Facing cashflow problems can be a daunting experience.
You may be able to make a friendly arrangement with creditors, as keeping you in business helps them get what they’re owed. Otherwise, there are several formal solutions to get your business back on track:
Company Voluntary Arrangement (CVA)
A CVA is an alternative to liquidating a limited company, allowing it to trade out of its financial difficulties by making a formal agreement with its creditors.
The arrangement is legally binding providing protection for the company and allowing it to repay a proportion of its debts over a period of one-to-five years.
This provides a company with immediate legal protection from its creditors, whilst a rescue and recovery package can be formulated.
A Pre-Packaged Administration
A ‘pre-pack’ sees a business’s assets sold to a third-party (sometimes the company’s own directors) prior to a formal administration process.
This preserves its value and maintains relationships with customers and employees.
Creditors’ Voluntary Liquidation (CVL)
If none of the above solutions are possible, then it may be advisable to close your company voluntarily, paving the way for a fresh start.
A CVL is a quick and cost-effective way of formally closing a company to comply with your duties as a director.
Acting quickly and seeking the help of a licensed insolvency practitioner will ensure you understand all your company’s options, providing you with the best chance to save your business.
Enjoyed this? Read more from Natalie Hughes, Simply Corporate