4R Business Recovery
We can work with you to identify an appropriate solution. We can then help you move from Rescue to Restructure and Recovery and finally Reward.
If your business cannot be rescued, we can provide the appropriate insolvency procedure.
Firstly we will provide simple and concise online advice via our video tutorials. This will give you easy access to information, and pdf downloads, [see news, press and downloads].
Creditors' voluntary liquidation (CVL) was used to wind up a business. It is now being used for recovery process.
Creditors' voluntary liquidation allows the owners to rescue the value of a company. They would then transfer that value into a new, debt-free, phoenix company.
A creditors' voluntary liquidation was used as the insolvency tool of choice to wind up and shut down a company. The assets were then sold to pay off any debts. This is the most common form of liquidation in the UK. If you want to close your insolvent business and walk away from all of the company debts, then creditors' voluntary liquidation is probably the best choice for you.
If your business is viable and can be restructured, a creditors voluntary liquidation and phoenix is used to secure a better outcome for owners and creditors.
This works by forming a new phoenix company which then purchases the assets and good will from the old company.
In summary a phoenix company is a new company that is formed from any value in the failed one.
A Company Voluntary Arrangement (or CVA) is a legal agreement between a company and their creditors. This is based on the company repaying a fixed amount, lower than the actual outstanding debt. The repayments are calculated monthly, based on what the business can reasonably afford.
Remaining debts will be written off at the end of the arrangement.
Customers do not need to know you are in a CVA.
Advantages of CVA are:-
- It is a legally binding agreement on all the company's unsecured creditors, including HMR&C and future and contingent creditors
- Up to 80% of the company's debts can be written off
- The payments to creditors (from as little as 20%) are paid by installments over a period of up to 5 years
- The business continues to trade under the control of its directors
- Minimum disruption occurs (it is probable that your customers will be unaware of the CVA)
- A CVA enables onerous contracts, leases, obligations etc. (including employee contracts) to be terminated at no cash cost to the company
- No investigation into the company's affairs and the conduct of the directors; no transaction can be overturned
- Any accrued tax losses are not lost, and can be used to off-set future tax liabilities on any future profits
Winding-up petitions and statutory demands - the options available
If issued with a statutory demand or winding-up petition, you would need to get expert legal advice right away. 4R Business Recovery will help you avoid personal liability for all the debts of the limited company.
Once the statutory demand has been issued, you will have a few choices to avoid a winding-up petition:
- Get the debt below £750.00
- Arrive at a settlement or negotiate a payment plan with your creditor
- Seek the protection of a company voluntary arrangement (CVA)
- Seek the protection of administration or a pre-pack
- Take control of the liquidation of the company and seek a creditors' voluntary liquidation
- If you dispute the debt, or think the statutory demand is wrong, apply for a set aside
A set aside, is a counter-claim that is able to be put into effect if the debt is in dispute. You will have 18 days from the date of receipt of the statutory demand to apply for a set aside.
Set asides must be carried out with specialist legal advice to ensure a successful outcome. It can sometimes be worth contacting the other side to demand they withdraw the statutory demand. They often refuse until contacted by your legal team or an insolvency practitioner.
HMRC debts - finding solutions
When a business has cash flow problems, directors divert cash from the money owed to Her Majesty's Revenue and Customs (HMRC) into essential stock or overheads.
HMRC take a dim view of this practice but it is understandable. Many businesses are struggling to survive and make the daily debts a priority over HMRC debts.
In addition, while annual accounts may show a taxable paper profit, creating corporation tax liability, by the time HMRC debt is due the business may not have the cash flow to make the payment to HMRC.
The HMRC debt may be allowed to operate for 12 or 18 months without recovery action.
There seems to be no hard or fast rule about when HMRC will begin to chase their debts. Sometimes bailiffs start calling when a single month is missed. Other businesses trade without paying HMRC for over 24 months.
However, Her Majesty's Revenue and Customs will start chasing for payment on HMRC debts.
Most turnaround companies and consultants will only be interested in the insolvency process, and once achieved they move on the next project. Be it a CVA, administration or administrative receivership.
Once they have the fee for the insolvency they move on.
4R Business Recovery uses a completely different business model. We work with clients beyond the rescue and restructure of that business can recover. The business owners can take the full rewards for their enterprise.