All too often, directors face difficult choices, such as whether to further invest money in to a financially distressed business or perhaps bring things to an orderly end. Just the decision to continue trading or not can be a difficult one, especially where there remains a risk of becoming personally liable for continuing to trade and potentially worsening the position for creditors. Often, the decision can be taken out of the director’s hands and the risks involved are increased. Where the decision is not clear cut, it is vital that a director takes professional advice to minimise the risk of future personal liability.
Remember, it is still possible to save a business (or parts of a business) even where it is not possible to save a company. Even if saving a business is not possible, CMB Partners can ensure that the recovery of assets is maximised and, where possible, funds are returned to creditors (in order of their statutory priority).
Company Insolvency/Turnaround
Companies often face short and long term financial difficulties. At CMB Partners, our diverse experience can provide directors and/or appointing creditors with the best advice to suit any situation. This ensures that the correct approach is taken to maximise the likelihood of a company or business being saved and/or assets being realised for the benefit of creditors.
CMB Partners provides a full range of company services, which include the following:
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Administration
This is a corporate insolvency procedure where the directors, the company, the creditors or the Court can appoint an insolvency practitioner as Administrator. The procedure is principally designed to, either rescue the company or to realise its assets in a way that is likely to result in a better result for all creditors or allow a distribution to preferential or secured creditors.
Creditors' Voluntary Liquidations
A creditors’ voluntary liquation (“CVL”) is a corporate insolvency process which allows the directors (with shareholder approval) to wind down an insolvent company on a voluntary basis. It is commonplace for this procedure to be used when the directors recognise that the company cannot continue to trade, no further funding can be found or there is no appropriate rescue procedure available.
Members' Voluntary Liquidations
This procedure can be used when the shareholders of a solvent company want an orderly close down of the company. The procedure is often used when the company no longer has a purpose or the director/shareholder is about to retire.
Company Voluntary Arrangements
A company voluntary arrangement (“CVA”) can be used by companies in distressed situations to avoid more terminal formal insolvency processes. A CVA is a statutory contract between a company and its creditors which usually involves a form of debt compromise.
Compulsory Liquidation
This is a court-based corporate insolvency procedure where the company is “forced” into liquidation, as a result of a petition from a creditor.
Turnaround
Turnaround is a process (but not a formal insolvency process) dedicated to corporate renewal when firms are on the brink of failure. It uses different types of analysis to determine a company’s failings (such as management review and also root cause and SWOT analysis).
Fixed Charge Receiverships (including Law of Property Act Receiverships)
As the name suggests, the holder of a fixed charge security (such as a mortgage) can appoint a receiver when the terms of borrowing have been breached.
Administrative Receiverships
An administrative receivership appointment can be made when a company has breached the terms of a loan or other credit facility from a creditor with a floating charge (usually a bank or other financial institution).
Scheme of Arrangement
A scheme of arrangement is a court-sanctioned agreement between a company and other parties. Schemes are a flexible and long-established Companies Act procedure. A scheme is a useful strategic device in a wide range of circumstances including restructurings, takeovers and mergers.
Restructuring Plan
Following the advent of the COVID-19 pandemic we saw the introduction of a new insolvency tool, the Restructuring Plan by the Corporate Insolvency & Governance Act 2020.
