Finding your company in a position of financial distress can be a very tricky situation to navigate. It’s important that you put a strategy in place early on, with the help of a team of financial experts to assist you with that process.
In many cases, that will require coming up with a tailor-made insolvency strategy. From finding the right insolvency practitioner for the job to ongoing monitoring, here’s how that process should play out.
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Find an insolvency practitioner
To create an insolvency strategy, you’ll need to hire some kind of insolvency practitioner. Organizations like Chamberlain & Co are often a good place to start, as they’ll have a range of insolvency professionals with expertise in a range of different situations.
It’s worth taking the time to look for a practitioner who has extensive experience helping businesses in a similar position to yours. The future of your business is quite literally at stake, and you don’t want to leave things up to an inexperienced practitioner.
Initial assessments
As you’d expect, any tailored insolvency strategy will need to be based on a thorough understanding of our organization’s current financial position. Once you’ve brought in an insolvency practitioner, they’ll need to quickly develop an overview of your company’s finances, including all debts, assets, and cash flow projections.
The most important thing that will need to be determined is whether or not there’s a reasonable chance of returning your company to a position of fiscal health. Whether or not this is the case will decide what happens next.
Choosing an insolvency strategy
While all insolvency strategies will need to be tailored to your precise business, there are some main options to choose between.
If the business cannot be saved, as the debts are simply too big, given future cash flow projections, then the company may need to be liquidated. This will require dissolving the company, selling the assets, and distributing the proceeds to creditors.
If, on the other hand, there is a good chance that it can be saved, then some kind of restructuring or administration may be appropriate. This will need to be discussed with all relevant stakeholders to come up with an arrangement that everyone will be happy with.
Implementing the strategy
Once a strategy has been chosen, it remains to be implemented. This will require ongoing dialogue with stakeholders and careful monitoring on behalf of the insolvency practitioners. If the company is to be saved, it will likely take a long time for this to happen, and it’s crucial that the company doesn’t slide into even more debt.
The strategy may need to be tweaked (or even abandoned) depending on how things proceed. While it’s possible that everything will go to plan, this is unlikely – expect the unexpected and remain flexible in your approach.
Insolvency is rarely a pleasant process to navigate, but it’s unfortunately unavoidable in certain situations. By working with the right service providers, you can greatly increase your chances that you navigate the process effectively, bringing your business out the other side intact.
