Business and Company Insolvency Solutions

A less well-known procedure, a CVA allows Directors to retain control of a business whilst allowing restructuring or a change of approach. A CVA is a procedure whereby a company can be ‘saved’ where it has suffered financial difficulties, but still has a viable business, which could survive if the burden of debt is released.

Comprising a formal and legally binding negotiated settlement between the company and its creditors, a CVA can allow historic debt to be settled in full, or in part, from future profits. It makes an ideal solution whereby the company can escape the burden of the past to excel in the future.

How does a CVA work?
The company agrees to repay some or all of its debts from future profits or asset sales over an agreed period (usually 5 years).

Where a CVA successfully completes, it can allow for the balance of debt to be written off where is cannot reasonably be paid.

CVA’s are often used as a procedure to pay any debts, such as tax owed to HM Revenue & Customs via a formal legally binding arrangement.

How long does a CVA last?
This will depend upon the company’s financial position, but most standard CVA’s last for between 3 and 5 years.

When will a CVA end?
Generally, when all sums due under the agreed CVA have been paid and the company has successfully complied with its obligations due under the Arrangement.

If you would like to discuss the possibility of a CVA for your company, call us on 02380 651441 or email info@beaconllp.com. All initial consultations at BEACON are free of charge!

Administration is a procedure available to a company that is insolvent or likely to become insolvent which places the company under the control of an Insolvency Practitioner and the protection of the Court.

If you have a viable business that is failing, or likely to fail, because of the burden of debt, an onerous lease or bad debtor, an Administrator can trade the company and often rescue a business, thus saving employee’ jobs and preserving goodwill.

Often a deal can be agreed in advance to ensure the inherent added value of the business is not lose, trading relationships not interrupted and service to customers is maintained.

The appointment of an Administrator can occur in a number of ways, by a number of people, depending on the circumstances and what is best for everyone involved.

If your company is subject to creditor pressure, if you are concerned about cash flow, the impact of a bad debt or are considering restructuring and feel there is a viable business worth saving, contact Matt Fox on 02380 651441 or via email info@beaconllp.com to discuss whether an Administration would be right for your company.

When initiating any Liquidation at BEACON we provide close support to you as directors, and / or shareholders of the company.

You and your company will be provided with a dedicated contact point, and our team has a wide range of experience within different sectors.

You want to be sure that Liquidation is the best solution for your company.

At BEACON, we will guide you through the Liquidation process. Learn more about Liquidation here.

Is your company struggling to pay its debts as and when they fall due? Do you feel that Liquidation may be the only way?

A Creditors Voluntary Liquidation (CVL) is a procedure whereby the director(s) and shareholder(s) of a company decide to place the company into Liquidation to facilitate an orderly wind up of the company’s affairs. This may occur when the company is unable to pay its debts in a timely manner, or the director’s believe that the company is no longer viable.

Delays can cause directors to become personally liable for company debts. It is therefore essential that professional advice is sought.

A CVL is director led, but you will need the assistance and guidance of a Licensed Insolvency Practitioner to place your company into CVL; and at BEACON we work with you through the process.

Contact us on 02380 651441 or email info@beaconllp.com for free independent advice tailored to suit your company. All initial consultations at BEACON are free of charge!

Is your company is receiving County Court Judgments (CCJ’s)? If yes, then action is required!

If you fail to pay a debt when it is due, a creditor can initiate a petition to the Court for a winding up order against the company – via the compulsory liquidation process.

A CWU is a Court driven process to wind up the company – but the effect on your business could be devastating!

The earlier you seek advice, the more options that may be available to you. Contact us on 02380 651441 for independent professional advice. All initial consultations at BEACON are free of charge!

A company can apply to the Registrar of Companies for dissolution, whereby the company is struck off the Register at Companies House.

BUT – this is not without risk!

There are rules and procedures, which must be complied with to ensure Dissolution is done correctly, and that you, as a director or shareholder, are not committing an offence.

Once a company is Dissolved, any remaining company property automatically belongs to the Crown!

