What factors should you consider?
As mentioned above, we will be discussing the role of insolvency practitioners, and how their advice can greatly benefit your situation.
The role of insolvency practitioners
Licensed insolvency practitioners are authorised under the Insolvency Act 1986 to deal with personal and company insolvency. The role for insolvency practitioners providing business insolvency advice can substantially vary, but can include:
- Controlling the business and dealing with the assets and the, general, running of the company;
- Filing a report for creditors on what went wrong within the company, such as taking on too many contracts, accounting errors;
- Preserve jobs if possible and, ultimately, attempt to rescue the company;
- Deal with legal claims and any action taken against the business;
- Negotiate between the debtors and creditors for arrangements to make repayments.
You can read more on the role of licensed insolvency practitioners here, and also seek insolvency advice from our BusinessRescueExperts as to the next step for your business.
What to consider
Insolvency or the threat of liquidation is an immensely critical time for your business, and you need to ensure the licensed insolvency practitioners can communicate with your creditors, understand the financial problems within the business and how they escalated and have the experience and knowledge to, possibly, help the company recover.
For the best insolvency advice and help, the IP must understand the nature of all industries and be able to provide sector-specific advice. This level of expertise across the board will, most definitely, help to ensure you receive the best solution.
Their insight in the market may also give a greater understanding on the issues faced by the company, and why the downturn occurred. The likes of the construction industry is one such sector that suffers regularly from delayed payments, which can be resolved with the IP negotiating with clients etc.
Good communication is critical for insolvency advice. An IP’s primary aim is to see if the business can be rescued in its current form, but they must also communicate with the company directors/creditors and, possibly, even clients. This, they need to effectively communicate, in layman’s terms, what is actually going to happen.
Faced with the alternative of the company entering formal insolvency, communication with creditors from an insolvency practitioner can encourage creditors to hold back from issuing costly proceedings which could be throwing good money after bad.
Aid for rescue
Not all companies can be saved – however, if rescue is at all possible, the licensed insolvency practitioner will, actively, do their best to negotiate an arrangement with the creditors. They will attempt to identify any issues and, possibly, turn around to return the company back into profit.
A good insolvency practitioner will also have experience on managing finances, and may be able to point you in the right direction for producing realistic budgets and forecasts for the future.
Project management is essential for licensed insolvency practitioners. IP’s will need a clear understanding of the processes involved and the control required for the business. Likewise, they need the leadership and management to implement these procedures and work with your creditors.
If you are seeking business insolvency advice, speak to companies that boast good relationships with solicitors and valuers. These relationships can speed up the process and the insolvency all the more easier for creditors, employees and the business as a whole.
Fees and costs
You must also consider the insolvency practitioner fees when looking for insolvency advice. You should be wary when your accountant recommends an insolvency practitioner and ensure they are doing so because of their reputation, and not because your accountant is being paid to send you to them. The insolvency practitioner may charge you a higher fee so this referral fee can be paid to your accountant.
Some firms may differ in how they take the fees; some may require the fees upfront, or others are willing to be paid after the company has entered formal insolvency. A good insolvency practitioner will also cover off not just the fees of the various procedures, but also the overall cost to your business.
For example, a company voluntary arrangement may look good on paper, but your business is committing to making payments over 3 – 5 years. If your company is unable to do so, a winding up petition will likely be presented against your business regardless, effectively causing further costs.
A good insolvency practitioner will only recommend procedures which your business can realistically implement and is in the best interest of the business. This is opposed to what could be multiple processes to generate them the most fee income.
If you have any questions on any of the above, or are seeking insolvency help for your company – our BusinessRescueExperts are Insolvency Practitioners and have the experience and the knowledge to place your business in the right direction.