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Administration   

Although there is only one type of Administration there are a number of ways that a company may enter Administration.

An Administrator may be appointed by the Directors, Shareholders, a petitioning creditor or a secured charge holder.

Where the directors or Shareholders appoint this may give rise in certain circumstances to what is known as a pre packed Administration where the Directors/Shareholders purchase the business from the Administrator immediately on appointment.

 

 

Liquidation   

There are three types of liquidation. If the company is insolvent it could enter into a Creditors Voluntary Liquidation or Compulsory Liquidation. However if the company is solvent but circumstances dictate that it should be wound up it could enter into a Members Voluntary Liquidation
 

 

 

Company Voluntary Arrangement - CVA   

It is more commonly known as a CVA. And is a route frequently taken by directors who feel their company has a viable future and are prepared to work hard to keep it alive.

Under such an Arrangement you will keep control of the Company and continue to trade as normal. All your company's unsecured creditors ( trade and revenue) would be contacted by us and an agreement made between you and them.

The Arrangement would ensure that the amounts owed to the company's current unsecured creditors were frozen, thereby allowing the director to concentrate on moving the company forward.

The proposal would be to repay either all or part of the company's debts over a period of time from the trading profits. These monthly payments would be in full and final settlement of all monies due to your creditors.

Creditors usually receive between 25% and 100% of monies owed to them. This is dependent upon what the company can afford to repay.

The Arrangement would be legally binding.

Once the Arrangement has been approved, affordable monthly contributions will be paid from the future profits of the  business. This is a legally binding agreement and usually lasts for five years.

Alternatively a lump sum contribution or re-financing of assets could be offered and the duration of the CVA would consequently be shorter.

 

Bankruptcy   

 

Bankruptcy is an option for individuals only A sole trader, partner or individual can file for bankruptcy. In some instances they can be discharged from bankruptcy within one year.

Bankruptcy proceedings would free you from debts and enable you to make a fresh start, although some restrictions may apply. The Bankruptcy is advertised in the local newspaper and London Gazette and is entered on a register.

Once you are declared bankrupt, the administration would be conducted by either the Official Receiver or a licensed Insolvency Practitioner who will act as Trustee of your estate.

Some assets may not be included in the bankruptcy. These include, amongst others, furniture required for domestic use, a vehicle to enable you to get to work, tools of the trade and your pension.Your share of the equity in your home would usually be realised and the Trustee has the power to take action to enforce this. However, all home owners would be kept aware of any intended or commenced actions.

Debts that are not written off when your bankruptcy ends include fines, maintenance and child support payments and other family court orders, debts to secured creditors, such as your mortgage company and other debts arising from personal injury, fraud and other criminal proceedings.

 

 

Individual Voluntary Arrangement  - IVA   

 

An IVA is a formal arrangement with all the unsecured creditors you owe money to.

The agreement made between you and your creditors could result in you not paying back the full amount, you could write off up to 100% of the debts you cannot afford to pay. The alternative to an IVA could be bankruptcy.

An IVA usually lasts for five years and over this period you would be expected to contribute a monthly payment into the IVA scheme fund. The level of this contribution is decided by YOU in conjunction with the Insolvency Practitioner appointed by you. This amount must be affordable by you and agreed by your creditors. These funds are then paid out to your creditors on a periodic basis throughout the term of your IVA. A lump sum can sometimes be accepted by creditors.

An IVA is also a way forward for sole traders and business partnerships, where short term cash flow problems have been encountered but the business remains viable and profitable.