Insolvency options

Whether the business difficulties are corporate or personal there are formal insolvency procedures for both, which involve a Licensed Insolvency Practitioner:

Corporate

Personal

 

COMPANY VOLUNTARY ARRANGEMENT

A Company Voluntary Arrangement (CVA) is a formal legal procedure that enables companies to enter into binding agreements with their creditors detailing how the companies' debts and liabilities will be dealt with, allowing directors to retain control of the companies.

Basically, a CVA allows companies with historical cash flow problems to repay their liabilities, either in part or in full within a time scale agreed with creditors.

On rare occasions, an application may be made to the Court to obtain a Moratorium to “ring fence” a company’s assets to allow time for a CVA to be implemented.

 

ADMINISTRATION

Administration is a procedure to protect a company from its creditors, giving it vital breathing space, whilst a business recovery or restructuring package can be formulated and implemented, or to ensure a more beneficial realisation of assets.

Pressure from creditors can sometimes be relieved by the appointment of an Administrator and this may enable a viable business to be saved.

 

ADMINISTRATIVE RECEIVERSHIP

An Administrative Receiver can only be appointed by the holder of a qualifying and valid floating charge who acts to achieve the best possible outcome for that chargeholder.

The Administrative Receiver only deals with assets covered by the security under which the office holder is appointed.

Changes in legislation have introduced restrictions on the ability to appoint an Administrative Receiver under newer charges (post 15 September 2003) and the appointment of an Administrator by a chargeholder is now likely to become a more usual approach.

 

CREDITORS' VOLUNTARY LIQUIDATION

If a business is insolvent and does not have enough money to pay all of its creditors sometimes the only appropriate course of action is for a company liquidation. A Creditors' Voluntary Liquidation is the most common way for directors and shareholders to deal with their company's insolvency.

 

A Creditors' Voluntary Liquidation is appropriate when?

  • The company is insolvent;
  • The company does not appear to be viable even if restructured;
  • The directors don't feel they have the determination needed to rescue the business.

Liquidation proceedings are usually commenced by:

  • The shareholders
  • Directors
  • Creditors
  • Administrator
  • Supervisor of a Company Voluntary Arrangment
  • Administrative Receiver

 

PARTNERSHIP VOLUNTARY ARRANGEMENT

A Partnership Voluntary Arrangement (PVA) is a formal legal procedure that enables partnerships to enter into binding agreements with their creditors detailing how the partnerships' debts and liabilities will be dealt with, allowing the Partners to retain control of the partnership. Basically, a PVA allows partnerships with historical cash flow problems to repay their liabilities, either in part or in full within a time scale agreed with creditors.

 

INDIVIDUAL VOLUNTARY ARRANGEMENT

An Individual Voluntary Arrangement (IVA) is a formal legal process that enables individuals to avoid bankruptcy. It is a contract between an individual and his or her creditors, which details how the liabilities will be discharged, either in part or in full within an agreed time scale.

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