The successful man will profit from his mistakes and try again in a different way,”
Dale Carnegie, personal and management development specialist
Business Turnaround and Recovery
At A-spire Business Partners we know that all businesses face difficult times at some point, but getting expert advice sooner rather than later can significantly improve your chances of turning your business around. And even if a turnaround is not possible, good advice and help will also significantly improve your chances of being able to control the situation.
We are an accountancy firm with a strong business management focus, and one of our areas of speciality is helping companies who find themselves in this position.
It is a well-known fact that running out of cash is the single biggest cause of business failure. In legal terms the meaning of the word “insolvency” is fairly technical, but in essence it means that a company cannot pay its debts.
The truth is that quite a lot of businesses slip into and out of being technically insolvent on a fairly regular basis – frequently delaying payments to creditors until money comes in from debtors.
When times are good, business owners can have a tendency to adopt a buoyant approach, believing that the money will come in from somewhere. And while we would never recommend such a course of action, it is also clear that the “credit crunch” has created a very different set of circumstances for businesses up and down the country.
If you find yourself in this position on a regular basis then take stock of the situation fast before you find that in legal terms you are wrongfully trading.
Wrongful trading is when you place orders with suppliers when you know that you do not have the ability to pay for them. While we have no desire to add to your woes with bad news, the truth is that if you are found to have been wrongfully trading and your company goes into liquidation, you can be ordered by the courts to make a contribution towards the deficit.
In this case, even limited liability will not protect you if it is proven that you have been wrongfully trading.
So that’s the bad news.
Turning your company around
The good news is that much can be done to turn a company around even when it is on the brink of “disaster” or to at least mitigate losses.
At A-spire Business Partners we always start by trying to find a way to turn a difficult situation around. The first steps would include:
- Examining the cause of the problems and deciding on the appropriate course of action.
- Trying to find ways of increasing sales revenue through marketing or other techniques if appropriate.
- Adopting strategies to recover debts.
- Negotiating payment terms with creditors.
- Scrutinising expenditure with a view to reducing overheads.
- Investigating possible investment capital.
If all else fails, A-spire Business Partners also work alongside licensed Insolvency Practitioners and we will be able to recommend when it is appropriate for an IP to step in.
In our experience, many business owners adopt a “head in the sand” approach to this issue. Some can feel a situation is so hopeless that there is no point paying out further money on a “costly” and “fruitless” exercise. Others think that IPs actually want businesses to fail.
This is certainly not the case and many insolvency practitioners will have an initial consultation with you for free. It has also been our experience that many IPs work very hard to save companies.
If you would like further information, then please contact us for your free initial consultation. You can phone 020 8864 9626 or send an email enquiry to .
Knowing when to let go
There are also procedures that can be utilised to stave off the ignominy of a Compulsory Liquidation:
- Company Voluntary Arrangement (CVA): The company prepares a proposal to creditors which may involve turning around a business by disposing of assets, delaying or reducing payments to creditors and refinancing. Such a proposal, carried out with our help under the supervision of a licensed IP, will then need to be approved at meetings of shareholders and creditors.
- Administration: A licensed IP, known as the administrator, is put in charge of running the company with a view to preserving the business so that it may be sold. This is designed to achieve the best outcome for the creditors. The administrator’s proposals are presented for approval at a meeting of the creditors.
- Liquidation: If the IP feels that there is no way to rescue even part of the business then it is usual to recommend that the company be put into liquidation. In this case, although the shareholders will pass a resolution to do this, a process known as Creditors’ Voluntary Liquidation (CVL) will be instigated. Creditors will usually ratify the directors’ choice of liquidator, but in this scenario they do have the power to appoint their own liquidator. The worst-case scenario is Compulsory Liquidation, where the directors and shareholders choose not to liquidate but one or more creditors petition for the company to be wound up.
At A-spire Business Partners, we work very hard to ensure that the best possible course of action is followed and will keep you informed every step of the way to ensure that you are primed with the right information and advice to allow the most optimum procedures to be followed.
Dissolution of a company
It is worth mentioning here that if you decide to cease trading – and even if you are perfectly solvent – any company needs to go through a formal winding-down process and have the company removed from the Companies House register.
Again, A-spire Business Partners can help with this process. It will then be possible to tie up all the loose ends – sell off any assets, ensure all creditors have been paid and distribute any residual funds to shareholders – following the correct procedure and submitting the necessary documents. This will ensure that you can walk away knowing that no one can come knocking on your door for money years later!
If you would like further information, then please contact us for your free initial consultation. You can phone 020 8864 9626 or send an email enquiry to