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Insolvency process

Assets

What Are Fixed and Floating Charges

in Guides Insolvency process

Fixed and Floating charges are different types of security over assets. A fixed charge is security over a non-changing asset like property whereas a floating charge is on assets that can change in character and value such as a debtor book or stock. This is a complex area and you should seek legal advice.

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What Are Fixed and Floating Charges

A guide to debt finance and refinancing

Are you running out of cash waiting for the business to make a profit or can't collect money in fast enough? Almost all businesses need to go through periodic refinancing exercises, whether replacing bank facilities, renewing overdrafts, obtaining bank term loans, EFG loan guarantees scheme loans, factoring/ invoice discounting or capital expenditure requirements. This is normal business practice.This is especially important following the Coronavirus Pandemic when companies have had unprecedented changes in their business environment.  There are government supported loans in the form of the Recovery Loan SchemeRaising working capital is an important plank in any growth plan. Since the 2008 banking crisis and new rules being imposed raising finance has become more difficult and more hassle.Where a company has encountered a significant downturn event or is under pressure, then the directors must consider whether raising further finance against assets is the solution to their problems. As the current market for business changes and evolves almost daily, we cannot provide an exhaustive list of the financial products available but we give a simple guide to the options available to you below.We assume that the business is not a prime candidate for lending and that it needs working capital. Refinancing Remember, this section is not designed for ordinary business financing solutions, rather it is for companies under pressure, who need to find adequate working capital.Consider the products, weigh them up against the circumstances you find yourself in and decide. If you want help to decide and find the most appropriate suppliers of finance, please contact us. We know and have access to dozens of providers of these products and can point out the pros and cons of each.Bank Overdraft Enterprise Finance Guarantee Loans Factoring and Invoice Discounting Asset Refinance Credit Card Merchant Advance Stock Finance Venture Capital Business Angel Investment Directors Loans (Simply what it says!) Crowdfunding Peer-To-Peer Finance (P2P) Company Voluntary ArrangementAfter all that are you confused? Want help to decide what is appropriate? Contact us - call us FREE on 08009700539 or fill out the contact us form. Bank Overdraft It may be possible to obtain temporary increases in facilities from the bank although due to regulations (BASEL III) banks are keener to convert overdrafts into loans. If the problem can be demonstrated to be short lived the bank will often want to try and help. If the problem looks more deep-seated the bank may want more investment from third parties (you). Prepare good information, your team's arguments and talk to the bank - early enough. Don't wait until you cannot pay PAYE and VAT as this is a sign that the company is probably insolvent. Rarely will banks allow extension of facilities for this purpose.If, however, your business looks like turning the corner you could offer to provide additional personal security such as personal guarantees (PG) secured against your home. If you are not prepared to back your hunch with a PG, then ask yourself why should the bank provide money at increased risk to the bank?Advantages Decision making process is usually short - if you have good information to give the bank. The existing relationship is very valuable - banks don't like losing customers. It may ask for more detailed work to be done on the figures, (despite the cost) this can a be valuable exercise. It may help pave the way to other financial products from the bank in future.Disadvantages If the bank cannot see how its money can be repaid (serviceability) or cannot see how it can get the money back in the event of liquidation (security) they will not lend. Ill-prepared requests for funds will be looked upon less favourably. The bank may want a third view and ask for investigating accountants to examine the business. It may be more costly than existing finance.The bank will probably want more security from the company and the directors - personal guarantees may be demanded or increased if already in place. Enterprise Finance Guarantee Scheme A government backed loan scheme to assist SMEs (small to medium enterprises) with working capital requirements. Typically the DeBIS (Government Business Department) underwrite up to 75% of the loan. Banks vary in their approach to the scheme but the DeBIS is actively encouraging its use.Advantages It can be good value but is never quick to raise this type of loan. The investment criteria are perhaps less stringent than non-guaranteed facilities. Capital and or interest holidays can usually be agreed. For distressed companies this can be a lifeline while they return to profitability.If you need to raise this type of loan remember it cannot be used to service arrears of VAT and PAYE. Being behind with tax payments  is likely to lead to a  rejection of any proposal for an EFG loan.Disadvantages Not all applications are approved of course. If the company is clearly distressed the bank and or the DeBIS may reject applications. Can you raise enough to provide a solution and adequate working capital whilst you return to profit? Can you service the loan? Merely creating more debt is not a solution where radical surgery may be needed. Also remember that almost always the loan is backed up by a personal guarantee.  