Preventing Open Position Liquidation in the United Kingdom

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Preventing Open Position Liquidation in the
United Kingdom 0 Comments / Liquidation / By
Viv1 If a creditor wants to put your company
into liquidation, they will need to ?le a winding
up petition in court. If this winding up order
is granted, your company will enter into
compulsory liquidation, which will involve the
sale of your assets so that you can use the money
generated to pay off your creditors as much as
possible. If you would like to avoid this
happening, then it is important that you are
aware of the ?nancial position your company is
in and take the necessary action if you have a
creditor considering this route. So, if there is
a chance your company is going to be forced into
open position liquidation, what steps can you
take in order to prevent this? Enter into
Negotiations A lot of the time, if you maintain
good communication with your creditors, this is
an excellent way to avoid any kind of potential
liquidation. You might believe that a positive
outcome cannot come from negotiating, especially
if youve tried this before, but the fact is that
having a reasonable discussion with your
creditors can often yield really positive and
mutually bene?cial results. Something that could
help you is getting professional support for
these negotiations. This can help when it comes
to instilling con?dence in your creditors and
reassuring them that you will eventually be in a
good enough position to pay them back. These
negotiations can be as informal or formal as you
would like depending on the tone youre trying
to set. Try HMRC Time to Pay If you are a new
business or if you are in a position where you
are struggling ?nancially, then taxes can really
creep up on you, and you may not be in a position
to pay them. This might not seem like a big deal
when you consider the likes of creditors, but
the fact is HMRC are actually quite quick to
close down businesses if they believe those
businesses are insolvent. As such, if you are not
going to be in a position to pay your taxes, then
you should be sure to contact them as soon as
possible, as opposed to just avoiding payment all
together. Chances are HMRC are going to be keen
to offer a Time to Pay (TTP) arrangement. What
usually happens with these payments is that you
will be given some extra time to pay off your
remaining taxes. During this period, you are
also going to need to stay on top of your current
tax liabilities as well. Again, it is a good
idea to enlist the help of professionals who will
be able to assist with putting forward a proposal
for Time to Pay.
Pay Off Debt with Alternative Finance
If you have a creditor who is being stubborn and
is completely closed off from the idea of
negotiation, then your business should consider
looking out for additional ?nance, which will
help with paying off debt either in part or in
full. You can always borrow from a bank, but
there are other options, too, such as invoice
?nance and asset-based funding. Both of these
options offer you good ?exibility and a boost in
your organisations capital, which will help
when it comes to paying off any outstanding
debts. The type of funding available to you will
depend on how your organisation is structured. As
such, be sure to consider the different options
that you have so you can pay off your creditor
before they o?cially take legal
action. Consider Entering into a Compulsory
Voluntary Arrangement If you have a few debts
outstanding, then it may be worth entering into a
Company Voluntary Arrangement. This is one of
several options that will help to prevent
creditors from forcing your organisation into
liquidation. A CVA is always a good option
because it means that you can carry on trading
with your business whilst repaying your
creditors a monthly amount which you can
afford. You are going to need to hire insolvency
practitioners in order to carry out this process,
as they will be responsible for assessing your
companys ?nances and then also putting forward
the proposal to your creditors on what your
business is likely able to pay. Getting good
support throughout this process is crucial as
for a business to enter into a CVA, 75 of all
creditors need to agree to said CVA.
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Enter into Company Administration Another
effective solution for your business could be
entering into company administration, as this
will also prevent liquidators from placing your
company into liquidation. When you enter
liquidation, you get an eight- week moratorium
period where you are going to be able to put
together some kind of business recovery plan,
which will provide you with a number of different
positive outcomes for your organisation. Once
you enter into administration, one of the
potential exit strategies could be to enter into
a CVA (as discussed above). There are also going
to be other methods you can consider as well.
Giving yourself these eight weeks to have a
proper think over what you can do to overcome
these ?nancial issues is crucial. Do You Need
Assistance with Your Businesses
Finances? Running a business can be di?cult,
especially throughout the current periods of
economic uncertainty that we ?nd ourselves in.
As such, its normal to ?nd yourself owing some
money to creditors. The problem with being in
debt is that it means creditors might try and
force your company into open position
liquidation, which would mean that you have to
stop trading and shut down operations. Naturally,
this isnt something that you want to do. If you
require help with running your business, then
you may well want to consider taking the time to
speak to professionals such as Simple
Liquidation. Our team of experts will be happy
to sit down with you in order to understand your
organisations current situation further and
then put together a plan to get you on a more
solid footing. If you require further information
or have questions, do not hesitate to get in
touch.
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