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Another source of surprise and delight is when they find out that even if they were a director of their company, they may still be entitled to redundancy payments as any of their employees were. 
Depending on how their income from the business was structured - the split between Pay As You Earn (PAYE) and dividends for example - the amount they are due will affect the potential of how their salary rate is calculated. 
The key point is that in order for a director to be able to access any redundancy payments from the Redundancy Payments Service (RPS), they actually have to be an employee of the company - not just an officer holder or a controlling shareholder who wasn’t also employee director. 
Carrying out daily activities for the company and getting paid a salary with a portion of it going through PAYE is a strong indicator of actual employment even if they are a director and 100% shareholder. 
Another strong piece of employment evidence is having a written contract of employment. While many shareholders and directors don’t have one, it should be noted that the absence of one doesn’t automatically prevent them from successfully accessing appropriate redundancy payments later on.
Whether you’ve considered applying for redundancy payments after your business has closed or not, why not contact us anyway for advice on liquidation? 
It costs nothing to click a link and it  costs nothing for one of our expert advisors to arrange a free initial consultation to discuss how best to close your business. 
If we progress your case then our friends at Redundancy Assist can review your employment entitlements. Don’t worry - they’re real experts, know redundancy law and practice inside and out and unlike us, they do bring donuts to their meetings!

Business Loan

According to the most recent figures from The Insolvency Service, the number of UK business insolvencies has grown 20% in the past three years with 17,439 businesses becoming insolvent in 2018, a rise of 122 from the previous year.

Most kinds of insolvency procedures saw increases for this period including Company Voluntary Arrangements (CVAs) which allow companies time to avoid administration, restructure and hopefully return to profitability.

While some of these companies will have had fundamental issues which would have meant their closure was unavoidable, many others may have just been suffering from temporary liquidity or cash flow shortages.  If they had been able to access extra funds at the right moment, it could have made all the difference. Or could it?

Warning signs

There are several common warning signs that indicate if a business is approaching a financial crisis:

There’s a first time for everything and if any of these eventualities happen and you deal with them quickly and properly then this is decisive management. If they keep cropping up, you ignore them or they happen so often as to become part of the usual business cycle then that is indicative of a larger problem.

Obtaining finance might also raise bigger issues. Banks and other lenders will require more in-depth, detailed information and security which would add them to the list of creditors in the event of business failure.

While it might be easier to obtain personal finance at this point such as a loan or a credit card, they may also require additional security and as information is shared between financial providers and credit referencing agencies then any discrepancies or other warning signs will be triggered and shared between every provider.

Press pause before pressing go

Before taking out a personal loan or additional business loans requiring personal guarantees to try and keep you business going, it may be time to stop and think:

Before obtaining the finance there are two steps you should take:

If you recognise any of these signs or you feel the downturn or slump your business is experiencing has become ingrained and permanent then you should speak to one of our team of experts who can give you an impartial view about what you can do to save your business.

If you take out the finance without taking advice, not only could this increase the losses to creditors, you could also find you have shifted a number of liabilities on to yourself through personal guarantees, only to keep the business running for another six months.

Sometimes a business can’t be saved and in such circumstances we can help you plot the most realistic strategy through administration, if necessary, and beyond.
Email us at or use our contact form here.


If your business takes a downturn and can’t pay its debts then it is insolvent.
This can be a daunting and worrying time for any business owner as you’ve worked so hard and put so much effort in and now need professional support and advice to help formulate a way forward.
It can be difficult to know who to turn to, who will put your interests first and get the best outcome for you and your creditors. Deciding who to trust now could literally be the difference between saving your business or having it fail.   
We want to take some time to explain how Business Rescue Expert and other insolvency practitioners are regulated and checked by various authorities to ensure that we are fully qualified and fit to act in you and your companies best interests.

Watching out for you
The insolvency practitioners industry is regulated and overseen by various Recognised Professional Bodies (RPBs), that are organisations approved by the Secretary of State for Business, Innovation and Skills. These bodies are able to authorise their members to act as insolvency practitioners. They include the Insolvency Practitioners Association, the Association of Chartered Certified Accountants and The Law Society.
The Insolvency Service regulates the various RPBs that ensure that the authorised insolvency practitioners they oversee are fit for purpose. Effectively they regulate the RPB regulators.
RPBs act entirely independently and each sets their own rules and regulations for members but all have set minimum standards that have to be met. The various insolvency practitioners they oversee have to meet their requirements in terms of formal education, training and ongoing performance.
In order to become a fully qualified and approved insolvency practitioner and RPB member, prospective candidates have to sit and successfully complete the rigorous Joint Insolvency Examination.
Following the completion of this exam, the insolvency practitioner is then required by law to have a financial bond in place before they can practice. The bond is an insurance policy that protects the client in the rare event that the insolvency practitioner acts fraudulently or dishonestly while handling your case.
Insolvency practitioners are also subject to frequent visits and inspections from their RPB. They act on behalf of the Secretary of State to monitor the practices and ensure the practitioner is adhering to all required laws and accepted standards set out in the Insolvency Code of Ethics.
The RPBs themselves are also subject to regular visits and inspections themselves from the Insolvency Service to ensure they are fulfilling their duties according to current legislation. If an RPB fails to meet requirements then they can be liable to have their status revoked immediately.

