In my recent article ‘The Longest Day’ I highlighted the emotional impact Insolvency can have on people, click to read here. This time I want to focus on what being insolvent actually means and, the need to pull stakeholders together to agree a plan of action.

Firstly, if you are taking the bull by the horns and confronting a potential insolvency issue - well done! I can help you make the right decisions.

Secondly, here is a reminder of how insolvency is defined:

Put simply, insolvency refers to a financial state where an individual, business or organisation cannot pay its debts as and when they fall due or its liabilities exceed its assets.

As I covered in my last article, insolvency can arise due to many factors, which are sometimes out of person/business leaders’ control and which can have a significant impact on all stakeholders involved and it can be a stressful and emotional time. It is important to communicate clearly with everyone involved as they will all have their own ideas on the situation, and, if not handled well it could cause ‘the herd to scatter’.

What does an Insolvency Practitioner do?

As an Insolvency Practitioner, I specialise in helping businesses and individuals in financial distress manage their situation and find appropriate solutions. This means that, as well as being appointed in formal insolvency procedures, I may be able to find options to avoid a business having to be closed or a person being made bankrupt.

I have over 30 years of experience to draw upon when advising people, I know how to assess the financial situation and provide expert guidance on all of the options and the potential outcomes of each.

I can communicate with stakeholders and am adept at problem solving and decision making. In this way, I can bring an element of control and calm to the ‘stakeholder group’.

What are the next steps I should take and why should I take them?

You should seek help a as soon as possible as doing nothing about your financial challenges or, alternatively, rampaging like a bull in a china shop and making ill-informed decisions will only make matters worse.

Your chances of turning around your situation will be improved by how soon you act once the warning signs of being insolvent start to show.

You will feel better if you share your problems. I can take the burden from your shoulders by helping with challenges like negotiating with creditors and attending creditor/board meetings.

I can analyse the causes of the insolvency and look into every option available to you. Depending on your circumstances and these may include restructuring to improve the financial viability and carrying out actions to rescue the business, starting with working together with management and other stakeholders.

If your financial circumstances are such that restructuring is not an option, there are legal processes in the UK and overseas that govern when an individual or business becomes insolvent. In this country the main insolvency procedures are regulated by the Insolvency Act 1986 and subsequent amendments.

The main processes are:

• Administration, a Company Voluntary Arrangement (CVA)
• Liquidation (winding up) for companies and Individual Voluntary Arrangement
• Bankruptcy for an Individuals. 

Within these processes there are a variety of options.

I can offer you a free initial meeting and will be able to advise you on what each of these processes involves, whether they’re suitable for your financial situation and the rights and responsibilities of the various stakeholders. All of these stakeholders will have their own views, but it is my job to align everyone.

Once you are armed with the right information it makes it a lot easier to maintain calm and control.

Look out for our next article which explains about all the options involved in insolvency in more detail.

Hayley Simmons Licensed Insolvency Practitioner regulated by the Insolvency Practitioners Association