How can I save my failing company?

Julie Palmer

Regional Managing Partner & Licensed Insolvency Practitioner

Updated

8 July 2026

If your limited company is struggling with unmanageable debts, cash flow problems or costs that are spiralling out of control, you need to identify and tackle the problem head-on. Burying your head in the sand and hoping the situation will resolve itself will typically lead to more stress, increasing pressure from your creditors and a narrowing of your options. 

Some failing businesses cannot be saved, but by acting early and getting advice from a team of company turnaround and business recovery experts, you’ll have the best possible chance of turning the situation around.  Helping directors assess whether their business can be saved is one of the most common conversations we have.

“The directors who contact us about saving their business are usually at one of two stages: either they’ve just recognised there’s a problem and want to act fast, or they’ve been struggling for months and have run out of ideas. In both cases, the starting point for us is the same, which is to take a clear, objective look at whether the underlying business is viable. That assessment determines everything that follows.”
— Julie Palmer, Partner, BTG Begbies Traynor

Understanding why the business is failing

The key to turning around a struggling company is to determine the underlying reasons for the problems it’s experiencing. You can then use one or a combination of the business rescue solutions available, including formal insolvency procedures where appropriate, to help you get back on track. In our experience, the choice almost always comes down to whether the underlying trading is profitable, not necessarily the size of the debt involved.

Pinning down the reasons for the business’s problems can be challenging for the directors because they are often too close to the company to take an objective view. That’s why external help can be invaluable.

Some common issues include:

• Poor cash flow management
• Insufficient credit control practices and extended debtor collection periods
• Unexpected costs
• Rapid growth and having insufficient capital to sustain it
• Ineffective marketing
• A failure to adapt to market changes

While many of these issues can result from poor or inexperienced management, some companies are just the victims of bad luck. Sudden changes to the business environment - the pandemic and cost-of-living crisis being two recent examples - can quickly derail otherwise viable and profitable companies. 

My business is failing - what can I do?

There’s a big difference between a struggling company and a business that cannot be saved. Depending on the scale of your challenges, there are multiple solutions you can explore, from informal debt arrangements to formal insolvency procedures.

Informal debt arrangements

If you are struggling to pay your creditors, such as finance providers, suppliers and HMRC, you should contact them directly to explain your position and negotiate a repayment agreement. Even a powerful creditor like HMRC makes Time to Pay arrangements with businesses to enable them to pay their tax arrears over a typical period of around six months.

If you have a positive relationship with your creditors, you might be surprised by how receptive they are. After all, waiting for their money is usually far preferable to the outcome if you entered liquidation. 

Spreading your debt repayments in this way can help reduce your outgoings, alleviate pressure from creditors and boost your cash flow position. As long as your creditors are cooperative, you can enter into an informal debt arrangement without external help. 

“You’d be surprised how often a direct conversation with a creditor resolves the situation. Most creditors would rather negotiate a payment plan than lose a customer or push you into formal insolvency proceedings. The directors who struggle are those who avoid having the conversation until a statutory demand or winding up petition forces it.”
- Julie Palmer, Partner, BTG Begbies Traynor

Alternative sources of finance 

When discussing business funding, people tend to think of business loans, credit cards and overdrafts. However, these days there are many more options available that could provide a quick cash injection in a way that suits your business’s needs. 

For example, invoice finance allows companies to release the value of unpaid invoices as soon as they are issued, rather than waiting 30, 60 or 90 days for the customer to pay it. Asset-based finance and merchant cash advances are two other alternative funding methods worth exploring. 

Streamlining

As companies grow, they often diversify their product and service offerings to grow their revenue. However, that can also increase costs, open them up to new competition and create inefficiencies. When a company is struggling, reverting to its core operation, which is tried and tested and profitable, can get it out of trouble. 

Reverting to your core operation may also free up assets the company can sell to balance the books and reduce labour costs. Reducing the workforce might seem like a drastic step, but making a small proportion of your team redundant is preferable to the company closing and everyone losing their jobs. 

Company Voluntary Arrangement (CVA)

If you are committed to turning your business around but have multiple debts you’re struggling to pay, a Company Voluntary Arrangement could be an option. A CVA is a formal insolvency procedure, so you’ll need a licensed insolvency practitioner to supervise it and help you put it in place. 