Fundamental Principles
The Insolvency Code of Ethics is a comprehensive document that all insolvency practitioners have to follow and be familiar with. The code sets out several fundamental principles for the profession that have to be applied at all times:

As an insolvency practitioner, we must be honest, clear and to the point throughout the length of our service to you.

We are there to support you throughout every stage of the insolvency process but we will always remain objective. We will steer clear of conflicts of interest, bias and any undue influence from other parties. If we have to deliver bad news, we don’t enjoy it but we do it all the same.

We have a continuing duty of care to always ensure that our education, training, skills and knowledge base is always up to date. This means a commitment to lifelong learning and staying informed of all relevant changes in the profession including practice developments, new legislation and new technology and techniques to consistently provide the highest level of service to our clients.  

We have a duty to treat all client information as strictly confidential. We will never disclose any information to any third party without the appropriate authority or prior permission to do so unless there is a compelling legal reason.

We hold ourselves to the highest personal and professional business standards and comply with all relevant laws and regulations and won’t engage in any behaviour that would discredit our organisation or conduct.

Who regulates Business Rescue Expert?
This is a brief summary of the regulatory framework that insolvency practitioners operate in but we’d like to let you know more about the additional professional duties and responsibilities the Business Rescue Expert team meet to maintain our high professional standards.
We are regulated by the Insolvency Practitioners Association (IPA), an RPB that works with over 2000 professional members as well as firms and students too.
The IPA is the second largest of the five RPBs approved by the Secretary of State to oversee the sector under the Insolvency Act 1986. The IPA is unique in that it’s focus is purely on the insolvency industry.
They are one of the entry bodies for the Joint Insolvency Examination and also offer a wide range of education courses and events. Our insolvency practitioners have all passed this examination and continue to enhance their professional skills portfolio.
The IPA also sits on the Joint Insolvency Committee, along with the four other RPBs and the Insolvency Service. They help to write, develop and agree the profession-wide Statements of Insolvency Practice (SIPs), Code of Ethics and other forms of professional guidance.

Why do we do it?
You can see all the regulation and oversight that exists throughout the industry and the various RPBs and you might reasonably ask why the team at Business Rescue Expert sign up for such a rigorous regime?
It’s because we are proud of our professional work and the standards we stand by. We not only meet and adhere to the performance and conduct levels expected by our oversight bodies, but frequently surpass them.  
We have a dedicated, inquisitive and insightful team that constantly gains new skills, knowledge and qualifications as they are introduced as they only enhance our service to clients.
We also take the opportunity to meet and speak with fellow professionals in the industry on a regular basis to better understand the ways insolvency affects individuals and businesses to help deal with the process more successfully.
There’s a wide choice of insolvency practitioners available but why wouldn’t you choose the one that will support, guide and advise you at every stage?
Contact us now to get some free initial advice and to arrange a longer chat to find out more about you, your business and how we can do our best for both.
Email us at or use our contact form here.

But what are the signs?

Every business has ups and downs but in our experience there are some common, unmistakable warnings that, taken together, can indicate that a business is off course and heading for rocks:

Some financial records are more informative than others. A healthy understanding of profit and loss is essential but there are several other indicators of businesses health that you need to be equally adept at interpreting.
Cash flow forecasts and figures, sales forecasts, debtor reports and bank reconciliations will give you a broader understanding of where your business is and where it could be going in the coming days, weeks and months.
As a director, you need to be able to access this up-to-date information, whenever you need to if you are able to make business decisions with full confidence. Without a clear view of what you owe and are owed, you may be blinded to any unforeseen consequences of your choices. For instance, if you offered over-generous flexible payment terms to secure a new contract, this could end up working against you if you then discovered you need quicker payment.

Reaching the credit limit in any account can happen, that’s why they have them, but if it happens regularly and/or with more than one account then it’s another warning signal.
Other factors could include being refused extensions to credit limits or extra credit and lenders requiring personal guarantees for finance or charges on assets. All of these could be additional signs of trouble, especially if you don’t have assets which can be used against loans.

Constantly being chased for payment isn’t a good look for any business. If you receive a Statutory Demand from a creditor because of unpaid bills, then you could be liable to face a winding-up petition if this demand can’t be settled.
This would put a company in significant danger of closure. Also once instructed to pay by way of a formal court order, there could be substantial late payment fees added to the amount making the situation worse still.

