You’re all busy people managing the day to day challenge of trying to grow your business, the very last way you’re likely to want to spend time is contemplating what you would do if things go wrong. Most business people certainly don’t run their enterprise by focusing endlessly on the nature of business bankruptcy or the need for business rescue services! Nonetheless, many companies do go through periods when trading isn’t quite working out, and their business plans need some very careful revision. This guide outlines the basics of Business Rescue & Recovery: Ways Business Rescue & Recovery services can help turn struggling businesses around; which options they support with if it is necessary to wind down trading; and ways in which they then support the directors to start anew.
Business rescue organisations are a place where sole traders and companies can turn to for important advice and support at times when their trading revenues just don’t meet their overheads. They work on three principles: rescue, recovery, and renewal (and you may hear these termed R3 services).
There may be a whole variety of reasons why a business needs support. Perhaps money is owed to the suppliers, or tax arrears are beginning to escalate. Maybe a company is being left without accountancy services while the accountant’s invoices are overdue. No matter what the problems are, business rescue professionals can work with you to find a reliable solution.
Perhaps the business merely needs more time, in which case was appointing a business rescue service sometimes greatly assists recovery by signifying to creditors that the business is garnering every available resource to try to put things back on track.
Business rescue professionals also provide expert support when companies face problematic tax arrears or when a financier such as a bank wishes to withdraw support. Longer-established services even sometimes arrange access to Commercial Finance – this may be secured against Assets, Property or Invoices you expect to be paid later on.
Sometimes a company will appoint Business Rescue & Recovery services for a straightforward ‘in-house business health check,’ precisely when things are running more smoothly. But sometimes it’s also the case that the best way to more problematic days is to bring the existing trading arrangements to a quiet close and then begin again. If this is the case, you’ll find that; business rescue professionals provide invaluable services guiding you through all the necessary steps.
Sometimes companies wish to avoid business bankruptcy by entering a Company Voluntary Agreement (CVA). A CVA provides a legally-binding, time-limited repayment plan for creditors. It is carefully supervised by a licensed Insolvency Practitioner (IP), who will usually hold membership of R3, The Association of Business Recovery Professionals (ABRP). Once completed, it means any outstanding debts owed are written off. It has some key advantages when compared to business bankruptcy.
One more route is called a Creditors Voluntary Liquidation (CVL). This is used when a business is sure its interests are best served through voluntarily ceasing trade and dissolving the company. It’s also worth discussing pre-pack administration at this time – where assets are sold before the appointment of an IP for Administration purposes. It’s even been known to the actual management of some companies in this position to make the resulting purchase. The administration itself is another area business rescue services provide expert guidance on, with the ultimate goal of rescuing enterprises while still, they are ‘going concerns.’
Whatever route you follow, business rescue professionals can then help you begin new trading (renewal). This might mean support after a CVL to appoint a new team of accountants; perhaps open new bank accounts; and the legal formation of your new company.