Considering Business Recovery Options

If your company is experiencing debt problems, it is important to confront the matter head on and think carefully about your business recovery options.

For some of these you may be able to negotiate directly with creditors or other third parties, for others, it may be necessary to involve a qualified insolvency practitioner or specialist business recovery company.

A good recovery adviser — you may also find these services referred to as “business rescue” — will consider all aspects of your company’s past and current situation, and will advise and guide you to a business recovery plan that may turn your problems around.

In a worst case scenario where liquidation of the company cannot be avoided, they will work with you to make the procedure as transparent and straightforward as possible.

Examples of recovery solutions

Business recovery and insolvency solutions can take a variety of forms, which might include:
 

• Debt management — a company’s debt problems may result from other firms or individuals owing them money, and a structured approach to recovering money from your debtors can be the first step to confronting and resolving your own company’s solvency issues.
   
• Debt restructuring — it may be possible to work with your creditors to restructure your company’s debt to a more manageable alternative, and in some cases this might be as straightforward as replacing a company credit card or business account overdraft with a more structured loan repayment.
   
• Company voluntary arrangement (CVA) — a formally managed arrangement with your creditors that helps you retain control of your company while agreeing a mutually acceptable schedule of debt repayments.
   
• Receivership — the appointment of an official receiver may require the realisation, or limited liquidation, of company assets to repay creditors.
   
• Liquidation — if a business’s debt problems cannot reasonably be resolved and the company is in a state of irredeemable insolvency, liquidation may be the only remaining option.

The importance of taking professional advice when looking at your business recovery options cannot be underestimated. 

Finding and using a professional adviser

An excellent first step in dealing with your company’s debt problems is to find and engage a company that provides business recovery services. A good starting point is to visit the website of the Association of British Recovery Professionals (R3) at www.r3.org.uk.

As well as providing useful and insightful advice that can help businesses start to tackle their solvency issues, the site also lets individuals or firms to easily search for details of qualified and regulated professionals by geographical area.

The number of corporate insolvencies peaked considerably during the financial recession in 2008-2009, and although this figure has shown some signs of gradual reduction, average quarterly figures still remain higher than their pre-recession levels. Many analysts feel that recent and forthcoming economic changes to crucial measures such as VAT and interest rates may present further risks of corporate insolvency.

By sourcing and engaging a professional business recovery adviser at the onset of any solvency problems, you may well help to place your business in a better position to resolve the situation before economic pressures can make matters worse.

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