As we’ve discussed, businesses can go through peaks and troughs and you may occasionally have a customer or client who pays late or misses a payment schedule entirely. While none of these occurrences are your fault, they can become a problem for your business.
If you aren’t being paid, then you won’t be able to make your own payments. We’ve covered this previously in a post about how to manage cash flow when clients pay late which gives some tips on what to do to recoup these amounts.

Why get advice?

Being a Director isn’t just a great job with a fancy title, a parking space and a bigger paypacket - it involves statutory responsibilities for you to execute on behalf of staff, creditors and shareholders.
If you’re seeing any of these individual issues occur regularly or altogether then it might be a good time to get some professional advice. Any one of these could be due to any internal or external factor such as inefficient business functions, staff absence or mistakes or they could be symptoms of a wider weakness within the business as a whole.  
Business Rescue Expert are an experienced, qualified team who are on hand to help determine the root cause of your business issues and can provide you with the help, advice and solutions to diagnose and fix the problems and help you keep your business lively and alive.

Insolvency is never a certainty. The earlier the possibility is acknowledged, the more options and alternatives are available for you to explore and implement to avert the eventuality.

If a business is at risk of insolvency then the simplest way to alleviate that pressure is to increase incoming cash. Like blood in the human body, cash flow is the circulation that keeps a the heart of a business beating strongly. The stronger the flow, the more resistant to external problems and pressures.
Some simple tweaks to regular business operations can improve things. Processing invoices and payments when they occur rather than waiting until the end of the month; staying on top of debts owed to you and collecting frequently; not allowing excess stock to build up and keeping an accurate forecast of all cash flow based on existing in and out payments to ensure that every decision is evidence based on existing circumstances.

A petty cash box is one thing but regular business expenditure is another. Develop a system and discipline of logging each and every purchase so you can clearly see if there are any regular and unnecessary costs that aren’t benefiting the business. These can include membership and licence fees for services you no longer use. Studying them can give you an insight into where efficiencies and savings can be made.
Even small reductions in expenditure can add up to a big impact over time, especially if they are implemented company-wide.

Banks are only one option when it comes to business financing. Depending on your situation and asset base, there are other choices including factoring agreements to help you secure payments.
For example, this option will help you maintain a cash flow by sacrificing a small percentage of your costs to obtain it. This must be preferable to incurring further debt with lenders or existing creditors.

Maintaining a regular dialogue with creditors is essential in straitened financial times. One of the biggest and avoidable mistakes is to close down communication with creditors in difficult times. You might save face and pride but you will raise red flags on their behalf, exhaust any goodwill and the benefit of the doubt and make it more likely that they will resort to formal legal methods to obtain their owed debts.
Creditors will appreciate knowing in advance if your payment is going to be late and will be more likely to work with you and negotiate on payment dates and terms if you give advance notice and a clear indication of when and how you’ll be able to clear any debts. After all, they’re in business too and understand fluctuations in fortune and circumstances.
Building and maintaining a good relationship with creditors is essential in reducing the risks of insolvency especially when a winding-up petition can be brought against a company owing as little as £750.

Despite taking the proper decisions and right actions, sometimes it’s not enough and a business will become insolvent. There are still actions that a director has to reasonably take and will help them personally and professionally in the long run as the process follows its due course.
Here are some steps to help maintain your reputation and fulfill your legal duties to help insolvency practitioners work through their tasks efficiently and easily:

Honesty is always the best policy, especially when it comes to dealing with creditors. Letting them know the situation and that you will do your utmost to secure their funds will do a lot to cementing goodwill and building trust with them.  Depending on how the situation unfolds, you may need to rely on the better angels of their nature and having a good relationship with them in advance is one less variable to complicate matters.

Keeping up-to-date, clear financial and business records should be a standard business practice but is utterly essential in any insolvency situation.  Records of meetings, available information and decisions made on that basis will allow insolvency practitioners to understand the timescale of what happened, when, where and why and prove that you did your best to monitor issues and implement correct solutions wherever possible.

If you already have excess debt then it can be tempting to assume that taking on a little more at this stage won’t make any difference, especially if it allows you to make one more payment and buy a little time so that things might turn around.  
Don’t. The more debt you accrue means the more you will have to pay back later and your business has already reached the end of the line. Taking on more funds now not only won’t help but could cause legal issues when you’re unable to pay and investigators look into the circumstances surrounding the new debt.

The business assets you own and control are your most important advantages now and have to be protected and insured correctly. They can be presented as a means of payment to creditors if they are willing to accept them and will help your case.
Do not be tempted to sell these assets to gain additional funds as investigators usually consider this wilful misconduct at best.

