Insolvency and reconstruction
Andrew Cawkwell discusses businesses in distress with Stray FM
At Newtons, our highly experienced insolvency and reconstruction solicitors advise on administrations including the sale and purchase of businesses using the pre-pack administration procedure, and work with a range of businesses across Yorkshire and the North East. The team has a national reputation for delivering practical and focussed solutions for owners and directors of businesses which are facing financial difficulties.
We can help with matters relating to:
- Administration and administrative receivership
- Receiverships and liquidations
- Company Voluntary Arrangements (CVA)
- Individual Voluntary Arrangements (IVA)
- Director disqualification
– Compulsory liquidation (CL)
– Creditors Voluntary Liquidation (CVL)
– Members Voluntary Liquidation (MVL)
- Statutory Demands
- Winding up petitions
- Business rescue and recovery including ‘business turnaround’
- Company restorations
- Trust and property issues arising out of insolvency
- Director’s duties when a business is in financial difficulties
- Debt relief/forgiveness
Administration allows for the reorganisation of a company or the realisation of its assets under the protection of a statutory moratorium thereby preventing creditors from taking action to enforce their claims against the company.
When a company enters administration, an insolvency practitioner is appointed as the company’s administrator. The administrator takes over the control of the company’s business and assets from the company’s directors, in order to achieve one of the statutory purposes of administration; which are as follows:
- Rescuing the company as a going concern;
- Achieving a better result for the company’s creditors; or
- Realising property in order to make a distribution to one or more secured or preferential creditors
An administrative receivership is commenced by a secured creditor holding security over all (or substantially all) the assets of a company which, as created, was a floating charge. The charge must pre-date 15th September 2003 in order for this route to be available to secured creditors.
An administrative receiver is authorised to take custody of the charged assets, run the company’s business and dispose of the assets to satisfy the secured debt.
Company Restoration Solicitors. If your company has been dissolved, please contact us discuss how they can help you with restoring your company to the register at Companies House.
The final event in a company’s life is it being struck off from the register at Companies House. The effect of which is that a company is dissolved and loses its legal identity and all of its assets automatically transfer to the Crown as bona vacantia.
It is generally possible to restore a company that has been struck off or dissolved to the register.
If your company has been dissolved, wound up or struck off, please contact one of our experts to discuss how they could help you by restoring it to the Register of Companies.
Company Voluntary Arrangements
A company voluntary arrangement (CVA) is a procedure that can assist a company to address its financial difficulties. It is a contract between a company and its creditors.
A CVA is commenced under the supervision of an insolvency practitioner. The insolvency practitioner is known as the nominee before the CVA proposals are approved, and as the supervisor afterwards.
A CVA binds all unsecured creditors of a company if the requisite majority of creditors vote in favour of the proposals at properly convened meetings of creditors.
The CVA procedure is intended to allow companies to avoid the adverse consequences of liquidation by coming to an informal, but binding, agreement or compromise with their unsecured creditors.
Typically, a proposal for a CVA will, fundamentally, include a rescheduling or reducing of the company’s debts.
Experts in Director Disqualification. If you have had directors disqualification proceedings issued or threatened against you, one of our experts can help advise you on the best way to proceed.
Under the Company Directors Disqualification Act 1986, a Court may make a disqualification order against a person that he shall not be a director of a company or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company for up to 15 years in the most serious of cases.
Liquidation Specialist Solicitors.
Liquidation is a procedure through which the assets of a company are realised and distributed to creditors. Following the end of liquidation, the company is dissolved.
There are three types of liquidation – which are as follows:
- Compulsory liquidation
A company can be placed into liquidation by an Order of the Court following a petitioning creditor issuing a winding up petition against the company.
- Creditors Voluntary liquidation (CVL)
This is the opportunity for shareholders and directors to decide to close the business and appoint a Liquidator.
- Members Voluntary liquidation (MVL)
Here the shareholders resolve to appoint a Liquidator and all of the liabilities of the company (including the expenses of Liquidation) are (usually) settled within 12 months.
Statutory Demands Expert Solicitors. A statutory demand is a written demand for payment of a debt, served on either an individual or a company.
A statutory demand does not need to be issued at Court.
The process has the following potential advantages for creditors:
- It does not involve the Court from the outset (and is potentially cheaper)
- Preparing and serving a statutory demand is quick and (relatively) inexpensive.
- It can either result in prompt payment of a debt, or flush out details of any dispute or cross-claim.
If you are owed at least £750 by one of your corporate debtors or £5,000 per one of your personal debtors, or you have been served with a statutory demand please contact one of our experts for a free, no obligation meeting to discuss your circumstances and the options available to you.
Winding up petition
A creditor of a company can apply to the Court to wind up a company if it can’t pay its debts as and when they fell due – such debt must be more than £750.
A winding up petition is an extremely serious action – and if not dealt with properly can have serious consequences for a company that has had one presented against it.
A winding up petition could result in a company’s bank accounts being frozen or the company being wound up.
It is an offence under the Insolvency Act where it appears to an insolvency practitioner who has been appointed in relation to an insolvent company that a person who is, or was, director of the company knew or ought to have concluded at some point before the commencement of the insolvency that there was no reasonable prospect that the company would avoid going into insolvency the insolvency practitioner of the company can seek a Court declaration that the director make a contribution to the company’s assets by way of compensation.