Staying Afloat

In order to avoid bankruptcy during the recent troubles which beset the UK business world, many companies opted to utilise the services of an Insolvency Practitioner. If it appeared that business would rebound once the economy bounced back, every effort was made to rescue the company from going under.

Sometimes informal arrangements could be made, but as many of a business’ creditors were figuratively in the same boat and in jeopardy of going under as well, more formal arrangements were required. If a company had a viable business but just going through a rough patch, perhaps due to uncollected revenue, an IP probably recommended a CVA, Company Voluntary Arrangement.

One of the benefits of a CVA is that the director/s actually gets to stay in control of the company as opposed to a receiver being appointed by the courts. The director knows his or her market and is thus able to work with both the IP and creditors to keep the company afloat during economic hardships. A business model might need to be revamped to realise a profit, but the company will not be turned over to a trustee as would be the case during bankruptcy.

Since 1986, the UK government has made every effort to help rescue companies in temporary need of assistance. One of the changes instituted was the CVA. As evidenced by the sluggish economy in the UK as well as around the world, altogether too many companies were in the same state. CVAs were reported to have been the saving grace of a good number of UK companies during those recent years.

Many businesses throughout the UK remained solvent because of a Company Voluntary Arrangement. If your company is in danger of becoming insolvent, an Insolvency Practitioner should be consulted as soon as possible. All parties involved will be bound by strict regulations as stipulated by R3. Your IP will take you through it every step of the way from making arrangements to having them filed with the court.