Is Strike Off the best option for my Company?
When a business faces financial troubles, applying for it to be struck off at companies house via the filing of DS01 might seem like the easiest way out, but it’s not always the best solution. In many cases, alternatives insolvency options may offer a more responsible and potentially easier path for businesses in distress. In this article, we will explore some of these insolvency alternatives that can help struggling businesses stay afloat and even thrive.
Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement allows a business to propose a repayment plan to its creditors. With a CVA, businesses can negotiate to pay off their debts over an extended period, often with reduced interest rates. This arrangement not only helps in avoiding liquidation but also allows the company to continue trading and potentially recover.
Administration
Entering into administration means placing a company under the management of an insolvency practitioner. The goal is to protect the business from creditors while attempting to restructure and salvage its assets. Administration can provide the breathing space needed to assess the viability of the business, streamline operations, and negotiate with creditors for a more favourable outcome.
Pre-pack Administration
A pre-pack administration is a variation of administration. It involves arranging the sale of the company’s assets and business to a pre-determined buyer, often the existing management or a third party. The pre-pack allows for a swift sale, which can preserve jobs and maintain business continuity.
Creditors Voluntary Liquidation
Creditors Voluntary liquidation (CVL), is a process through which a company willingly decides to wind up its operations and distribute its assets among its creditors and shareholders. This option is typically chosen when a company is insolvent, meaning its liabilities exceed its assets, and it can no longer continue its operations
Debt Restructuring
Debt restructuring involves renegotiating the terms of loans, credit lines, and other financial obligations. By extending repayment periods or reducing interest rates, businesses can alleviate their financial strain and continue operating without the need for insolvency proceedings.
Refinancing
Seeking new loans or investors to inject capital into the business can provide much-needed liquidity. Refinancing can help a struggling business pay off existing debts, stabilize operations, and focus on long-term growth.
Keywood Group is a Licensed Insolvency Practice so how can we help?
Striking a business off should be a last resort for companies facing financial difficulties. There are numerous insolvency alternatives available, each with its unique advantages and drawbacks. These alternatives not only protect the business and its assets but also offer opportunities for recovery and future growth.
Before considering dissolution, it is advisable for business owners to explore these options, engage with professionals who specialise in insolvency matters, and make an informed decision that aligns with the best interests of the company and its stakeholders. Come and visit us at our offices in Birmingham or London for a free no obligation consultation.
