Corporate Insolvency
Definition of insolvency:
- The company's liabilities exceed it's assets (balance sheet insolvency)
- The company is unable to meet it's debts as and when they fall due (cash flow insolvency)
Here at Buchanan Roxburgh Ltd we are keen to explore recovery procedures which enable the company's survival whilst recognising that it may be necessary to implement insolvency procedures to bring the company to an end.
For more detailed information please follow the links below:
Recovery procedures to enable the company's survival
Formal procedures to bring the company to an end
Recovery procedures to enable the company's survival
Administration
When facing major financial difficulties, directors can file documents in court requesting that the company be placed into administration. The administration process provides a company with protection from its creditors, allowing the company time to reorganise its affairs with a view to rescuing the company as a going concern or achieving a better return for creditors than would be available were the company to be wound up through a formal liquidation.
Due to the changes brought about by the Enterprise Act 2002 this procedure has become much more popular as it is now less expensive to achieve.
A company in administration may continue to trade while a plan is formulated to achieve one of the following:
- Rescuing a company as a going concern or
- Achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration)or
- Realising property in order to make a distribution to one or more secured or preferential creditors.
Our experienced and friendly team are waiting to hear from you and will be delighted to provide you with advice on all of the options available subject to your particular circumstances.
Simply contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk for a free and confidential consultation
Company Voluntary Arrangements
If a company has a viable future, but has cash flow problems then this is a procedure which could provide a solution to achieve the long term viability of the business. The advantages are that it enables the company to continue to trade with a view to improving the position of the creditors whilst at the same time protecting the company from court action and winding up procedures.
The CVA is a formal compromise between the company and its creditors which allows creditors to be repaid an agreed amount over an agreed period of time. The proposals must have the support of more than 75% of the creditors who are voting at the meeting.
Consultation with the main creditors is essential and we work closely with both directors of the business and creditors in order to agree a formal mutually beneficial solution.
Our experienced and friendly team are waiting to hear from you and will be delighted to provide you with advice on all of the options available subject to your particular circumstances.
Please contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk for a free and confidential consultation
Members Voluntary Liquidation
It is a normal occurrence for a successful business to need to restructure for a number of reasons. The reasons can include the sale of part of the business, the splitting of the business into segments or simply the close down of a now dormant company.
A Members' Voluntary Liquidation is a shareholder-controlled procedure, which affords a tax efficient method of distributing the assets of a company.
The Liquidator, who must be a Licensed Insolvency Practitioner, is appointed by the Shareholders for the purpose of realising the assets, settling all of the company's debts, plus interest, in full within 12 months.
Distribution can be liquidated assets, assets in specie or shares in a newly formed company, which then holds the assets of the liquidated company.
Our experienced and friendly team are waiting to hear from you and will be delighted to provide you with advice on all of the options available subject to your particular circumstances.
Please contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk for a free and confidential consultation
Formal procedures to bring the company to an end
Winding up procedures
Economic or market conditions are often the reasons given for business difficulties. This may be true but there are also many individual reasons which can lead to a business needing to use an insolvency procedure. In Scotland the procedures which are used for this purpose are:
Creditors Voluntary Liquidation (CVL)
A Creditors Voluntary Liquidation is a very popular way for directors and shareholders to deal voluntarily with their company's insolvency. This route is appropriate when the company is insolvent and does not appear to have a viable future even in the event of a restructuring. In certain cases this route is also suitable where the directors do not have the determination needed to secure a rescue of the company.
The directors convene meetings of shareholders and creditors in order to resolve to place the company into liquidation. It is normal for the company to then cease trading, with the company's employees being dismissed.
Once appointed by members and creditors, the liquidator, who must be a Licensed Insolvency Practitioner, has four main duties;
- To realise the company's assets
- To agree the claims of the Company's creditors
- To investigate the company's affairs and
- To submit a DTI report on the conduct of the directors.
If you would like more information please contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk for a free and confidential consultation
Winding up by the Court (WUC)
A petition for the winding up of the company can be presented by the directors, the company (shareholders) or a creditor. The most common reason for the presentation of a petition is that the company is insolvent.
If a petition is presented on behalf of the company or its directors a resolution for winding up must be passed.
If the petition is presented by a creditor, the creditor must demonstrate to the court that the company is insolvent. The definition of insolvency in this instance is if:
- The company's liabilities exceed it's assets (balance sheet insolvent)
- The company is unable to meet it's debts as and when they fall due (cash flow insolvent)
It is normal for the creditor to show that the company cannot pay its debts as they fall due. There are a number of ways a creditor can do this. For further advice contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk
If considered appropriate the initial petition may include the request, on grounds shown, to appoint a provisional liquidator. If the debt is not paid the petition will be advertised and, in due course, the winding up order will be granted. At this stage an interim liquidator will be appointed. The interim liquidator will call a meeting of the company's creditors and a liquidator will be appointed at the meeting.
The liquidator's main duty will be to realise the company's assets and pay a dividend to creditors.
If you would like more information please contact us on 0800 092 8002 or email us at info@buchananroxburgh.co.uk for a free and confidential consultation