Events might seem stressful and overwhelming but this is because you are not used to insolvency. The experienced team at Business Rescue Expert have been through hundreds of processes and will have dealt with every eventuality and circumstance you can imagine, and more you can’t.
The need for transparency and accuracy now is critical, just when you are at your limits. There are significant legal complications that can arise if mistakes are made in the process, even accidentally.
If your business is at the point of insolvency or by reading this article you realise it is closer than you thought then you need to take action. Call in the professionals and get some specialist advice to see if your business is recoverable, what steps need to happen to achieve this or whether insolvency procedures need to begin.

What next?

Fortunately the first step is the easiest.
Business Rescue Expert offers a free initial consultation to talk through your business’s unique circumstances and give their opinion based on the facts.
Get in touch today and take charge of your businesses destiny again. Email us at or use our contact form here.


The construction industry is currently facing renewed concerns regarding the number of firms at risk of insolvency, especially in the wake of the recent Carillion collapse. Recent insolvency statistics reported that the construction industry has the second highest number of total liquidations per industry each year.

The challenges that the construction industry faces is down to a number of factors. In this article, the team at RJ Lifts delve deeper into the insolvency issues within construction whilst outlining potential businesses recovery strategies.

The insolvency statistics from 2017 show an increase in overall company insolvencies in the UK, particularly voluntary liquidations. This actually accounted for the largest number of insolvencies in the UK, with a figure of 12,861.

The construction industry saw 2,633 companies experience insolvency during 2017. The number of construction businesses facing insolvency has also seen a 0.5% increase annually.

In 2017, the sector recorded many important issues, leading the press to conclude that over a quarter of construction firms in the UK are likely to hit insolvency by 2020.

Insolvency cases in construction

As mentioned, the Carillion collapse is by far the most notable case of compulsory liquidation within the construction industry. Back in July 2016, Carillion projected a market value of £1 billion, spreading into Canada, the Caribbean and the Middle East.

The business had a huge number of employees - 20,000 in the UK, and 42,000 globally. However, as business began to expand, many of the contracts they secured became unprofitable.

The initial stages of the collapse came to light in 2016, with three profit warnings issued later the same year. The market value of the company therefore dropped to £61 million, partly down to the investigation by the Financial Conduct Authority (FCA) regarding their HS2 contract.
Another case involves B&Q, the UK’s leading DIY chain. Although not currently facing insolvency, they have experienced a steep decline in profits. Kingfisher, owners of the construction store, advised that direction of the chain was “uncertain”, as they disclosed a 9% drop in shares. The rise in interest rates last November had also been suggested as a possible effect on the companies stability.
Carpetright have also recently announced their new business recovery plan and are considering a company voluntary arrangement (CVA) to close all unprofitable stores and therefore cut down on rent costs.

Why are construction companies facing insolvency?

Insolvency rates in the UK within construction have always been high, with several reasons backing this up.


Bad debts and late payments are the main trigger for such insolvencies. Tax payments also leads to an overwhelming number of firms seeking business recovery plans. Whether it be paying tax in one lump sum, making several payments at a time or incurring penalties, these can all contribute to a company’s overall cash flow.
If VAT penalties aren’t paid in full or by arranged payments, it can lead to devastating consequences. Not making these payments indicates financial issues to HMRC, and you may incur a default surcharge notice.
HMRC grant times for a company with their first late payments, and smaller businesses are treated with more leniency compared to larger establishments, but if you do fall behind with payments, the HMRC business payment support service must be immediately informed.
There are two options for firms who are unable to pay VAT liability:


Construction output in the UK amounts to more than £110 billion per annum, contributing 7% of GDP. Therefore, we find a lot of competition in the sector regarding large-scale projects. With a large amount of construction firms competing for jobs, work if often price sensitive. In various cases, charging lower prices may seem the best option in order to gain a contract.
The rise in construction businesses has also caused many employers to look for more experienced contractors, benefitting larger companies but leaving the smaller firms without a profit.


Due to the increased number of construction industry insolvencies, suppliers and clients contractors either fail to receive or make payments, resulting in cash being owed to various external creditors.
As such, construction firms tend to have much bigger debts, which can affect their ability to get credit. The shortage of capital assets can mean that credit are at high-rates when looking for business support.

Construction Industry Scheme (CIS) Arrears

The Construction Industry Scheme (CIS) outlines the takings firms receive from a subcontractor’s payment, which is passed on to HMRC. Every construction business must verify their own CIS regulation, deduct the appropriate amounts and submit payments to HMRC, as well as monthly statements to subcontractors.
However, if the payment is withheld, HMRC will act quickly. If you’re able to pay immediately, no further action is usually taken. Otherwise, an agreement will have to be negotiated, similar to that of a VAT penalty.

Communication with your creditors

Consideration must be given in the interest of your creditors, especially for those experiencing cash flow issues. By having an open communication with your creditors early on, it makes it possible to put relevant agreements in place that will allow you to spread payments and avoid facing insolvency procedures at all.
For example, informal arrangements costs much less to implement and ultimately, it is in your creditors’ interests that the company in successful. Similarly, CIS or VAT arrears don’t necessarily have to mean your business is over. However, ignoring such problems will affect the durability of your firm.


