure that accurate and up to date accounting
information is always available and fully understood;
- formulate and implement a prioritised
action plan to remedy the company's financial difficulties;
- ensure that the company is up to date
with filing accounts at Companies House and complying with
all the statutory requirements;
- where a director disagrees with board
policy but elects to remain a director, ensure his or her
views are properly minuted.
Where viability is in doubt
- Seek the advice of a licensed Insolvency
practitioner immediately. An initial consultation with The
P&A Partnership is always without charge. If we doubt
viability, we will advise the directors to:
- avoid taking further credit and pay cash
for future supplies;
- avoid paying any creditors unless it can
be justified (and minuted) as being in the best interests
of the company and general body of creditors;
- avoid supplying customers who are also
creditors of the company;
- take appropriate action to stem losses,
either by ceasing to trade or by commencing formal insolvency
proceedings. There are a number of formal insolvency proceedings
that may enable the business to survive.
Dealing with the dilemma
There will often be situations where the
directors identify insolvency and acknowledge that viability
is in doubt, but believe that there is a reasonable prospect
of survival. In these circumstances it may be inappropriate
to commence formal insolvency proceedings.
However, expert professional advice should
be sought to protect the interests of the company, its creditors
and the directors personally.