If the bank can't get all the money out of you then they can then revert to the government to make up the shortfall.  Think of a CVA and restructure the company's fixed and viable costs AND improve working capital. Factoring & Invoice Discounting You essentially sell the debtor book (customers that owe your company money) to a factoring company who then provide the company with working capital advances (effectively a loan) against that asset. They will provide from 50-95% advance against the debtor book and charge around 0.33% to 2% depending on the number of invoices, the quality of the debtor book and how much work is required.Usually all your future invoices pass through the system and this sharply improves cashflow. Not any more seen as "lending of last resort" factoring is a very powerful tool and there are some excellent factoring companies providing multiple working capital products to tens of thousands of UK businesses nowadays.Some companies can now even offer finance based on one invoice! Call Keith Steven if that product would be helpful to you. This can be used, for example, if you are selling some products to one new customer. The provider just looks at the history of the debtor. Talk to KSA if you need a new factor, specific spot factoring or just some guidance.Factoring means that the customers know you are borrowing money against their invoices from you. Confidential invoice discounting (CID) usually means this lending is discrete and the customer doesn't know.Advantages If your debtor control is poor this can help. It is an extremely flexible form of finance - the facility can rise and fall as your needs dictate. If the company is under pressure and your sales are growing it is a vital tool. Finding the right factor can lead to much more efficient use of your assets and the ability to plan production or activity - thereby creating improved efficiency.If your business is growing this can grow with you, if sales are shrinking it can be a flexible facility but see below.Disadvantages Concentration in one or two customers can cause difficulties. It is perceived as expensive - but it is providing the commodity you need - money. Most banks have a factoring division - they may not be suitable for your business - shop around. BUT in the current climate big bank factoring facilities are less flexible than the small more nimble factoring companies. Any bank overdraft is normally repaid from the advance from the factor (the bank's main security is sold to the factor). If you have very low margins or your debtors pay very slowly (more than 80 days) it is not generally suitable.Talk to Keith Steven on 07833 240747 if you need to find new flexible factoring or CID facilities Asset Refinance or Asset Based Lending (ABL) Most companies depreciate their assets faster than the value of those assets fall. Therefore, there are often "unencumbered" assets to lend against. The assets of the business form collateral for the lender to secure themselves against.Assets can include, property, machinery, stock (see stock finance). Used in conjunction with, say, factoring, this method can provide a package of new finance to overcome distress.Advantages It is usually a very quick method, access can be through commercial finance brokers or other contacts. Contact us by email for help if required. Where a short term crisis (say a large bad debt) has occurred this method can help the company round the problem very quickly by efficiently using its assets to raise cash. Better quality assets such as land and buildings can attract good rates of interest. In 2020-21 there are many new players offering refinance and asset based lending at good rates.Disadvantages Raising finance this way is not cheap. Where the company has unencumbered assets it is tempting to raise cash against them but remember NB: If the crisis is longer term can your company service the debt repayments?Call us for a CVA now! Costs vary but rates of interest on refinancing assets (i.e. where previous debts are repaid and fresh advances made) can be as high as 30%. The value of assets is established by the lender - it is never as much as you expect. Stock Finance (very limited availability) A form of asset finance. Where the business carries stocks that are easily value-able and resold (such as retail or wholesale or where manufacturers hold stock for clients) then stock finance can be raised. The value of stock is usually much less than that on the balance sheet and lenders lend according to their own valuations.Advantages As part of a package of measures stock finance can be useful. It can often be flexible and longer term advances can help cope with trade cycle ups and downs. It can be relatively quick to organise.Disadvantages It can be costly and the stock will never be worth as much as you think. The security may be difficult to assign. If the bank has a debenture in place any finance raised may be taken by them to mitigate the exposure anyway. Business Angel Investment The classic UK equity gap problem is getting worse. Too small for venture capital and too big a risk for the bank - where to turn? Angels can provide a mixture of loans and equity to distressed or struggling businesses. Most come from a business background and have lots of experience. They usually take a longer term view and can greatly assist the directors grow the company.Advantages With bags of experience an angel can be just what the growing or struggling company needs. Chose carefully and the relationship can be very fruitful. The funds can be flexible and inexpensive. Further rounds of funding can be available. The fact that an investor is putting money in can also help persuade the bank to increase funds available.Disadvantages Chemistry can be difficult - they are going to be involved long term therefore will take time choosing their investments. Equity: they