We support you in identifying the critical issues that need addressing and explore the options available to your company.
At Crowe, we believe in a business rescue culture. Where possible we will seek to avoid a formal insolvency appointment by creating and implementing a recovery plan with the support of key stakeholders.
If stakeholders are unable or unwilling to engage with the company to pursue a consensual solution or there is insufficient time to implement a plan, it may be necessary to consider alternative options including a formal insolvency appointment.
The options available to your company are dependent on the timeframe in which we have to work, which is dictated by the cash position and the level of creditor pressure that the business is facing. Advisory assistance can include:
For more information, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
We support you in identifying whether an administration is the correct procedure to be followed for a company and if a statutory purpose of an administration can be achieved. The purpose must be aimed at rescuing the business of a company, enhancing the value of a company's assets, and/or providing a return to certain classes of creditor.
Our Insolvency Practitioners work with you to identify the critical issues that need addressing and structure a plan for your company. Following their appointment as Administrators, they will take over and manage the affairs of the company. They may have found a buyer for the business prior to their appointment, or they may continue to trade the company’s business while they seek a buyer, or pursue a restructuring plan. No matter the strategy, they will carry out our duty to achieve the best possible outcome for the company's creditors as a whole.
Appointing an Administrator stops all legal actions and places a moratorium (a protective shield) around a company. This allows breathing space to restructure a business.
Where all or part of a trading business is likely to attract a buyer that wishes to continue its operations, it may be appropriate to consider an accelerated sale process. By undertaking a short open marketing process, buyers can be identified and negotiations progressed rapidly with a view to rescuing the business and providing continuity of trade.
Distressed sales of this nature are often packaged as a ‘trade and assets’ sale, rather than a sale of shares, and are completed by an Administrator shortly after their appointment. This is referred to as a “pre-pack administration”. A pre-pack administration occurs when a company arranges the sale of its business and assets to a buyer, before appointing Administrators (who completes the sale upon, or shortly after their appointment).
Undertaking the marketing process and negotiation of offers prior to an Administrator’s appointment can help to protect jobs, increase offer values by reducing trading disruption and reduce process costs, collectively resulting in a better outcome for creditors than a post-appointment sale.
Administration is a complex area. If it is deemed to be an appropriate tool, we will put together a tailored strategy to meet a purpose of an administration and to implement a business rescue.
For more information on whether an administration is right for your business, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
We will work with you, using the CVA process, to restructure a company’s finances where it may be encountering cashflow difficulties. A CVA often results in a company's debts being repaid (in part or in full) over time, typically between three and five years. Payments to creditors under a CVA can be made from contributions from ongoing profits generated by the business. Alternatively, payments may be funded by a one-off contribution linked to new external funding. Whatever the terms, we can tailor a CVA to the specific circumstances of your company.
For a CVA to succeed, the business of a company must be profitable and able to survive. Often a CVA can quickly improve cash flow and it can stop pressure from creditors.
Trading forecasts and cash flow projections will need to show that the terms of a CVA can be met, and that a CVA is a viable alternative to liquidation or administration. A CVA proposal will then be prepared and sent to creditors for their consideration and they will be asked to vote on it. A CVA must be approved by more than 75% of unsecured creditors by value (of those voting). After the CVA is approved, it becomes legally binding on all unsecured creditors (even if they voted against it).
A company will need to make scheduled payments to the Insolvency Practitioner, who is appointed as the CVA supervisor. The CVA supervisor will ensure that the terms of the CVA are being met and will periodically pay funds to those creditors from the ongoing profits generated by the business or from the new external funding.
There is an alternative process called a restructuring plan which shares a number of characteristics with a CVA, but also gives the ability to bind secured creditors and shareholders, as well as additional powers to bind dissenting creditors. A restructuring plan is more complex, it requires court involvement and is therefore costlier than a CVA to implement, but may be appropriate to consider in some situations.
For more information on CVAs and restructuring plans, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
An MVL is often used for a company that is no longer required, it could be an owner managed business where shareholders are looking for an exit strategy or a company that is part of a larger group structure and no longer serves a specific purpose.
The MVL process provides comfort in that a statutory process of advertising for creditor claims, realising assets and distributing any surplus to the shareholders has been followed. There are often tax efficiencies to be gained by shareholders (when compared to dividends paid under income tax rules) as distributions made by a liquidator are declared as capital.
Whatever the reason for a solvent liquidation, it is essential that the wind down and dissolution are handled with care and diligence to ensure that both personal and commercial risks can be managed.
In many corporate groups there are entities that are surplus to requirements. Corporate simplification is the process of removing those entities from the corporate structure. The liquidation of surplus entities can result in a release of capital, allowing funds to be redistributed, and a reduced administrative cost. Additionally, professional costs for tax returns and audits can be reduced and tax efficiencies may also be found. We have broad industry expertise and can draw upon the resources of our restructuring and tax teams in the UK and in other jurisdictions, across Crowe’s Global network.
We identify and manage the risks inherent in winding down a business, undertaking a project management role if required to ensure a timely and efficient closure. The shareholders then appoint us as MVL liquidators and we realise the company's assets, ensure there are no unpaid liabilities and pay the surplus funds to the shareholders.
For more information on whether solvent liquidation and corporate simplification is right for you, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
Our Insolvency Practitioners will deal with the liquidation process from start to finish. Their main function when appointed as liquidators will be to identify and realise the assets of a company, liaise with and pay distributions to creditors (in a set order of priority) and then bring a company’s affairs to an orderly close. When selling a company’s assets, it is possible for the liquidators to sell assets to directors.
Directors of an insolvent company are under a duty to take all possible steps to reduce the losses to creditors, ensuring that creditors’ interests are placed above those of the company, its directors and shareholders. Our Insolvency Practitioners will explain the duties that you have to the company and to creditors.
The directors nominate a licensed insolvency practitioner to act as liquidator and typically that appointment is confirmed by creditors. It is to creditors that a liquidator has their primary duty of care.
A CVL will normally require a company to cease trading and employees will necessarily be made redundant. Employees can make a claim for qualifying statutory and contractual entitlements to the redundancy payments service (RPS).
For more information, on whether a CVL is right for you, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
The existing management of the company retain custody and control of the company’s affairs in the period of a moratorium. As Insolvency Practitioners, we are appointed as the company’s ‘monitor’ to conduct a rolling review of the company’s ability to pay its debts as they fall due during the moratorium period.
The company’s management must ensure that cashflow forecasts indicate that the company will have adequate cashflow to trade and pay the liabilities incurred while the moratorium is in place. We must be satisfied throughout that the company is viable as a going concern.
The moratorium process has a narrow scope in terms of utilisation, but could be a very effective tool to help a company navigate through cash flow pressures.
A moratorium lasts for a minimum of 20 days but the initial 20-day period can be extended. A moratorium can act as a gateway to a refinancing exercise, business restructure or CVA.
For more information on whether a moratorium is right for you, please contact one of our Insolvency Practitioners, Vince Green or Steven Edwards to arrange a free consultation.
We care about your business. Close working relationships are at the heart of our service delivery, trusting us for our specialist advice and open dialogue.
We understand your needs. Our expertise, market knowledge and access to professionals across our global network means we are well placed to offer insight and pragmatic advice to your business.
We help you to make smart decisions that have lasting value. Working with you, we will help you to successfully adapt and overcome the challenges you face.