The most efficiently run businesses can get into financial difficulty during the good times. It stands to reason that in times of global economic downturn the pressures on businesses increase tremendously. There is no need for any company director to feel shame if their business is failing in today’s challenging economic climate.
However, as in most times of crises, time is of the essence and the viability of a company is best addressed at an early stage. The longer a company is left to fail, the more difficult it will be to put in place an effective business debt recovery plan.
Ignoring telephone calls and demands in the post from customers and creditors is an easy option, but delaying coming to terms with the company’s viability increases financial pressure on the business.
If an attempt at securing additional funding from financiers draws a blank, then the next step is business debt analysis conducted by a reputable firm offering business debt services.
One method of helping a failing company deal with its business debt is the creditor voluntary arrangement. In this procedure, the company asks for additional time to settle its debts often coupled with a request for creditors to write off some of its debts. This arrangement cannot be forced on the creditors, but is subject to approval of at least 75% by value of creditors at a meeting convened to discuss the arrangement.
Creditors may decide that it is better to accept the voluntary arrangement on offer as they may receive less if the company was forced into liquidation. Trade creditors may also take the view that they have more to gain from future dealings with the company which would not exist if the company stopped trading.
At Cooper Matthews we have the necessary expertise to assist in turning around failing companies.