Dissolution does not absolve directors or shareholders from any personal liability they may have.

At BEACON, we can help you avoid the risks. If you wish to explore this option, please contact us on 02380 651441 or email info@beaconllp.com.

MEMBERS VOLUNTARY LIQUIDATION (MVL)

• Are you considering retirement?
• Do you want to restructure your solvent business?
• Do you require a tax-efficient way of distributing accumulated profits to shareholders?

From 1st March 2012, the Extra-Statutory Concession which allowed shareholders to realise assets informally, and pay Capital Gains Tax ended. The new rules meant that informal distributions totalling over £25,000 per Company, would be subject to Income Tax.

It is only via an MVL that total distributions from solvent companies over £25,000 can be subject to Capital Gains Tax.

BEACON have developed a streamlined process for assisting Director/Shareholders wishing to extract dividends from solvent companies in the most tax efficient way possible and can normally allow a same day payment of funds to Shareholders as a Capital Distribution.

The process is straightforward and easy for all involved:

• BEACON prepare and can send all documentation via email and accept scanned, executed documents in return
• The Declaration of Solvency (an asset / liability statement of the company) is sworn in front of any local solicitor or commissioner for oaths (normally charging approx. £10) and then returned, either via email or post to us.
• Upon receipt of these documents, the MVL can usually commence the same day, with funds available for payment to Shareholders on that same day, as a Capital Distribution
• Any VAT paid on our fee and disbursements can usually be reclaimed and paid out to shareholders (if the Company was ever VAT registered).

No hidden costs

BEACON charge a fixed fee, including disbursements, from £3,000 plus VAT. 

It is a very common question that we are asked and many believe that they are liable however this is not usually the case. The debts of your limited company belong to it not you as a Director. This will usually include unpaid invoices, loans, assets finance, unpaid rent and bounce back loans.  That said, there can be certain circumstances where you are at risk.

For example most directors will have given personal guarantees at some point in time, possibly to their landlords, banks and key suppliers in order to acquire loans, funding and continued supplies. But if the company cannot meet these payments the director can become personally liable for covering the shortfall. You should take advice from a licensed insolvency practitioner as soon as possible as you may face a serious financial situation which could lead to you entering into bankruptcy. Please click here to email an IP for free advice.

Another circumstance could be an overdrawn Director’s current account. If your company is doing well, you may often be advised to pay yourself a small salary and withdraw dividends from profits. The problems begin however when your company starts to struggle financially but you continue to take dividends. These payments can be regarded as unlawful as well as leading to large overdrawn director’s loan account. If the company subsequently becomes insolvent, you as a director can become personally liable and may have to pay back the debt. Though if the company does get placed into liquidation, the insolvency practitioner can reach an agreement with you depending on the circumstances.

There is one other area where you as a director may be at risk of being made personally liable. That area revolves around your conduct during your time as a director of the company and the actions you have taken. 

Commonly termed as antecedent transactions. These are circumstances where you as a director may not have acted in the best interest of the company or its creditors. The two most common are Preferences and Transactions at an Undervalue.

Preferential payments: this is when one creditor is paid in favour of others, it creates a ‘preference’ - the recipient may be required to repay the money. Typically you may, for example, prefer to pay a key supplier for a recent delivery compared to another who has an older and overdue debt. This would be termed a preference. 

Transactions at an undervalue: quite simply, if an asset has been sold for less than its true value, it diminishes returns for creditors and may be reversed by the liquidator. For example, you may sell a vehicle owned by the company to generate cash but not have sought to have it valued first. If the sale amount is significantly below its true market value the transaction could be deemed at under value and overturned.

The main tests for insolvency are the ability of a company to pay its debts as and when they fall due. Therefore, if your company cannot pay its bills or suppliers it would be deemed insolvent. The other test, is the balance sheet test. If the assets of the company are lower in value than the amount due to creditors, it can be termed as insolvent on a balance sheet basis. 

The risks therefore are that your company may well be forced into formal insolvency for non payment of debt. Typically, creditors or suppliers will commence legal action, possibly via County Court Judgements leading to visits from Bailiffs. This could then lead on to a Petition for the Winding Up of your company in the High Courts.