will want to hold shares in the company and the depth of the distress or pressure will determine how big a slice they require. Paucity: there are thousands of angels but finding an appropriate angel, convincing them to get involved and getting finance can take many months. Control: many angels will want control at board level. BUT isn't it better to own say 75% of a company with value than 100% of nothing?Speak to Keith Steven on 07833 240747 if you think this is a product that you need.Angel investors often want to see debts restructured either through a CVA or a pre pack. Be warned they never want to risk their money to plug a gap for tax payments for your company, if the company fails they may pick the assets up is a common view.So ask yourself should the company be restructured with a  CVA and hive out BEFORE any new funding comes in? (click links to read more on these powerful tools). Venture Capital Most small businesses in trouble are NOT suitable for Venture Capital. VCs invest in around 1 in 1,000 applications for finance and unless there is a huge growth potential and an almost unique nature to the business it will not get venture capital. If however the company is unusual in the above regard, then contact us by email keiths@ksagroup.co.uk with a synopsis and we will look at the options with you.Advantages Most directors are aware that equity is "cheaper" than debt. Having a quality non executive director to help guide the board (a pre-requisite of most VCs) is also a big plus. The company's reputation and PR are enhanced. Where growth is achieved and prospects remain good, the ability to raise further finance is enhanced.Disadvantages Classically, shareholder directors see the dilution of their equity as a no-go area. Would you rather have 40% of a company worth £10m or 100% of a company worth £1m? VCs only part with money after thorough due diligence, it is hard work and costly. In the end you may not get the money. Only the best management teams with the best ideas win through. It is very time consuming - in a distress situation do you have 3-9 months to wait?No! Use a CVA or pre-pack to restructure the costs, overheads and debts. Then a business angel or VC investor may be interested. Call Keith Steven 07974 086779 for more details. Directors' Loans It may be possible for the directors or senior people to raise funds privately. This can then be loaned to the firm. Tax efficient repayment may mitigate the PAYE due on directors pay. But if the company is insolvent, repaying your loans in advance of the creditors may contravene the law.In the event of a liquidation, the monies may have to be repaid to the company! This is a possible minefield.Security may be taken for the directors loans - but this is a complex area and needs proper advice.Beware you could create a potential preference (s239 Insolvency Act 1986) if you put money into an insolvent company and then pay yourself back!! Call Keith Steven for smart, expert advice 08009700539 or 07974 086779.Advantages It is cheap, you remain in control of the financial process. It is usually a quick method to raise finance. But be warned, taking out second mortgages will require showing the lender the company's accounts. You can repay the loan as convenient to cashflow. It can carry zero interest (you can however charge interest). Personal loans are now more freely available.In 2019 mortgage providers lent less than 30% of the amounts in 2007. A distressed set of accounts will make borrowing harder. You can of course use credit cards and personal loans (unsecured) but the lending criteria for these product have also hardened. Remember if you lend the money to the company and then take it back out BEFORE liquidation, this is a breach of s.239 Insolvency Act 1986.Disadvantages If you had lots of money it would probably already be invested in the business? Can you afford the repayments personally? If the company fails you still have to repay the loans. The bank may take some of their existing advance back after the funds are introduced. Finally, is the money you can raise really ENOUGH money to solve the company's problems? New Finance products Crowdfunding There are several web based crowd funding sites. Essentially you pitch to the investors and if they like your model they will provide equity or debt to the business. You will need a GREAT pitch, good accounting information, forecasts and a business plan.   Read more about crowdfunding here.  This particular type of funding has seen explosive growth in the last year with hundreds of companies now offering shares. Peer to peer finance Investors or companies can lend finance directly to businesses in exchange for interest. Those in need of finance can create a pitch which is then passed from the peer-to-peer platform (e.g. Funding Circle) to investors.Call Keith Steven now for a guide to this innovative route to financing your business. Recovery Loan Scheme See this page Short term loan providers Advantages. Quick and easyDisadvantages - only up to £50,000, set criteria and a personal guarantee will be needed. Credit card finance merchant loans This is like factoring above. Effectively you obtain a loan against the future credit card receipts in the business. So if you had sales of £100,000 on credit or debit cards last year; you can borrow £10,000-£12,000 against this. Great for a short term tax problem say, and relatively easy to obtain with no security; but a Personal Guarantee (PG) will be required.If you have a funding requirement have you thought about postponing ALL unsecured debts, collecting in debtors and work in progress and cutting costs? This huge increase in working capital is the impact a company voluntary arrangement can make.If you're concerned about your business, request our free 40-page expert guide for directors, answering everything from personal guarantees to rescue options.

