Sometimes a business needs to make important changes, especially if it is facing insolvency or another operational challenge. By working with a recovery service, you can transform your operations so that you can move forward with confidence.
Therefore, when you seek recovery help, you may want to turn your business around. When you can turn your company around, you will find that situations such as insolvency can be overcome. Sometimes a business needs a push in another direction.
When You Should Ask for Assistance
If your company is experiencing an inadequate cash flow to meet its debts, you need to view the situation as serious. The directors in a company that is not meeting its debts are at risk if it is shown that they were involved in wrongful trading.
Liquidation, when offered by a company such as Michael Chamberlain business recovery services, can help you see your way clear financially and professionally. Forms of liquidation include the following:
- Creditors’ voluntary liquidation
- Members’ voluntary liquidation
- Compulsory liquidation
In some cases, business restructuring cannot be done. However, a formal review should still be considered if it is possible to make a payment arrangement or a company voluntary arrangement can be established.
Getting a Second Chance
With that being said, a creditors’ voluntary liquidation, or CVL, does not represent the end of a business’s operations. Following a separate valuation of the company’s assets, the original shareholders, directors, and owners can buy them back. Many times, this action permits the business to continue as a newly established limited company. This type of recovery saves jobs and offers a business a second chance.
The CVL Process
The CVL itself involves establishing a meeting for of directors in a company to place a company into insolvent liquidation. During the process, a licenced insolvency practitioner is named as liquidator.
A CVL is often recommended for companies that no longer can sustain themselves. It is also suggested for companies that cannot pay their creditors and continue to lose money. By taking this approach, a company can realise several advantages.
These advantages include the following:
- The liquidator or insolvency practitioner takes control of the failing company.
- The directors no longer have a role in the business.
- Once the company goes into liquidation, the directors are released from the claims of creditors citing wrongful trading.
- Any wages in arrears, pay in lieu of notice, or holiday pay is overseen and met by the Government.
- The assets and company can be purchased from the liquidator, minus the liabilities.
As you can see, insolvency is not the end of the world. If you feel that your business has reached this point, you can still strike a favourable outcome. Talk to a company offering business recovery assistance today.