Debt options for limited companies
There are a number of different options and processes relating to dealing with companies which are insolvent or which may have serious financial difficulties.
The main debt options for limited companies are:
Turnaround & informal arrangements
Corrective action such as company and capital restructuring, reducing costs, concentrating on core products, sale of part of the business, and increasing financial control can help towards making a company profitable. Informal arrangements can then be made with creditors to pay the debts off. For further detail see turnaround & informal arrangements.
Company Voluntary Arrangement (CVA)
This is a formal arrangement between the company and its creditors for settlement of its debts over an agreed time scale where the business is suffering cash flow difficulties but is fundamentally sound. For further detail see Company Voluntary Arrangement.
Under the Enterprise Act 2002 it became easier for a company to enter into Administration.
An Insolvency Practitioner is appointed to control the company with the aim of making proposals to lead to a turnaround/company survival or to coming to arrangements with creditors which give a better realisation of the company's assets (for example sale of business). For further detail see company administration.
Company administrative receivership
In this case an Insolvency Practitioner realises the company's assets to repay a major creditor who has a security over the company's assets (such as bank). For further detail see company administrative receivership.
Liquidation is the process whereby the assets of the company are realised and distributed among its creditors according to their legal priority and entitlement. For further detail see company liquidation.
For further detail on the debt options for companies see:
Or for debt options for sole traders and partnerships click here.
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