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A guide to debt finance and refinancing

Business Insolvency

Definition of Insolvency. A business is defined as insolvent if it can’t pay its debts when they fall due. There are two main types of business insolvency:Cash flow insolvency – the business cannot pay bills when they fall due. If trade creditors sell to the company on say 30 days terms and the company regularly pays on 90+ days, then this could mean the company is insolvent. Balance sheet insolvency – This is when a company’s total liabilities outweigh its total assets.  But it may still be able to pay its liabilities when they are due.  So a company may have a big tax bill coming up, which is not due yet, but if it was then it couldn’t pay it.  A company might also be deemed balance sheet insolvent if contingent liabilities exceed its assets.  A contingent liability is one that has not as yet crystallised or been determined exactly.If your business fits into either scenario, you must act fast to ensure you minimise risk for your creditors.  There is also a legal action test of insolvency which is really a follow on from the cashflow test of insolvency. When might your business face insolvency? All company directors should be aware of the risks of business insolvency, and its possible consequences.It can affect the future of your business and personal life, so it’s worth investigating the options open to you even if your company is not in financial distress.Here, we’ll explore exactly what business insolvency is and explain as much as we can about the proceedings that follow it. That way, you can be prepared for insolvency proceedings, just in case. Warning Signs Of Insolvency There are also several warning signs to look for, including:Creditors increasing pressure to pay, often with threats of legal action Company overdraft at its limit, suggesting the company is not viable Applications for borrowing refused Directors taking a pay freeze Late payments to HMRCAs a director, it’s important that you are aware of all these signs. They may help you prevent business insolvency, or mitigate the consequences for you personally and for your company.  Read our page on the implications for directors. What Are My Options If I Face Insolvency? Being insolvent puts your company in danger of closing down. However, there are several options you can take once your company becomes insolvent, including some that allow the company to continue trading.Remember, as soon as you realise your business is insolvent, you must do all you can to maximise the creditors' interests. If you don’t, you might be made personally liable for your company's debts.Business insolvency can be a complex and confusing process, so it’s best to seek expert advice straight away. There are plenty of people and organisations you can turn to, including:Citizens Advice Bureau Solicitors Qualified accountant Licensed insolvency practitioner Reputable financial adviser Debt-advice centreHowever, it should be borne in mind that only a licensed insolvency practitioner can take the necessary steps to protect the business or its creditors.  They are an officer of the court and they are the only people that can allow debt write off in a business to be formally binding.  Many insolvency practitioners will outline your options for no charge.  