What are the options available to a company when faced with insolvency?
The most common routes available when facing financial problems and the restructuring of the business are Administration, Company Voluntary Arrangement (CVA) or Liquidation (CVL). The choice can be difficult and giving advice is also difficult without being given all the facts at the time. In an attempt to make the choice easier here is a brief appraisal of each option.
When a company is insolvent and facing pressure from it’s creditors, disputes and/or financial, it may enter the administration process.
During this process, the director(s) lose control of the business and the Administrator takes over control and becomes responsible for the day to day running of the business.
Administration buys a company time to address it’s problems and seek a way forward to it’s financial turnaround.
The Administrator must have a purpose and under current rules the process can last no longer than 12 months without approval of it’s creditors or court.