When Should You Contact An Insolvency Practitioner?
Is your company facing financial difficulty? Concerned about what the future holds and the next steps to take? If this sounds familiar, then you’re likely to be wondering when is the right time to contact an insolvency practitioner. Should you wait until your business needs to be liquidated or seek advice earlier on? These are all important questions that we’ll be addressing in this guide. Let’s start by clarifying what exactly an insolvency practitioner does, and how they can help your struggling business.
What Is An Insolvency Practitioner?
A licensed insolvency practitioner is a professional who is authorised to act on behalf of an insolvent partnership, company or individual. Depending on the individual requirements of the company, they may be instructed to liquidate the company or to facilitate its rescue.
When a company needs to be closed down, an insolvency practitioner may act as liquidator in a Creditors or Members Voluntary Liquidation, or as an administrator in a company administration. On the contrary, if there is a realistic chance of the business returning to solvency, an insolvency practitioner can help put business rescue strategies in place. Most commonly this involves them acting as supervisor in a Company Voluntary Arrangement (CVA).
With this in mind, it’s important to emphasise that instructing an insolvency practitioner doesn’t always mean closing your company down. Many people are apprehensive about contacting an insolvency practitioner as they fear this will mean the end for their business. This is certainly not the case in a number of circumstances. Whilst liquidations are a large part of an insolvency practitioners role, they are also able to help renegotiate debt and restructure finances in order to re-stabilise the company.
The Importance Of Acting Early
If your company is in financial distress, you should contact an insolvency practitioner at the first signs of trouble. Do not wait until your business is at the point of collapse before you start seeking help. Consulting the advice of an insolvency practitioner early on will provide your company with more options, including the potential to rescue the company through strategies such as a CVA. Leaving it until the very last minute could mean that you are left with no option but to close the company down.
If it is the case that liquidation is the best option, timing is everything. Your insolvency practitioner will be able to advise you on the best time and method for liquidating, ensuring that the process provides the best outcome possible for creditors and directors.
It’s particularly crucial to address insolvency head on. It is the duty of directors to prioritise the interests of creditors if their business becomes insolvent. Continuing to trade whilst insolvent could have serious legal implications for directors, and could result in the company being forcibly closed down.
If you are concerned that your business is in distress, please don’t hesitate to get in touch with our experienced team of licensed insolvency practitioners at My Liquidation. Looking at your company’s individual situation, we can talk you through the best options for moving forward.
