Business Rescue & Insolvency Tools
Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (CVA) is a deal between an insolvent company and its creditors. The company agrees to repay some or all of its debts from future profits or asset sales over an agreed period (usually three to five years). A CVA can allow for the balance of debt to be written off where it cannot reasonably be paid. RNF Business Advisory Limited’s turnaround experts often save companies by creating innovative, but realistic payment plans.
Informal Schemes
For smaller businesses or where problems are temporary, an informal arrangement with creditors may be suitable. Informal schemes minimise bureaucracy and costs. They often give creditors a much better return and avoid the negative publicity of a formal insolvency scheme. RNF Business Advisory Limited has a lot of experience negotiating informal schemes with creditors.
Section 1003 Strike-off
Under S.1003 Companies Act 2006, directors are entitled to request that a company be struck off if it has ceased trading, even if it is insolvent. It can be a cost-effective way of dealing with a small company where the costs of liquidation are prohibitive. The company has to have ceased trading for three months and have no assets. There are statutory forms to complete and known creditors receive notice and can object. HMRC may object if it believes directors have overdrawn accounts or if dividends have been paid to the detriment of creditors. The process is straightforward, although best managed by an insolvency practitioner, since there can be pitfalls. As of 1 March 2012 it is likely that the ESC 16 concession will be replaced by a statutory instrument governing the limits allowed to be distributed on company dissolutions which means that the MVL route is probably the most tax efficient method of shareholders withdrawing funds rather than using the Strike-Off process.
Receivership
Now almost entirely replaced by administration, receivers can still be appointed by secured lenders, such as banks, to recover debt due to them. Receivers usually wish to work with management to sell the business as a going concern and maximise the funds realised. Banks can now appoint administrators instead of receivers, but the administrators’ duties are to all creditors, not just the bank.
If you require any business recovery advice, information or assistance, please contact us.