Call us on 0800 9700539 if you want to talk to us direct.Your options are; Create an informal arrangement with creditors It is vital that you contact your creditors as soon as you become aware of your company’s financial distress.If your company is experiencing temporary financial difficulties, try contacting your creditors to arrange a payment plan. However, this usually only works if there is no immediate threat of formal action by creditors.These arrangements are not legally-binding. A creditor can withdraw from the agreement at any point, but this is a good temporary solution that allows you to continue trading.Before you make alternative arrangements, make sure you’re aware of any costs for changing your repayment terms, including how it will affect your interest payments. Enter into a company voluntary arrangement (CVA) Similar to the previous option, a CVA is an arrangement made with creditors to deliver money owed over a new time period.This is a binding arrangement for all, or part of, the company’s unsecured debts and allows you to continue trading during and after the arrangement. Go into administration Administration is a bold move for companies experiencing business insolvency. However, it has many benefits; it offers respite from all creditor actions and enables the company to continue, or be sold.The process is quite simple. You hand over your company to an insolvency practitioner (the administrator), and while they’re in charge your creditors cannot take legal action to recover their debts without the court’s permission.  Although any charge holder has to be notified and may appoint their own administrator if they wish.The administrator will draw up proposals to try any of the following.Restore company viability Restructure the business Sell the business as a going concern, or realise more from the assets than in a liquidation Realise assets to pay preferential or secured creditorsThe administrator will also decide if you can continue trading during proceedings. Use administrative receivership Known more commonly as ‘receivership’, the holder of a 'floating charge' - usually a bank - initiates this option.They appoint a receiver (a private insolvency practitioner) to recover the money owed. The court is not usually part of these proceedings. The receiver will recover enough money to pay:Their costs Preferential creditors The floating charge holder’s debtThis option does nothing for unsecured creditors and it cannot be used if the floating charge occurred after September 2003. As such, there are hardly any of these nowadays. Liquidate or ‘wind up’ your company Liquidation or ‘winding up’ a company, essentially means closing it down. The assets are sold, and funds are given to creditors. Often, this will not cover the money owed to all creditors.Both solvent and insolvent businesses can do this. If your company is solvent, the term given to this is a member’s voluntary liquidation, if it is insolvent it’s known as a creditors voluntary liquidation (CVL) or a compulsory liquidation.All liquidations are followed by investigations into the company director's conduct. If the investigation finds anything inappropriate, there can be severe consequences. What can happen to me as a director? It's not just the company that has to face consequences of business insolvency, as a director you might too.If your actions have been unfit or unreasonable, or you have traded wrongfully or fraudulently, you may face these consequences:A fine Director disqualification for up to 15 years Being held personally liable for money owed, from the time you should have acted A prison sentenceIt is extremely important, for both your professional and personal life, that you act quickly if you think your business is insolvent. Seek professional advice and find out about your options, so you can create a plan for dealing with business insolvency.If you are concerned about business insolvency, speak to our experts today. They’ll be able to give you high-quality, actionable advice tailored to your situation.

