Every year, tens of thousands of businesses experience severe debt problems with thousands entering liquidation. However, liquidation is a last resort and alternative options should be sought in order to ensure that the all available options are assessed before big decisions are made. Getting the right company rescue advice could be the difference between a business entering into liquidation and a turnaround success. There are some key aspects involved in company rescue:
Here are some of the main options that are chosen by businesses looking for company rescue advice.
A CVA is a contract between an insolvent company and its creditors, and allows a business to pay a proportion of its debts through future profits. This option is appealing, as it allows a company to continue trading as normal, rather than being wound up or liquidated. It also offers creditors the chance to see the money that they loaned returned, rather than seeing the company wound up or liquidated. Businesses seeking to proceed through a CVA route for their company rescue must be able to display potential for future profit, however, which may be difficult.
An IVA is similar to a CVA, but often deals with individual trader who experiences debt problems.Again, the individual will be expected to pay back their debts through future profits and it allows a trader to continue without filing for bankruptcy.
Liquidation will see all assets of a business sold off, with the revenue generated used first to pay for the liquidation process, and then used to pay back any creditors as a secondary course of action. Most often, liquidation is a last resort and company rescue advice should always be sought before resorting to liquidation, as a more suitable alternative is often available.