If your company has financial problems, even if you think they might be temporary, you should seek professional advice. If you take action early enough and speak to a licensed Insolvency Practitioner you might be able to save your business and continue trading. Please click here to email an IP for free advice.

When a company goes into liquidation its assets are sold to repay creditors, employees are made redundant, the bank account is frozen and the business cease to trade. The powers of Directors cease and a Liquidator will review their conduct.

The company name remains on Companies House but its status switches to 'Liquidation'. The removal of the name only comes about on dissolution which is approximately three months after the closure of the liquidation, which can sometimes take over a year to complete.

The aim of the liquidation process is to realise assets to allow a dividend to be paid to each class of creditor. Following the change of HMRC status to a preferential creditor, it is often the case that unsecured creditors receive little, if any, return. 

Please click here to email an IP for free advice.

There are two types of Liquidation that are commonly Director lead. You have a Members Voluntary Liquidation, this is for a solvent company where you wish to extract cash or assets in the most tax efficient manner. 

Alternatively, if your company is insolvent, you may as a Director and shareholder seek to place the company into Creditors Voluntary Liquidation. This is where the company has debts exceeding its assets and can no longer trade. 

In both circumstances you will require the advice of a licensed Insolvency Practitioner. Only such a practitioner can be appointed as liquidator. They will discuss the financial circumstances of the company with you. Then a good licensed Insolvency Practitioner will usually be able to advise on all of the options available and the likely best solution to help you. Please click here to email an IP for free advice.

The Liquidation of a company is a formal process whereby a firm of licensed Insolvency Practitioners are engaged in writing to assist the board of directors in winding up the affairs of the company. As Directors you will be made aware that you will need to make sure the fees charged for placing the company into Liquidation are paid. In most cases this will be possible by selling or recovering the assets of the company.

In certain circumstances there might not actually be any assets remaining. It is possible therefore that as Directors you may be entitled to a claim for Redundancy and Pay in Lieu of Notice. If you have worked for more than two years and taking a regular salary through PAYE, you could have an entitlement.

It is common in these cases for Directors to use their entitlements to help cover the cost of liquidation. Make sure you speak to an Insolvency Practitioner to better understand your options. Please click here to email an IP for free advice.

At Beacon we charge a fixed fee, so you know what the cost will be. Typically, depending on the size of the company, the fee for placing a company into Insolvent Liquidation is £4,250 plus VAT and disbursements.

At the point your company goes into Liquidation your powers as a Director will cease. Eventually the company itself will get struck off and dissolved once the liquidation is complete. In the meantime the failure of your company should not affect your personal credit rating. 

You may find that if you start trading a new company, suppliers and credit companies may carry out a search on you as a Director and be cautious granting you credit if they can see you have previously been involved with a company that has entered into liquidation. 

Please click here to email an IP for free advice.

There are many reasons why you might find your business unable to pay debts on time. Cash flow problems can be caused by many factors, loss of a key contract or employee, a bad debt or difficulty in getting raw materials and stock. If the position does not improve, you may find that the company will fall behind in payments to not only suppliers but HMRC as well. This can lead creditors taking legal action and obtaining or seeking to enforce County Court Judgements. 

You should seek the advice of a Licensed Insolvency Practitioner, most will not charge for an initial meeting and will be happy to listen and offer help. You will need to decide if your business is viable moving forward.

Are you able to raise capital, either yourself or via a third party? There are various sources of funding available. You might want to consider some form of commercial finance via an asset based lender. It could be possible to finance either debts due to your company or items of plant & equipment. 

Company Voluntary Arrangement 

This is an option you may consider, particularly if you have a good cash flow forecast and can demonstrate core profitability. You will need to speak to a Licensed Insolvency Practitioner to confirm if a CVA is a viable option.

In brief terms, as Director, you will be issuing a proposal to the company creditors demonstrating the business can survive especially if given the opportunity to restructure its finances and debt. The company is usually required to make a monthly payment for a period of three to five years, pending on the circumstances.

