How to halt Creditor Action?
Running a business can be challenging, and at times, financial difficulties may arise, leading to creditor action. Creditors have legal avenues to pursue debts owed to them by companies. However, there are ways for companies to stop or prevent creditor action and regain control of their financial situation. In this blog post, we’ll explore some strategies to help you navigate creditor action effectively.
What can my business do to stop creditor action?
Open Communication
One of the first steps in dealing with creditor action is to establish open and honest communication with your creditors. Ignoring their demands or avoiding contact can escalate the situation. Instead, reach out to your creditors and explain your financial difficulties. They may be willing to negotiate new repayment terms or even offer a temporary payment holiday.
Seek Professional Advice
In some cases, it’s wise to seek professional advice. Consulting with a financial advisor or a licensed insolvency practitioner can help you better understand your financial options. They can assess your company’s situation and recommend the most appropriate course of action, whether it’s debt restructuring, a Company Voluntary Arrangement (CVA), or another insolvency procedure.
Consider a CVA
A Company Voluntary Arrangement (CVA) is a legally binding agreement between a company and its creditors. It allows a struggling company to propose a repayment plan over an extended period, typically three to five years. If approved by the majority of creditors, a CVA can help you avoid liquidation and continue trading while repaying your debts.
Explore Funding Options
If cash flow issues are at the root of your creditor problems, consider seeking additional funding. This could involve obtaining a business loan, seeking investment from shareholders, or exploring government grants or support programs designed to assist struggling companies. Adequate funding can help stabilize your finances and prevent further creditor action.
Liquidation
Liquidation may be a last resort. If your company’s financial situation is beyond repair, liquidation may be the only option. In such cases, it’s essential to engage with a licensed insolvency practitioner who can guide you through the process and ensure that your creditors are treated fairly.
Legal Protection
To protect your business from creditor action, you can explore various legal avenues. For example, you might apply for a Time to Pay arrangement with HM Revenue and Customs (HMRC) to spread tax payments over a more extended period.
Contact Insolvency Practitioners
Facing creditor action can be a daunting experience for any company, but it’s essential to remember that there are strategies and options available to mitigate the impact and potentially turn the situation around. Open communication, professional advice, exploring funding options, and considering legal protection can all play a crucial role in helping your company navigate this challenging phase. However, it’s crucial to act promptly and seek expert guidance to make informed decisions tailored to your specific circumstances.
Keywood Group is a licensed Insolvency Practice with offices in Birmingham and London. Feel free to contact us today for a no obligation confidential consultation by calling us on 0121 201 0399 or on 0208 912 0399.
