Member of BTG Global Advisory

When Do I Need a Licensed Insolvency Practitioner?

Many people believe that Insolvency Practitioners (IPs) are only called in once a company has actually become insolvent, but this is not the case. The role of an IP includes the provision of advice to directors whose company is still solvent, but who need help to turn its fortunes around and trade profitably again.

If your business is being threatened by creditor legal action or you are experiencing temporary cash flow problems, obtaining professional advice can make a huge difference to the fate of the company.

Act quickly to prevent long-term problems

Speed is of the essence in these circumstances, and acting without delay opens up a wider range of options, potentially including:

  • Company restructure
  • The sale of assets to inject cash into the business
  • Voluntary liquidation
  • Sale of the business as a going concern.

Assuming that the company was previously trading profitably and the underlying business is fundamentally sound, consulting a licensed Insolvency Practitioner at an early stage offers the best chance of survival.

The reason for your financial problems can be something as simple as an unexpected bill. Maybe a key customer has become insolvent themselves, or a downturn in the market has adversely affected trade and you find yourself unable to pay your suppliers.

Begbies Traynor is licensed to provide advice for companies experiencing financial problems. We will identify and present all your options for recovery or restructure, keeping in mind the long-term goals for your business.

How can a licensed IP help in practical terms?

An Insolvency Practitioner can negotiate with creditors on your behalf, put forward all the options available to you, and recommend the best course of action in your company’s circumstances.

Engaging your creditors in professional negotiations instils a sense of confidence in the company’s long-term ability to pay its bills. Creditors are more likely to respect and trust in the judgement of a professional advisor, and be guided by specialist knowledge.

Intervention on your behalf might be all that is needed to set the company back on the right track, especially in the case of HMRC.

Help in negotiations with HMRC

Discussions with HMRC can be particularly problematic and stressful for directors – negotiations that, if not conducted proficiently and with an understanding of HMRC’s point of view, could signal the end of the road for your company.

HMRC are known to collect monies quickly and aggressively. They have the power to issue a Notice of Enforcement without recourse to the courts, which would result in goods being seized from your business to pay tax arrears or other overdue amounts.

Apart from having adverse long-term effects on your company’s credit rating, this action could potentially lead to its closure.

An investment in the company’s future

Consulting a licensed Insolvency Practitioner is an investment in the future of the company. Without this type of guidance directors could ultimately face issues over personal liability for company debt, closure of the business, and accusations of wrongful trading, whether or not they were acting in good faith by attempting to trade out of difficulties.

An IP will look in detail at business operations, trading figures and accounts, to identify the best way forward at an early stage. This does not necessarily mean entering a formal insolvency procedure, but if that becomes the only option, an IP will ensure that the correct route is chosen – one that maximises creditor interests, but also keeps the interests of the business in mind.

What type of advice can be offered?

An insolvency practitioner can offer advice on a wide range of issues to help improve the financial situation of your business. Here are just a few:

  • Alternative finance options if you have been refused borrowing by the bank
  • Whether giving personal guarantees for company loans is the right thing in your situation
  • The best ways to deal with company cash flow issues
  • Various routes into insolvency, and what they mean for your business.

As you can see, Insolvency Practitioners have a broad remit when it comes to giving advice. Whether it is providing simple tips on how to deal with temporary cash flow problems, or drawing up a Statement of Affairs to present to your creditors, their involvement and influence throughout the process is invaluable.

Begbies Traynor is the leading insolvency practice in the UK. We offer a free same-day consultation with one of our experts, and operate from offices around the country.

Contact our team

Processing...
Latest News
York taxi company placed into administration
York taxi company placed into administration
On 25th November 2016, Rob Sadler and Dave Broadbent of Begbies Traynor in York were appointed as joint administrators of Six Five Nine Cars Ltd. The business, which has traded in York for over 15 yea…
40 jobs saved as gaming retailer sold out of administration
40 jobs saved as gaming retailer sold out of administration
Administrators of a South West-based gaming retailer have succeeded in saving 40 jobs at the company after securing the sale of the business, including 12 out of 15 of its High Street stores. Business…
Nearly 100 jobs saved as bars and restaurants are sold out of administration
Nearly 100 jobs saved as bars and restaurants are sold out of administration
Almost 100 jobs have been saved by the successful sale out of administration of a number of Midlands bars and restaurants. Town and Country Inns plc appointed business recovery and rescue specialists …
Begbies Traynor opens new office in Taunton
Begbies Traynor opens new office in Taunton
The UK's leading independent business recovery practice, Begbies Traynor, has opened an office in Taunton.  The move will enable the firm to build on work it has already done in the town and with the…
Brexit uncertainty puts the brake on London businesses
Brexit uncertainty puts the brake on London businesses
New research reveals that British businesses from Land's End to John o' Groats have shown surprising resilience since the EU Referendum result was announced, with levels of financial distress falling…
UK businesses remain resilient in the face of Brexit
UK businesses remain resilient in the face of Brexit
UK businesses across nearly every sector of the economy were showing positive signs of stability following the EU Referendum, new research from Begbies Traynor, the UK’s leading independent insolven…

Advice You Can Trust

Insolvency Practitioners Association Institute of Chartered Accountants in England and Wales R3: Association of Business Recovery Professionals ICAEW Business Advice Service Turnaround Management Association ACCA (the Association of Chartered Certified Accountants) ICAS | The Institute of Chartered Accountants of Scotland
Menu