If your business’s relationship with the bank is breaking down,and you find that you are having challenges fulfilling your obligations,then your company could be insolvent. This is a devastating place to be considering the consequences that come with it,including loss of customers and bad publicity.
Once you conclude that your company might be insolvent,it is advisable to take immediate action to prevent more damage from occurring,such as the complete dissolution of the company. Your company can continue doing business even though it is insolvent,but this will require you to make agreements with your creditors who otherwise will pursue your company. Below is some company insolvency tips you could use in case you find yourself in this situation.
If you like this article please contact antony batty
Company Voluntary Arrangement â CVA’s.
This option is legally binding and gives a company time to repay all or part of the monies owed to their creditors,inside an agreed time period. If the company successfully repays the debt within the stated period,it can continue trading.
In such cases,the company uses a professional insolvency practitioner and makes their proposal known to the creditors. The proposal gives all the details of how the company plans on minimising their monthly expenditures while trading. Most creditors resist having this agreement because of the associated costs,which is also part of the repayment proposal. However,some prefer the CVA because the insolvency practitioner is legally obligated to act in their best interest,and thus,they are assured of getting their monies in the future.
In other cases,a company may select to have a meeting with the creditors and have an informal agreement. This option mostly works if the business is experiencing temporary financial difficulties that can be dealt with,and the creditors have not shown any signs of taking legal action against the firm. If you want to use this method,contact the creditors immediately you notice any signs of insolvency,explain the situation to them and work on a repayment plan that is reasonable and achievable. Remember this procedure is not legally binding and so the agreement could be stopped at any time. You must ensure you work towards paying the amount you owe them within the agreed time to avoid [problems