Frequently asked questions about insolvency
Solvent companies can be closed down through a Members Voluntary Liquidation (MVL). This allows the assets and cash to be distributed in a tax efficient manner and for the company to be closed down in an organised manner. Speak to a specialist at Walsh Taylor to find out more.
If you have debts to HMRC whether it is Income Tax, PAYE, NI, Corporation Tax or VAT arrears it is key that you act quickly, HMRC will pursue the debt and it is important that they see that you are making every effort to repay the debt. Failure to pay HMRC debts can be serious, leading to court actions or baliffs.
Speak to one of our specialists at Walsh Taylor at the earliest opportunity; the earlier we speak to you the more potential options you will have. We will talk you through the options and the effect each of these could have on you personally and on your business.
We provide advice for clients who prefer to deal with HMRC directly themselves or in many cases the client authorises Walsh Taylor to deal with HMRC on their behalf.
Winding up a company refers to be the processes involved in closing a company down. This may include paying creditors, selling assets or concluding where possible any other business obligation. It is often followed by a liquidation.
The term winding up a company is usually used to describe the process of closing a company which is unable to pay its debts as they fall due, the process for doing this is a liquidation and has to be carried out by a licenced insolvency specialist. The process may either be a Creditors Voluntary Liquidation or a Compulsory Liquidation.
It is also possible to carry out a solvent liquidation if the company is able to meet all is obligations, this is called a Members Voluntary Liquidation.
A detailed review of your business would be needed to ensure that you are advised of the right option for your situation and business. There are a number of potential options one of which is a payment agreement with your creditors. This can be arranged either informally or formally. An informal arrangement is made between yourself and your creditors. This can be done with assistance by the team at Walsh Taylor. Typically these are used when there is a good relationship between creditors and the business, the amount owed is small or the cashflow problem issue is seen as being short term.
The formal route is called a Company Voluntary Arrangement (CVA) which is managed by an insolvency specialist. After a detailed review of the company’s financial situation a proposed a payment schedule is put forward to the creditors detailing the amount that is to be paid (this is often a percentage of the total owed) and agreed time period. Each creditor votes on whether they wish to accept the offer, in order for the CVA to go ahead it must be approved by 75% by value of the creditors that chose to vote.
Other potential routes include a Creditors Voluntary Liquidation (CVL) where the company ceases to trade and its assets are used to pay off any creditors. However, it is important to discuss your individual situation with Walsh Taylor and the potential alternative routes available.
Accelerated Payment Notices request that sum is paid to HMRC in full and within 90 days of receiving the notice. The sums requested can be substantial and with no right of appeal it is important that professional advice is taken immediately. Walsh Taylor have experience of assisting companies who have received APNs. There are some cases where the use of APNs has now been subjected to judicial review. Contact Walsh Taylor to discuss your situation in detail and the potential routes available to you.
We encourage people to speak to us as early as possible when a company is suffering issues. There are some important reasons for this. Firstly the earlier you speak to Walsh Taylor the greatest chance there is of us to assist you in turning around the situation and minimising the damage. We have experience of helping companies of all sizes and sectors return to healthful trading. Secondly, it is important to ensure that certain processes are followed to minimise the risk to directors, trustees or employees should the company become insolvent.
If you have any concerns about your company experiencing financial issues either now or in the future call us for a free, no obligation conversation.
There are a number of options that a company can take in this situation. The preferred route is always a course of actions that return the company to health, a route that Walsh Taylor has supported many companies in achieving. Research consistently shows that many companies that end up entering liquidation could have been saved if professional help had been sought earlier.
A company is deemed to be insolvent if it is unable to pay its debt or does not have enough assets to cover its debts or is unable to pay its debts as they fall due. However a company does not need to be placed into liquidation if it shows that it can trade out of this situation, returning the company to solvency. Walsh Taylor are experts at assessing companies and assisting the directors in taking a company back into healthy trading.
Directors can be at personal risk when a company is in a perilous position and taking advice early is is crucial for them to ensure that they are not falling foul of their duties as directors which could result in them being disqualified from acting as a director in the future. A duty of the directors is for them to consider or act in the interests of the company’s creditors in order to minimise the potential loss to them and therefore taking advice from an insolvency specialist to assess the whether liquidation is the best course of action for the business is important.
No, in the UK only an individual can be made bankrupt. If a company is unable to pay their debts their insolvency route options include a Company Voluntary Arrangement, Administration or a Creditors Voluntary Liquidation.
An IVA is an agreement entered into by a debtor with his/her creditors to pay off their debts over a set period of time. It is one option a debtor can use to pay off their debts. It is a formal, legal debt solution. This means it is approved by the court and both the debtor and his/her creditors must adhere to the terms of the IVA. It is an alternative to bankruptcy for a debtor who is in financial difficulty. The main benefit of an IVA is its flexibility and the fact that (unlike bankruptcy) it allows the debtor to retain control of his/her assets.
Who can take out an IVA?
An individual, sole trader or partner (in a business partnership).
The Agreement
The agreement sets out how creditors will be repaid and normally involves setting up monthly repayments over a specified period of time. Alternatively, if an asset (such as a property) can be sold, the agreement may specify that the proceeds from the sale will be used as payment and lump sum payments are made in addition or alternatively to monthly payments. An IVA must be set up by a qualified Insolvency Practitioner, who will then deal with the creditors throughout the life of the IVA.
An Insolvency Practitioner will normally assist in working out what the debtor can afford to repay and how long the IVA should last. The IVA will start if creditors holding 75% of the total debt agree to it. For an IVA to be approved, the IVA proposal must usually offer a higher return to creditors than could otherwise be expected were the debtor to be made bankrupt. Once approved, the IVA will apply to all creditors, including any who voted against it.
It is important to note that an IVA can be cancelled by the Insolvency Practitioner if the debtor fails to keep up with repayments.
Are all creditors included?
No, only unsecured creditors are included in an IVA, secured creditors such as a mortgage company are excluded. Other types of debts that are excluded from an IVA include maintenance payments, student loans and magistrate court fines.
Further information
If you wish to discuss whether an IVA might be the right solution to your current financial issues please contact.
