Having to consider putting your company into Creditors’ Voluntary Liquidation (or CVL) is not something any Director sets out to have to do…
Unlike liquidation, Administration provides immediate protection against action being taken by Company creditors such as your suppliers or HMRC. This is important as it buys you time to determine the best strategy for you and your business.
The Administration process is usually started by the directors filing a form at Court called a Notice of Intention to Appoint an Administrator. This form is a simple document that we will arrange to complete and file for you. As soon as the notice of intention has been filed at Court, your Company is protected from all forms of legal and recovery action for a period of 10 business days.
Administration has the following benefits:
- Allows you to gain immediate protection from the Company's creditors;
- The Company can still go on to a rescue plan, CVA or Liquidation;
- Enables you to continue to trade whilst the Company's options are assessed;
- Provides the opportunity to restructure the business into a more profitable form.
The notice of intention is not public knowledge as you are only required to disclose it to the Company's charge holders (such as a factoring company or a bank you have a loan with) and any enforcement officer who is trying to complete distraint against Company assets or has already done so. This means that your suppliers, customers and staff will not be aware that you have started the Administration process, thus allowing us the opportunity to work with you to decide on how best to proceed in saving the business.
At this stage, the Company is not yet in Administration and you can choose not to continue if you wish although it is unusual not to press ahead at this point as restructuring the business through Administration will usually be your best option.
Whilst the Limited Company is protected, the proposed Administrator (who is an Insolvency Practitioner of your choice) will work with you to establish the Company's true financial position and assess the value of the Company's assets. Based on this you will both be able to agree whether the Company should continue to trade, go into Administration (which may or may not be as a pre-pack) or take a different insolvency option like Liquidation or CVA.
With all business turnaround procedures, the sooner you act the more options you will have and the easier it will be to formulate a viable recovery plan as the Company will be under less pressure and distress. To discuss you options or to find out how we can help your business, call us free on 0800 066 3122