With the help of your insolvency practitioner, you’ll draw up an affordable repayment proposal to send to your creditors. It will outline what you’ll pay per month over how long and the proportion of their debt that will be repaid. 

If 75% (by value) of your creditors agree to your proposal, you’ll make a single monthly payment towards your debts over a typical period of three to five years. Unlike an informal debt arrangement, a CVA is legally binding on all parties and prevents your existing creditors from taking legal action against you. 

Administration

Another option is to enter administration. It places a legal ringfence around the company, called a moratorium, which provides protection while an administrator puts a strategy in place to try and avoid liquidation. 

The administration is managed by an insolvency practitioner, who will take control of the company and explore how they can save it. They will attempt to restructure the business so it can continue to trade or look for new owners. They aim to protect jobs and create a more positive outcome for the creditors than liquidation.   

What we typically see

A director of a hospitality business contacted us after three consecutive months of declining revenue and growing creditor pressure from HMRC and their landlord. The company had 15 employees and the director was using personal credit cards to cover shortfalls. Total debts were approximately £95,000.

After assessing the company’s finances, we identified that the underlying business was viable, having a loyal customer base and strong weekday trade, but was overburdened by an expensive lease and £40,000 in accumulated VAT arrears. The revenue decline was seasonal, not structural.  We proposed a CVA that included the HMRC debt, renegotiated the lease terms with the landlord, and put a three-year repayment plan in place. The CVA was approved with creditor support. All 15 jobs were retained and the business continued to trade uninterrupted.  The director told us afterwards that they had been weeks away from giving up entirely when they made the call.

Should I use my own money to save my falling company?

As a company director, it can be tempting to put your own money into the business to boost its cash flow during difficult times, particularly if you believe its fortunes are about to change. However, it’s not often a wise approach to take. If the company were to fail and enter into formal insolvency proceedings, such as Creditors' Voluntary Liquidation (CVL), you’d become an unsecured creditor of the business and would be unlikely to get any of the money you invested back.  

Instead of using personal funds, consider the other steps you could take to raise money quickly. For example, could you sell a company asset at auction or offer customers an early payment discount to boost your cash flow?

“One of the most common things we hear from directors is ‘I’ve already put £30,000 of my own money in.’ By that point, the business has usually been insolvent for months and the director’s personal savings are now gone too. If you’re thinking about putting personal money into the business to prop it up, that’s the moment to call us, not after.”
- Julie Palmer, Partner, BTG Begbies Traynor

How to tell if your business can be saved

Not every struggling business can be rescued, and understanding this early is important, both for protecting creditors and for protecting your own position as director. When a director contacts us, the first thing we assess is whether the underlying business is viable. In general terms, this means answering two questions:

1. Is the business generating enough revenue to cover its operating costs? If the answer is yes, meaning the business is profitable on a day-to-day basis but is being dragged down by legacy debt, a one-off loss, or a specific creditor pressure point, then rescue is usually realistic. The debt is the problem, not the business itself, and a CVA, administration, or restructured repayment plan can address that.
2. Can the business meet its obligations going forward? If the answer is no, meaning the business is losing money on its core trading, not just carrying unaffordable debt, then rescue is unlikely to work. A CVA that restructures your debts won’t help if the business continues to lose money each month. In that scenario, an orderly closure through a CVL is usually the most responsible option.

“The viability assessment is the most important conversation we have. Getting it right means the director pursues a route that has a genuine chance of success. Getting it wrong means spending time and money on a rescue that was never going to work, while in the meantime, the position for creditors and employees gets worse.”
- Julie Palmer, Partner, BTG Begbies Traynor

When rescue isn't the answer

Sometimes the most responsible course of action is to accept that the business cannot be saved and to close the company in an orderly way. This can be an extremely difficult decision to make, however, it is often the best course of action for all parties when a company's financial problems take it beyond the point of rescue.

In these circumstances, a Creditors’ Voluntary Liquidation (CVL) provides an orderly way to close the company, deal with its debts, and protect your position. Entering a CVL early, before creditors force the issue, gives you more control over the process and demonstrates that you acted responsibly.

Get help for your failing business

If you’re worried your business is failing, seeking professional advice at your earliest opportunity will give you the best chance of making a recovery. At BTG Begbies Traynor, we will assess your situation, explore your options and guide you throughout the process. Get in touch for a free, same-day consultation or arrange a meeting at one of our 100+ offices throughout the UK.