The financial services industry is of great importance to the economy of the UK, contributing £119 billion to the UK economy in 2017, which was 6.5% of total economic output. But, the vote to exit the European Union could see the sector face significant difficulties. According to a Parliament Brexit and Financial Services research briefing, the “gulf between what the industry wanted at the start of the process, and what it looks as though it will achieve now is quite wide”.
Currently, as with every market across the nation, the future of the financial services sector depends heavily on the relationship Britain shares with the EU following Brexit. As it stands, the Financial Conduct Authority (FCA) is working closely with the government, ensuring the firms it oversees continue to abide by UK law obligations, including those that come from EU law, while also preparing for any further legislation that is yet to come into effect.

Business as usual?

However, while business seems to continue as ‘normal’, there are several companies within the financial services sector debating how they will continue to operate within the UK. Hiring dedicated project teams to handle the outcomes of Brexit, firms are trying to determine which operations will need to be moved outside of the UK in order to continue to serve customers as they have previously.
According to an article by the Evening Standard, there are at least 30 banks and financial firms that are set to move their EU headquarters outside of the UK. This could see over 10,000 jobs lost within the sector, and the London economy will take a hit of around £700 billion. The European Banking Authority, the regulator of the euro-zone area, also has plans to move its London headquarters outside of the UK within the first two years following Brexit.

Financial Services Insolvency Statistics

Since the year of the referendum in 2016, the financial services sector has seen a grand total of 808 companies become insolvent. In 2015, the year before the referendum, insolvencies were down year-on-year by 320 since 2011.
Stats Source: Insolvency Statistics
Following this decline, a spike in 2016 saw 266 companies become insolvent, which was 19 more than in 2015. Surprisingly, in 2017, the rate of insolvency seemed to decline back to the same levels seen in 2015. This suggests that the initial reaction to Brexit following the referendum had a significant impact on the industry, and began to level back out during 2017.
However, at the end of 2018 as we drew closer to Brexit, these numbers have grown dramatically, with 295 total insolvencies within this sector alone. This can be attributed to the uncertainty the sector faces as to whether operations can continue to be carried out within the nation, or whether it will be necessary to relocate. Relocation is a costly feat and looking at the figures outlined in the table above, it could suggest many are unable to do so.

What does the future look like for the financial services industry?

That famous, ‘it depends’ phrase comes back into play here as we look to the post-Brexit future of the financial services industry. As Britain continues to work for an agreeable Brexit deal, John Glen, the UK financial services minister stated “I do have every confidence that we will in the end be successful”, at an ISDA derivatives industry conference.
As Brexit approaches however, with no sign of a deal coming in the near future following the vote on amendments on Tuesday the 29th January, banks, insurers and asset managers in Britain are beginning to open new EU hubs to help ease disruption. Many feel concern that Britain’s financial sector will shrink over time following Brexit. (Reuters)
We’re beginning to see big players in the industry take action due to these concerns. Barclays, which in 2016 stated it had absolutely no plans to move any of its jobs outside of the UK has now said £166 billion worth of assets will be moved to Dublin as it “cannot wait any longer to implement its Brexit contingency plans”.
As a deal starts to look less and less likely, with just weeks to go before Britain plans to exit and an amendment seeking to extend this departure data rejected, Britain could be set to lose even further valuable contributions to the economy from this sector.
Uncertainty is still as high as ever, and as financial services continue to struggle to plan for the future as Brexit draws nearer, it’s likely we will see an increase of insolvencies again in 2019. If you’re worried about your company during this period of uncertainty until a deal is reached, then we recommend you seek some professional advice. Get in touch with one of our business rescue experts today for some free initial advice on what you can do to reduce the impact of Brexit on your business.

The term garnishee order arises from the old legal term garnishee, which is defined as a third party who is holding money on behalf of a debtor who has been instructed to release the money to a creditor to settle a debt. Businesses do not generally hold money themselves, but will place the funds in a bank account.
If a creditor has obtained a County Court Judgement (CCJ) against the debtor, they may ask the court to compel the bank to pay funds directly to them, making the bank the garnishee, giving rise to the term garnishee order, more modernly known as a third party debt order.
Whilst a bank has been used as an example here, being that it is the most common use of the third party debt order, debtor payments due to your company can also be redirected in this fashion, however the debt must be properly falling due for payment at the time the order is served. For example, if 30 day credit terms are provided, but the order is served on day 20, the order will not take effect. Where cash flow is already tight, a third party debt order, particularly where the amount due to the creditor is large, can be devastating for your business.

What is the third party debt order procedure?

