Protecting your Business against Rising Energy Costs
UK businesses continue to struggle with the cost-of-living crisis, rising energy costs, supply chain disruption and an accumulation of Covid-19 debts. The Guardian recently reported that The Association of Convenience Stores, which represents 48,000 stores, said energy bills had surged to an average of £45,000 for smaller members, more than double what store owners had been paying previously.
Liz Truss, the new Prime Minister, is reported to be considering implementing a lengthy freeze on energy bills for homes and businesses. A support package is expected to be announced as soon as Thursday, but many businesses will be concerned that this could be too little, too late.
If your business is one of many which has been affected by these challenges, then you should consider its financial position carefully.
What should I do if my business is struggling?
The most important thing to do is seek professional advice at an early stage. A Licensed Insolvency Practitioner can provide practical advice when cash flow issues emerge and help with practical solutions to address them. A Licensed Insolvency Practitioner is also best placed to provide advice on the formal options which may be available, and may offer protection to your company.
If the challenges facing the company are too significant, and the business is no longer viable, it might be appropriate to consider company closure.
What is Creditors’ Voluntary Liquidation?
Creditors Voluntary Liquidation (CVL) is usually an appropriate solution when a business has no viable future and must cease trading. The procedure can be instigated by the directors of an insolvent company, if the shareholders’ also agree that the business should cease trading.
Once it is resolved that the company should enter CVL, a Liquidator will be appointed by the shareholders and creditors, and company assets will be sold to repay its debts. The Liquidator must be a Licensed Insolvency Practitioner who will facilitate the formal wind down and will also prepare and file all of the necessary documentation, ensure that the winding up is fully compliant with the current legislation.
Benefits of a Creditors Voluntary Liquidation (CVL)
✓ Allows employees to claim redundancy pay and unpaid wages from the Government
✓ Prevents creditors from taking action
✓ Provides directors with comfort in dealing with their choice of liquidator
✓ Reduced costs, compared to the likely costs of other insolvency processes
As always, careful consideration must be given to all options available.
Help from a Licensed Insolvency Practitioner
Keywood Group are a firm of Licensed Insolvency Practitioners with offices in Birmingham and London. Our team has extensive experience in advising businesses on their options and dealing with company closure. Our experienced team will work with you to assess the options available and guide you through the process. If you want further information, please contact us for a no obligation chat.