The proposal will state that this arrangement will facilitate survival of the company resulting in a dividend to creditors potentially repaying all or a substantial amount of the debt. It will also demonstrate that this would be a far better outcome for creditors than the alternative of Liquidation which may result in no return at all for creditors.

Liquidation and ceasing to trade

You may decided that it is not possible to continue trading and the business should cease so as not to worsen the position.

A Creditors Voluntary Liquidation may therefore be the more appropriate option.  In brief, the role of a Liquidator is to realise all assets of the company for the benefit of its creditors. A sale of such assets can be to even yourself if you wish to start another company but this must be overseen by a professional valuation agent. 

Administration 

This may be another option, particularly if you are seeking to continue the trade of the old business via a new company. There may be many reasons why the old company cannot continue to trade but if a new business is set up correctly, with capital, then a sale could be achieved via what it termed a ‘pre pack’.

A sale of the business is often agreed prior to the appointment of an Administrator and will involve a professional valuation of the assets as well as a sale purchase agreement prepared by a solicitor. A sale is usually completed upon the appointment of the Administrator so that the business, its assets and employees can all be transferred simultaneously without a break in trading.

Please click here to email an IP for free advice.

If your company has reached the point where it can no longer pay its debts as they fall due then you need to seek urgent advice from a Licensed Insolvency Practitioner. If you do not cease to trade at this point you maybe at risk of Wrongful Trading, particularly if you trade on knowing the company cannot pay its debts and worsen the position.

Wrongful Trading can also leads to you being disqualified as a Director for up to 15 years plus a fine. You may also be at risk of being made personally liable for company debts.

Please click here to email an IP for free advice.

If your company cannot keep up to date with its payments to HMRC then eventually a penalty notice will be issued and an additional amount will be due. The amount due to HMRC will continue to increase as interest will be added to the outstanding amount. If you are not able to pay by the HMRC deadline you may find legal action will commence. This may result in a statutory demand being issued, potentially leading to a petition to wind up in the High Court. 

As a Director you should enter into dialogue with HMRC as soon as possible and advised if your company is going to be late in making payments. By making contact you may be able to discuss options with HMRC and possibly agree a Time To Pay arrangement. These can run typically over 6 to 12 months. If you do not address the situation promptly HMRC are less likely to agree a payment plan. 

Please click here to email an IP for free advice.

Whilst the simple answer is ‘yes’, there are certain matters to be aware of.  In particular if you should start a new company you must make sure it is a different name. If you do not then you could fall foul of Section 216 of the Insolvency Act 1986. This potentially can lead to you being made personally liable for the old company debts. It is important therefore that you seek professional advice from an Insolvency Practitioner. 

You are able however to purchase the name of the old company and continue to use it but this will be via a Court application and you will need to purchase the name from the liquidator of the old company.

Please click here to email an IP for free advice.

This scheme started in mid 2020 and for most businesses taking advantage of the loan this means that the first payments are falling due, now that the 12 month free period is up.

What happens if the overall financial standing of the company has still not improved and the company cannot afford to make payments? You should seek professional advice from an Insolvency Practitioner as to the viability of the company to continue to trade.

If the company does cease, the bounce back loan is a company debt, you as a director will not be personally liable. The bank should then reclaim the loan loss through the Government guarantee.

If however it is found that the loan application was in anyway fraudulent or the funds were not used for the purposes specified, you may be at risk if you have committed an offence under the Insolvency Act.

Please click here to email an IP for free advice.

As a Director it is common for funds to be taken out of the company via dividends. But what happens when the company becomes loss making and is struggling financially. 

If as a Director you continue to take funds via dividends, you are actually borrowing money and creating an overdrawn loan account. If the company returns to profitability and you trade on successfully then all is well. But if the company cease to trade and goes into liquidation, the Liquidator will request repayment of the overdrawn amount from you. 

Usually you will be given some time to reach settlement as the role of the Liquidator is to act in the best interest of the company creditors.

Please click here to email an IP for free advice.