Before a third party debt order can be obtained against your cash assets, the creditor must first obtain a county court judgement against your business. Once the CCJ is registered the creditor can then file a further form with the court, nominating the garnishee to be subject to the garnishee order. Creditors are likely to be strategic with these orders, planning to serve the order at the time when the largest level of funds will be available. 
Rather than serving the paperwork on your company, it is instead served on the garnishee. Therefore the first notification you will receive that an order has been made is the third party writing to you to advise the funds have been set aside. The first stage of the third party debt order is to provide an interim order. Once the interim third party debt order has taken effect, the court will list a date for the order to be made final. The funds are held strictly to order of the court by the third party until otherwise directed.
If the third party debt order is made final at the hearing, the third party will be directed to pay the funds directly to the creditor holding the CCJ in settlement of their debt.

How to respond to a third party debt order

There are various alternatives on how to respond to receiving notice that your funds have been set aside by a third party debt order.

The debt is disputed

Where the debt is disputed you can apply for the third party debt order to be set aside, by requesting the county court judgement be set aside. This is done by making an application to court using form N244. You will need to provide a witness statement setting out why you believe the debt is not due along with evidence to support the application.
If the court is satisfied that there is a prima facie case to set aside the judgement, they will also set aside the interim third party debt order, requiring the garnishee to release the funds back to you. This should not be used as a routine means to circumvent the third party debt order. If there is no clear case to set the judgement aside then the court will not consider the same.

The company is insolvent

If the company has not been able to pay its debts as they fall due, then the company is likely to be insolvent, if there is no clear route out of the situation. Upon making the realisation that your business is insolvent you should seek professional advice on the next steps. Whilst the third party debt order may prevent you from having access to the necessary funds to commence formal insolvency proceedings, certain proceedings will prevent the order from being made final.
Placing the company into administration activates a moratorium, preventing any legal actions from proceeding any further. Consequently the funds set aside under the interim order will be returned to the administration, allowing them to cover the costs of the procedure. Alongside recovering the funds for the benefit of the estate, administration can also be used as a means to rescue the business, seeking a buyer for the same, whilst providing breathing space from legal actions
If your business has been crippled by a third party debt order it is important to act quickly in either circumstance. Delays could result in the funds being lost permanently. Our business rescue experts can help you take swift and decisive action to deal with a third party debt order.

It’s perfectly possible that after entering into a factoring agreement you may want to exit the agreement completely or, change the terms of the factoring agreement. If you find yourself in this position, then you will be relieved to hear that it is possible to amend the terms within a factoring agreement or walk away, albeit usually subject to additional fees and costs.
If you have agreed to a factoring agreement, then you will have agreed to pay a settlement fee that must be paid should you wish to cancel this agreement before the end of the term set out. The factoring company, or ‘factor’, will outline this clause into the factoring agreement to compensate for any losses incurred by the agreement being terminated early. We explain how these fees work and what to do to minimise the amount you will need to pay should you need to cancel a factoring agreement.

What is a factoring agreement?

A factoring agreement is a type of debtor finance that involves a business ‘selling’ its accounts receivable or invoices to a third-party for an agreed percentage of all accounts payable.
Assuming that you are the company that wants to sell its accounts payable in order to raise cash funds, entering a factoring agreement means that your company will hand over control of collecting payment from those who owe you to the third-party. This allows your business the security of meeting its cash flow needs without having to worry about late payments or defaults on payments.  
In some cases, you may wish to end a factoring agreement term early, for example if you feel the percentage taken is too high, or you simply wish to take back control of your accounts. But what can you do to lessen or avoid these termination fees?

Terminating a factoring agreement early


Check your contract thoroughly

Ensuring that you fully understand the terms set out in your agreement can be helpful to avoid early termination fees. The contract will outline all the terms and conditions involved in early termination, providing details of notice periods required and fees - so read the small print very carefully to determine what you should do next. If needed, you can seek professional advice by contacting us to gain a better understanding of these terms if you’re unsure about any of them.

Be prepared to negotiate

Once you understand the terms covered in your factoring agreement, you are then in good stead to begin negotiations on terminating the agreement early. When negotiating, a good place to start is to gather quotes from competitors - particularly if your dispute relates to the percentage taken by the third-party being too high. This market is competitive, so if you can demonstrate that several better options from different companies would be available to you, then an amendment to your contract may be possible.
However, it is important to note that these negotiations are better carried out before you sign the contract. This way you are able to demonstrate why you believe you should have more reasonable settlement fees. In some cases, an early termination fee is unavoidable, so you may want to preempt this before the need for it arises. If you’re already in the contract and wish to terminate early, then you may need to seek professional assistance from one of our advisors to help you negotiate a deal.

Be transparent

You must be clear to the factor (or lender) on why you wish to terminate the agreement. Whether it is because you wish to regain control of your accounts receivable, you feel the percentage they take is too high, or you simply feel you may be able to find other suitable financing options, it’s important to be truthful about it. This way the factor may be able to provide some form of mutually-agreeable solution to allow you to avoid the termination fees.

