Directors usually contact us when something has started to feel wrong.

That may be because:

• HMRC arrears are increasing
• VAT, PAYE or Corporation Tax cannot be paid on time
• suppliers are chasing payment
• the company has received a County Court Judgment
• a creditor is threatening legal action
• cash flow has become difficult to manage
• Bounce Back Loan or other finance repayments are unaffordable
• wages, rent or trade creditors are becoming a problem
• the company has received a winding-up petition
• the company has attempted to strike off, but an objection has been made
• the director is worried about personal risk or their duties

If any of this sounds familiar, it does not automatically mean the company has to close.

But it does mean you should take advice before making any major decisions.

The earlier you speak to someone, the more options may be available.

That may include HMRC arrears, unpaid VAT or PAYE, supplier pressure, Bounce Back Loan concerns, or problems after trying to strike the company off.

When a company is under pressure, it is easy to delay making decisions.

That is completely understandable. Most directors are trying to keep the business going, protect staff, deal with customers, manage creditors and hold everything together.

The problem is that waiting too long can sometimes reduce the options available.

Speaking to an insolvency professional early can help you understand:

• whether the company is insolvent
• whether the business can continue trading
• whether a repayment arrangement may be possible
• whether formal insolvency action is required
• what your duties are as a director
• what you should and should not do next
• whether you may be personally at risk
• how creditors, staff, HMRC and company assets should be dealt with

We will not push you into a process that is not suitable. Our job is to give you the information you need to make a sensible decision.

Every company is different. The right option depends on the company’s position, creditor pressure, assets, cash flow, future trading prospects and what the directors want to achieve.

The main options may include:

Informal creditor arrangements

In some cases, the company may simply need time to deal with creditors. This may involve speaking with HMRC, suppliers, landlords or lenders to explore whether payments can be brought up to date over time.

This is not always suitable, especially where creditor pressure is serious, but it can be an option where the business is viable and the debts can realistically be paid.

Company Voluntary Arrangement

A Company Voluntary Arrangement, often called a CVA, may allow a company to continue trading while making agreed contributions to creditors over a period of time.

A CVA is usually only suitable where the business is viable and can afford future payments.

Administration

Administration may be suitable where a company needs protection from creditor action while a rescue, restructure or sale of the business is explored.

This is usually used where there is a business or asset value to protect.

Creditors’ Voluntary Liquidation

A Creditors’ Voluntary Liquidation, often called a CVL, is a formal insolvency process used where a company cannot pay its debts and there is no realistic prospect of recovery.

The company stops trading, a licensed insolvency practitioner is appointed, assets are dealt with, creditors are notified, and the liquidation process is handled properly.

Members’ Voluntary Liquidation

A Members’ Voluntary Liquidation, often called an MVL, is used for solvent companies. This may be suitable where a company can pay its debts in full and the directors/shareholders want to close the company in a tax-efficient and orderly way.

A company may be insolvent if it cannot pay its debts as and when they fall due, or if its liabilities are greater than its assets.

Common warning signs include:

• using one creditor’s money to pay another
• falling behind with HMRC
• relying on personal funds to keep the company going
• being unable to pay suppliers on normal terms
• receiving legal threats from creditors
• having no realistic plan to clear arrears
• struggling to pay staff, rent or finance payments
• avoiding opening letters or emails from creditors
• being unsure whether you should continue trading

If you are concerned, it is better to ask the question early.

You may have more options than you think, but you need clear advice before the position becomes more serious.

DCA Business Recovery is based in Southend-on-Sea and provides insolvency and business recovery advice to company directors.

We know that speaking to an insolvency firm can feel like a big step. Many directors worry they will be judged, pressured or confused by jargon.

That is not how we work.

Our approach is practical, calm and straightforward.

You will receive clear advice from people who deal with company debt and insolvency issues every day. We will explain what the options mean, what the risks are, and what you should consider before making a decision.

We help directors understand the route forward, whether that involves recovery, restructuring, liquidation or simply taking early advice before matters escalate.

If your company is struggling, try not to make rushed decisions without advice.

Before selling assets, paying certain creditors, resigning as a director, using personal funds, continuing to trade, or attempting to strike the company off, it is worth understanding the possible consequences.

A short conversation may help you avoid making the position worse.

We will explain your options clearly and help you decide what is appropriate for your company.