Lightside
The Courtyard
124 High Street
Nailsea
Bristol BS48 1AH
T: 01275 595006
F: 01275 859145
No responsible company director wants to be declared bankrupt or suffer the embarrassment of having their company liquidated to pay off debts to creditors. Find out how Lightside can
help you properly reduce your commercial debts.
If you are looking to solve your company's debts then talking to Lightside Financial is an effective solution - we can help you answer your questions completely Free of Charge so if you need help with CVA's,
debts or avoiding bankruptcy then call us on 01275 595006.
If you own and direct a company either jointly or on your own and
have run into serious debt problems then a CVA could help avoid you
being declared bankrupt and your company taken over by administrators
and sold on for far less than what it’s actually worth.
CVA’s (Company Voluntary Arrangements) are somewhat like an IVA (another
insolvency procedure) which allows a company to reach an agreement with
its creditors to make them payments to help clear its debt in full or
part of a debt over a set and agreed amount of time.
As a Company Director you can propose a Company Voluntary Arrangement by
calling your creditors to a meeting. If 75% of your creditors agree,
then the CVA is binding with all creditors who attended the meeting.
Only creditors who had notice of the meeting are bound by the meeting’s
terms.
When a CVA is created the firm’s liabilities to its creditors is
removed. A company can keep on carrying out its business in a CVA.
Do bear in mind CVA’s can also be set up after a company has entered
administration or liquidation so it is not uncommon for administrators
or liquidators to create, they are not just for directors to sort!
A CVA can allow you as a company director to be given more time to
pay your creditors and stops them from taking you to court to declare
you bankrupt.
CVA’s are increasingly agreed to by HMRC to allow company directors to
clear serious and outstanding debts of tax arrears.
By permitting the company to carry on its business directors can
continue to be paid a salary.
Implementing a CVA significantly costs a lot less than putting a company
into liquidation.
Company Directors and their conduct will not be reported to the
Directors Disqualification Unit for the Department for Business and
Enterprise if a CVA is entered into.
This process allows companies to be protect from creditors demand and
at the same time put in place a restructuring plan to solve their debt
problems.
Only a correctly licensed insolvency practitioner (IP) can act as the
administrator and must be appointed by a court. The IP’s role is to
ensure the company is taken care of as a going concern rather than
winding it up – which can be considered a far lesser result.
Advantages of placing a company in Administration
Insolvency Practitioners regularly use Administration to carefully make
sure a company survives by appointing selected directors to control, run
and manage the business.
Administration also offers some protection from creditors allowing the
IP administering the company an extended time frame to negotiate
payments of outstanding debts.
Liquidation should be considered the last resort for a company, as it
ensures the business becomes insolvent and prevents it from further
trading.
Directors will need the assistance of an Insolvency Practitioner to
arrange (very likely) a number of meetings with their creditors to wind
up the company and sort out a liquidator. During a meeting of the
creditors, the directors and IP a report is given detailing the
company’s history, its finances and then the creditors are given the
opportunity to ask the directors what went wrong. After this the
creditors would then vote to appoint an official Liquidator of the
business.
A company placed into liquidation will no longer be allowed to carry out
business or conduct trade with customers.
The cost of liquidating the business is funded by selling off the assets
of the company, with any further funds being used to pay creditors some
of the debt that is owed.
Many creditors prefer to avoid the debtor being made bankrupt as this usually results in a far smaller payment of the debt outstanding. Many responsible IP’s will work towards other routes in an attempt to solve a company’s debt problems before placing a company into voluntary liquidation.
Lightside’s UK Debt Advisors can talk to you for free, giving you a bespoke plan that clearly maps out what you need to do to clear your business commercial debts as stress free as possible. It is time to stop worrying and start talking, so why not call us on 01275 595006 today?