Forecast your requirements

Terminating a factoring agreement isn’t ideal for either party, so ensuring you plan ahead could help you to minimise the need to do so. In some instances, termination could become unavoidable, but forecasting your accounts and financial requirements accurately for the period covered within your agreement can lessen the impact of this.

Transfer to a competitor

If it is the case that the issue with the factoring agreement is the percentage is too high, you can consider transferring the book to an alternative factoring company. It is possible for the new factoring provider to buyout the ledger from your existing supplier. They will generally guide you through the process to ensure a smooth transition and to minimise the costs, as it is also in their interest to do so.

Seek external support

Ending a factoring agreement early may not always be the best option financially. You may feel it is necessary, but by seeking professional help from a business such as ours, you might be able to find a more preferable solution.
The financial products available on the market are constantly changing, with one of the new products being market invoice finance. Where factoring take control over the full accounts ledger, market invoice finance only applies to specific invoices and is not subject to a contract. Therefore you also avoid termination fees through market invoice finance.
If you’re unsure about changing your factoring terms, moving to a new type of lending, or negotiating with your factor, then we can certainly help. At Business Rescue Expert, we’re a highly-experienced team specialising in helping businesses affected by excessive factoring agreement termination charges. Get in touch with us today.

Prior to a company entering voluntary liquidation, alongside the statement of affairs, a pack of explanatory information will also be provided to creditors. This information will include a reconciliation of the position between the last set of published accounts and the statement of affairs, known as the deficiency account. Here we will look at how the deficiency account can be interpreted and how it can be used to explore whether wrongful trading has taken place on the part of the director.

What can be interpreted from the deficiency account?

It should be noted that a deficiency account is only prepared when a company is to enter an insolvent voluntary liquidation. An example of a deficiency account can be found below.

for the period from 31 March 2017 to 02 October 2018

£ £
Profit and Loss Account Balance at 31 March 2017 -449,823
Exceptional losses incurred or amounts written off since the date of the last accounts: - -4,044
Pay in Lieu of Notice
Termination of Contract
Amounts written off for the purposes of the Estimated Statement of Affairs: -
Tangible Assets -264,646

As can be seen from the above example, the account starts from the last set of accounts, which in this case shows the business was already trading at a loss around 18 months before the company started the voluntary liquidation procedure. From this figure, deductions are made to take into account any assets that have been written off or sold for less than book value since the last set of accounts.
Once the initial deduction has been made, items which cause a loss to the company as a direct result of the insolvency of the company are listed. As these items arise purely due to the insolvency, they are specifically accounted for in showing the difference between the last accounts and statement of affairs. Some examples appear in the account above, however, this can include:

The final adjustment on the deficiency account is the difference between the book value for the assets of the company and the estimated to realise value in the statement of affairs. Where a company enters voluntary liquidation, unless a sale of the business can be achieved, it is likely assets will be sold on a break up basis which will reduce their value.

Estimated trading loss and trading whilst insolvent

The final figure discussed in the deficiency account is the estimated trading loss for the period between the last accounts and the statement of affairs. When all other items have been covered off as above, it must be assumed that the remaining difference between the statement of affairs position and the last accounts must be a trading loss. The size of this trading loss is telling as to the state of the business.
If the last accounts show that the company has previously carried significant losses, potentially making it insolvent, the estimated trading losses in the deficiency account can then reflect the additional losses to creditors since the company became insolvent. This is however a very basic view of the test for the this and many other variables must be taken into account, including establishing when was the point of no return and what actions were taken by the board to support the company at the time.
If a director cannot demonstrate they have taken steps to wind up their company, when they have become aware that it is insolvent with no prospect of recovery, they may be held liable for wrongful trading, requiring them to contribute personally to the assets of the insolvent company. If a director can show they took every step to try and mitigate losses to creditors, including introducing their own funds to the business, then their liability may be reduced or extinguished.
If you are concerned that your business is facing financial difficulties and find you are unable to pay creditors on time or at all, taking early advice from our business rescue experts on the next steps for your business could be the responsible action to take, and will help you avoid becoming personally liable for company debts. Please feel free to contact one of our business rescue experts and we will be happy to provide a free, informal initial consultation.

By entering into a commercial lease, it is usually the case that you have agreed to continue this tenancy for a specific period of time and this is usually considered to be a fixed term. However, there are many reasons you may wish to end this lease before this time period is up, e.g. the premises are no longer suitable for the needs of your business or you’re struggling financially and need to downsize.
However, ending a legally binding contract early is no easy feat, no matter the circumstances in which it is required. Once you’ve signed on the dotted line, you have contractually agreed to occupy this space for the agreed amount of time, as well as make the necessary payments within this timescale too. So is it ever possible to end this agreement without penalty? If a quiet word with your landlord doesn’t cut it, then there are still some options you can consider.

