Dealing with disgruntled creditors
While many creditors were sympathetic when the coronavirus crisis first hit, many indebted companies are now feeling the heat rising as creditors seek to recover money owed.
If your creditors are relentlessly chasing you and you are feeling increasing levels of pressure to pay money which you simply don’t have, you may feel there are few options open to you.
No matter how bleak you feel the situation is, there are always solutions. When it comes to dealing with disgruntled creditors, the worst thing you can do is ignore the problem and refuse to engage.
With unprecedented business disruption over the past six months, you are certainly not alone in experiencing financial distress and your creditors may be more understanding than you think.
Opening up channels of communication and allowing creditors to understand what you can afford to pay, is the first step towards solving your financial worries.
Armed with this information, creditors may well prefer to take the option of partial repayment rather than risk recovering nothing at all.
No matter how bleak, there are always solutions
Negotiating with creditors can often be the best way of resolving such a situation, and depending on the level of debt involved, your ability to repay, and your existing relationship with your creditor, these negotiations may result in an informal repayment plan, or alternatively they may be solidified by a formal insolvency process known as a Company Voluntary Arrangement – or CVA.
If your financial woes have taken you past the point of turnaround, however, you may need to consider whether placing the company into liquidation or administration is a more suitable option in order to protect creditors’ interests and stem further losses.
- For further Lancashire business news, advice and analysis subscribe to Lancashire Business View or join the LBV Hub from just £2.50 per month. Click here to subscribe now.