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Business Insolvency

Insolvency Advice For Small Businesses

We have over 20 years of turnaround and insolvency experience.  We are licensed Insolvency Practitioners, so we guarantee to help you find the best solution for your business. We offer tailored services, as we know each company has its own specific problems. Give us a call to find out how we can help you – we offer friendly and honest advice, free of charge in the first instance. When to Seek Insolvency Advice For Your Business Luckily there is now plenty of free advice available online on websites like ours.  However, first of all you need to recognise that your small business may be insolvent. Warning Signs of Small Business Insolvency Creditor Pressure If your creditors are chasing you for money and it is starting to distract you from the everyday running of the business then that is a sure sign that your company may be insolvent. Delaying the odd payment to ease cashflow is fine but if it is happening all the time then that is a problem.  If a creditor resorts to legal actions then your business is insolvent on the "legal action test" Not Paying Yourself Many directors do this to say they are investing in the business.  This is fine up to a point.  If you haven't taken a wage in months or years then you have to ask yourself if the business is viable. A company's primary purpose is to deliver an income for the shareholders!  No point throwing good money away.  You will have learnt a great deal from running a company, so the experience is worthwhile but don't let it hold you back from your true potential that might be around the corner as an employee or starting a NEW business. Borrowing Money For Cashflow Purposes Borrowing should really be for investment in products/people or services.  If you are finding yourself borrowing to plug gaps in cashflow then the company is likely to be insolvent.  Unfortunately loans used for these purposes are usually very expensive and eventually put added pressure on cashflow.If you find you or your business is struggling then you should seek advice.Some 23 years ago we recognised that there is very little support available, when things start to go against you in business. There are few resources about business rescue - hence in 2000 we developed this online service for distressed business people. It has grown by over 2,000 pages of free content since then. We still provide this service free of charge.Most accountants, bank managers, Business Link advisors, lawyers and management consultants have insufficient working knowledge of the UK turnaround sector, or insolvency techniques, to be able to guide distressed companies properly and give correct practical advice.Even today, most insolvency practitioners (IPs) remain tied to closure techniques like liquidation or those methods where fees are greatest like administration. Whilst many IP's are moving into the rescue and restructure field they do not communicate with distressed companies easily and can seem arrogant and distant.Call us or email us, fill out the form on this page or the contact us page, whichever way you contact us we are proud of our ability and willingness to help with a kind and helpful voice. You will speak to trained advisors who will quickly help you.We will give you practical advice on a completely confidential basis, we will need to ask lots of questions and once you tell us what is happening in your business; this will slowly start to lift the pressure on you. Quickly we'll start to set out options for you to look at. We may send you Expert guides in easy to use portable document files (PDF) and or links to some of the relevant pages on this site, all these have been carefully designed to help build understanding of YOUR options.What is in it for KSA?Obviously there is a commercial motive - we should all be in business to make profits - but we hope that the lack of overt selling messages on the site, means that you do not feel hustled to buy anything.For your clarity our commercial gain will come from providing hands on agreed turnaround work through our expert company turnaround advisors, insolvency advisors and insolvency practitioners, should we work together. Until then...THERE IS NO CHARGE FOR INITIAL ADVICE OR INITIAL MEETINGS.All fees are agreed and set out in advance so there are no misunderstandings. All of the team at KSA Group looks forward to helping you solve your business problems. Why not call us today?

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Insolvency Advice For Small Businesses

Who Are Preferential Creditors In A Liquidation Or Administration?

A preferential (or preferred) creditor refers to a creditor who has the right to payment before others. The priority of secured, preferential, and unsecured creditors is set out in the Insolvency Act 1986.  Preferential creditors are prioritised before unsecured creditors in a liquidation but below creditors with a fixed charge on assets such as property.

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Who Are Preferential Creditors In A Liquidation Or Administration?
cost cutting

