What happens when you reach out to an Insolvency Practitioner?
I doubt any business owner is totally ready for the pressure that being in charge can bring. It’s hard being the person at the top, particularly when it comes to having money issues. Every company is unique in its own way but if there is one thing they have in common, it is the sleepless nights that come along with the realisation that you may be in trouble financially. Whether you are struggling with HMRC, unpaid debts, cashflow, wanting to close your business voluntarily, or one of the many other reasons you may need help, taking the first step and calling an Insolvency Practitioner is the best idea. But it is an understandably difficult step to take. You are potentially starting down a life changing road, so naturally there is going to be a lot to worry about, but there may be less than you think and worrying doesn’t really help.
The first question most business owners want answered is whether they should reach out to an insolvency practitioner in the first place.
The answer to whether you should contact someone is simple. If you think you may be in need the services of an Insolvency Practitioner, then you should contact one. You are clearly worried enough to be thinking about insolvency so you definitely must do something. Remember, we are only of use to you if you need us. Insolvency advice is not a ‘saleable’ item like buying a tin of beans because it is only relevant when and if you need it. So, when you call a good insolvency professional, before they do anything else, they should establish if you need them. If you don’t need them, then great news, you no longer need to worry, or at least not worry quite as much. If you do need one, then what happens next is not as bleak as you would think. Here is an overview of how it usually works.
What happens after you contact us?
Firstly, let’s clear up a few misconceptions so that we are all talking the same language. When you contact an insolvency practitioner their first response will be to help keep you in business. The bottom line is that we are not here to look for a way to close you down. My experience is that a number of businesses that come to see me can be rescued and the first approach is always to look for ways to keep you trading. This will be true of any good insolvency professional. It isn’t always possible to keep a business viable unfortunately, but closure is always a last resort.
Secondly, sometimes there is a little bit of confusion over terminology. We will always explain everything in plain English, but a few key words are good to know in advance. To simplify things down:
- Bankruptcy is only applicable to individuals. Sole traders for example.
- Insolvency is when you are unable to pay your debts. So, it is a global term usually used to describe the situation where your debts exceed your ability to pay them.
- Liquidation is where a company’s assets are used to pay off its debt(s).
- Administration is where an Insolvency Practitioner is appointed to try to rescue the business or chose the best course of action for a business which is insolvent.
The start point therefore, is with assessing your current situation. Depending on which of the above applies to you, (assuming they apply at all) someone will then will work with you to decide the best course of action and what your initial steps should be. Ideally they will be towards recovery.
The consultation will take place in a convenient way and location for you. Some of our clients prefer to come to see us or discuss on a private telephone call and others prefer us to visit them to get a feel for their business.
What is the first meeting really about?
This first part of the process is not about telling you what to do or criticising you. It should be about:
- Collaboration and mutual understanding.
- Offering you the best option available.
- Working ‘with’ you.
- Building a working relationship help us achieve our goals.
- And, most of all it, is about practical solutions.
They will need to know about your business, why you think you need them, what your situation is overall and some other top-level information. Honesty is important of course but they are not there to judge. They are here to help.
No business owner wants to face the prospect of having to put up the shutters and call it a day. Why would they? For most of us our business is our baby. It is something we have worked on, and usually in, with all our heart. Picking up the phone to call an Insolvency Practitioner is clearly going to be hard. However, if you are in the position where you think your business may be facing difficulties, making the connection with us as early as possible will certainly be a more positive action than lying awake at night worrying.
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- Bankrupt, insolvent or in need of rescue? - July 26, 2020