Break clause in the lease

Your lease may include a ‘break clause’, which allows both the landlord and the tenant some leeway to end a lease after a given period of time. This enables the tenancy to be terminated without anyone facing a penalty. Typically as a tenant, a notice period of two months is required to let your landlord know in writing that you are using the break clause.
Be sure to thoroughly read through your contract to determine whether or not a break clause is included and then abide by the terms and conditions outlined to ensure that you won’t be penalised.
If you fail to comply with the conditions set out in the contract, then you risk jeopardising your right to use the break clause and this could result in penalties, along with the requirement that you continue with the tenancy.

Negotiating early exit and surrendering your lease

You may be able to negotiate with your landlord on a one-to-one level, to allow them to consider your circumstances and determine whether they would agree with the termination of your tenancy.
It’s unlikely that simply by asking to end your agreement early that your landlord will simply comply with no penalty. For that reason, it can be advisable to consider what you can bring to the negotiation. For example, if you are downsizing, then your existing landlord might already have a suitable space. Offering to stay with that landlord may work in your favour.
In the event that your landlord doesn’t wish to comply with your request to end the lease early, then you may have to go down the formal surrender route.
Surrendering your lease can be very costly, and there is a strict criteria in which both your business and the landlord of the premises must have met in order for the surrender to be viable. A common misconception is that you are able to simply hand your keys back to the landlord and cease to occupy the premises. This is certainly not the case and in fact both parties must act in a way which is inconsistent with the lease continuing and agree upon the surrender. For example, you could vacate the premises and the landlord could grant a new lease to a new tenant. If this applies, the lease will then be surrendered by ‘operation of law’.
Surrendering without a formal deed (i.e negotiating with your landlord) is naturally, a much quicker and less costly process. But it is worth bearing in mind the legal complications that could potentially occur as a result. It is important if you are ending your lease in this manner that you seek professional legal advice to ensure you comply with all obligations throughout the process.

Securing a new tenant

You are entitled to source a new tenant for the premises to take over your tenancy if you wish to leave. This enables you to vacate the premises and terminate the contract without penalty, as the landlord won’t incur any inconvenience or losses as a result. Note that there may be further legal obligations to comply with when proceeding with this and you should involve your landlord throughout the process.
Also bear in mind that you will be responsible for marketing the premises to potential tenants, the tenant may still need to pay a deposit and may also be required to start a completely new lease as opposed to taking over your current one. You must be completely transparent throughout with both the landlord and the new tenants. If you wish to carry out the termination of your lease in this way, it may be worth seeking professional advice to ensure you don’t compromise your contract.
If your contract includes a subletting clause, you may be entitled to bring in a new tenant without ending your lease at all. Remember that if you do this, you will become the new tenant’s landlord and have to meet all their requirements, while still having to abide by the clauses outlined by your landlord.

Forfeit by a landlord

Your landlord is able to end the tenancy if you break any of the clauses written in your lease agreement, such as falling behind with payments or causing significant damage to the property. The landlord is then entitled to change the locks at the premises, known as peaceful reentry, if the premises in question is commercial.
The landlord can also go down the court route, if they feel it is appropriate, however this will take some time to come to fruition. If you’re struggling financially and are at risk of losing your premises, you may wish to seek advice.

Fixed-term tenancy and ending the lease

If your tenancy is a fixed-term tenancy, this means that the agreement automatically comes to an end when the term is up. It may be an unlikely event that the term of your tenancy ends at the same time that you wish to terminate your lease, but in the case that this does happen, you are able to walk away without any risk of penalty. You may be required to undergo inspections in order to determine whether deposits will be returned and you may need to sign further documents to contractually terminate the tenancy.

Costs involved in ending a lease early

If you need to end a lease early due to closing down your business, then this is an extra expense at a time that already requires you to make substantial payouts, so it’s worth noting the costs involved with terminating the lease early to ensure you can do so correctly, while abiding by any legal obligations.
Not only will you need to pay for the lease termination itself, but you will also need to pay for professional advice to ensure the termination is completed legally. You may need to instruct a solicitor and a conveyancer, and it may take some time to negotiate a deal. This means the longer it takes to come to an agreement with your landlord, the more costly the process will be.
If you’re in a difficult financial situation, then you may be able to demonstrate that your company is incapable of meeting payments in the long-term, and in this case your landlord may agree that it is in their interest to end the lease. In order to pitch this successfully to your landlord, you may find that professional advice will support your argument.
Alternatively if you simply cannot afford to pay the lease any longer and the company as a whole is struggling financially, it may be time to consider the formal insolvency route for the business with a view to a complete shut down, or as a rescue process to start again fresh. You should however beware of personal guarantees on the lease when considering this route.
If you’re struggling to keep up with payments and need a way out, come and talk to us. We can help you to find the right solution for your business. Call us now on 0333 939 8040 or send us an email at

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association


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