Guide to cost cutting for my company

in Insolvency process

When the economy is facing tough times is important to keep costs under control. I know how difficult it is to let Marge or Reg go, he has been with you for years; or Paul who arrived last year, or that whole department set up for that exciting new project that never floated off the ground. However, if your company is struggling you must take steps to preserve your business now. That may mean letting people go - regardless of sentimental attachments.Read on for Company Rescue's top tips, from the turnaround experts!Listen guys, whatever the size of your business I can tell you something; you can always cut costs. No matter how many business people tell me they have already cut costs, I can always find more savings in their company. So don't forget, control cash daily and be tough on costs to save your business.Keith Steven Company Rescue September 2022We suggest you print this page...Our TOP 20 Cost Saving Rules and Cash flow Tips.Common sense says: Only following a couple of these tips won't work, using as many as possible will; The truth is the solution will come from a mixture of cost savings, driven marketing and sales, SHEER HARD WORK and a bit of luck thrown in. Once you regain control of the situation you can start to manage your cash flow problem.We are still in, or just emerging from a serious recession now in the UK, does your business strategy reflect this? If not follow this guide and you will be better able to cope.Set up a daily cash flow to control all cash going in and out of the business; This my help protect you from wrongful trading, as it stops bounced cheques. If you don't have a daily cash flow forecast click here for your free copy (downloads Excel spreadsheet) , email Keith Steven (keiths@ksagroup.co.uk) now or call KSA on 0800 970 0539 FOR YOUR FREE DAILY CASH FLOW MODEL. Make sure that all purchases are approved by you as the MD/FD/operations director/owner, and your partners. You should sign all cheques or approve all BACS/CHAPS payments in writing. No purchases are approved unless signed by you, which will make them produce a purchase order. Then you can check if they are doing their job, is the price fair, are they and your supplier ripping you off, or are they just lazy and not getting the business best value? No petty cash is drawn from the bank unless you personally go and get it - makes you question what every pound is spent on when people ask for cash, won't it? By the way, you get out of the daily grind and time to think. Review all expense claims by the staff; reject all that are not really necessary. If you get complaints or murmurings (they may be too scared to act professionally and debate with you), then meet with them and explain the position. Remember survival is KEY. If you lose people or profits that's not a vital issue, CASH IS KING for now. Profits will soon begin flow again from very tight cash flow management. If people sue for unfair dismissal, get help. KSA may be able to kill off their claims with straight talking. Or perhaps a CVA can kill these claims too. Ask every supplier for a review of their prices. Ask if they can cut you a better deal? You could also consider asking them too for a few extra weeks payment grace, or ask for regular monthly payments  Ask your landlord for a breather on rent. See if you can pay monthly rather than quarterly for a while? This helps cash flow. Technically this actually puts you in rent arrears, but that's OK at this stage. Most landlords are very keen to retain their tenant and may be more forgiving than you expect. Similarly, ask your accountants to accept monthly payments. If your accountancy fee is £10,000 per annum, then ask to pay over say 10 months, that's just £1,000 per month.MANAGE cash EVERY DAY! It may be that you need someone to do your bookkeeping for you. Have a look at our page on bookkeepers here Get someone else's view on the situation; Do you have a trusted friend or mentor? If so talk to them about your business, actions and get them to sanity check you. They may be able to help you and suggest cost savings. Question whether you need your company car; Can you use your own and give it back? It may save you a lot of personal tax too. Ask yourself if you can you sell any assets, to raise cash? Make sure they're not owned by a leasing company first. Shop around for the best deal. If you are factoring or invoice discounting, ask your factors to cut their costs, only drawdown funds weekly.Using your FREE daily cash flow model will of course help in this. CALL NOW FOR YOUR COPY 0800 970 0539 This can save hundreds of pounds a week.Cut ALL overtime to the bone, why do you need it? Is your production planning so poor or weak? If you need more people hire them, at lower rates. If you need to make redundancies and cannot afford them, use the DeBIS  Hardship Scheme. Ask HMRC for a Time to Pay Deal, use our programme here is you don't know what to do. Use the internet to buy or price everything; you can get fantastic value over the net. Work all hours, to build the recovery plan and set out the Time To Pay Deals with TAX AND VAT if you cannot pay tax debts on time. KEEP MINUTES or notes OF ALL DECISIONS. If you're a partnership or sole trader KEEP NOTES.We get paid to do this for companies large and small. We use the same process every time because it works and it can work for you. Take no prisoners, work hard, manage cashflow and you will hopefully lead your business out of the dark times.See our page here - Ten Top Tips to Manage Cash Flow problemsIf you have already cut costs, but you need help now, please call 0800 9700539 for quick accurate advice on your options.

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Guide to cost cutting for my company

Advice for Travel Companies Affected By Coronavirus.

in Insolvency process

Following the travel restrictions, lockdowns and quarantines the travel industry has not seen a difficult time like this, since the second world war. Obviously, this is a very challenging time for all those concerned.The situation now, for most companies, is they are being supported by the Government in multiple ways.  Using government parlance, they have “thrown a protective ring” around companies and businesses.Furlough scheme for employees Business Bounce Back Loans and Coronavirus Business Interruption Loans (CBILS) Business rates freeze, where applicable Extra time to pay for other taxes such as PAYE Legal action by creditors halted if debts due to pandemic. There is a ban on issuance of winding up petitions by landlords currently scheduled until June 30th Changes have been made to insolvency law via the Corporate Insolvency and Governnance BillBut How Do We Start Again? One overriding problem the travel industry has, which is more prevalent is the issue of customer deposits.  Most customers buy their holidays a long way in advance and so deposits are taken from customers.   Faced with a sudden loss of income from new bookings there is immediate cash flow pressure when people want their money back for old bookings. New bookings have also dried up. Double whammy.Most firms do not operate a trust account system and this means that deposits are not ringfenced for the customer if the event is cancelled. Rather, the payment is protected if the company fails or becomes insolvent by ABTA,  ATOL, ABTOT, insurance companies and often by merchant service providers who facilitate the card payment on debit or credit cards.This guide does not address that issue or how a refund credit note can be offered or the date for RCNs to be extended.  Rather, it addresses what should struggling operators do, now that cash is drying up and an avalanche of refunds is due?Most of the above provide cover for the customers in the even of a formal insolvency event such as company voluntary arrangement, liquidation, administration or pre-pack administration. These insolvency actions would automatically trigger a full refund of deposits of full payments made by the customer. Thus, it can be strongly argued that if the company simply doesn’t have the cash to pay the customers back then a full refund can only be provided if the company enters an insolvency process.This would achieve the objective of maximising the interests of creditors as whole which is a  UK legal requirement for directors of insolvency companies.  We would strongly advise all company’s boards to consider all other options very quickly, and to speak to qualified insolvency advisors like KSA first, we can advise on these options.Perhaps operators have tried to get refunds from airlines, hotels etc. but all are suffering similar problems of poor cashflow.  Where no money can flow back to the customer due to suppliers not able to perform their end of the contract I,e hotels, flights etc then your customer can make a claim against their credit /debit card. Obviously,  this could lead to clawback of funds from any designated accounts the operator holds for the merchant service provider. This can be a huge and very sudden blow to cash. An insolvency process can halt this cash outflow. The question really for travel companies is how will they trade going forward? Cut CostsDuring the lockdown the best thing to do is to try and reduce your costs as much as possible.  So negotiate with the landlord, suppliers, cancel agreements that assume you are trading as usual or are able to use – you will be surprised at how many there are such as car insurance/tax, parking spaces, office service charges etc.Cut employment levels. When furlough ends what will all of the returning employees be doing? You should start redundancy programmes as soon as you canIf there is insufficient cash to meet costs cutting and redundancy objectives you should consider using  a company voluntary arrangement or administration which can terminate those payments, cut costs and restructure debt arrears.Think about what your customers will want in the futureNo-one can predict with much certainty what travel will look like in the future, but it is likely that staycations and small group holidays will come to the fore, at least in the short term.  In fact, it has already been hinted that small holiday groups will be allowed.If you run a travel firm and you have concerns about forward trading and/or the ability to refund clients, if requested to do so, and these are unaffordable, you should be seeking advice. There are options available to you and as a company director you are required to maximise the best interests of the creditors (your clients if they have made part or full payments in advance of travel) and understand the various mechanisms available to you.We are currently advising various firms in the travel/leisure sector on the various scenarios facing them.

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Advice for Travel Companies Affected By Coronavirus.
advice

Partnership Bankruptcy

in Bankruptcy Insolvency process

The following guide to bankruptcy cannot be comprehensive, given that it is a general discussion of the process, application and exit from a mechanism that can be very complex depending on your individual circumstances. It is important that you seek professional advice before entering bankruptcy.

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Partnership Bankruptcy

What is a Prescribed Part?

in Insolvency process

A prescribed part is the part of the proceeds from realising the assets covered by a floating charge, that is set aside and kept available, so it can satisfy any unsecured debts.

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What is a Prescribed Part?

What is Balance Sheet Insolvency?

in Insolvency process

Balance sheet insolvency is when a company’s total liabilities outweigh its total assets. However, it may still be able to pay its liabilities when they are due.

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What is Balance Sheet Insolvency?