Formal Business Insolvency: What Are The Alternatives?

If your business is facing insolvency, it can seem like there’s no way out. You may be kept up over what’s going to happen to you, your staff, your professional reputation, and your assets. Although the stress might be overwhelming, you have time to sit back and look at your options. Rushing into a formal agreement can do you more harm than good in the long term.

What Does ‘Formal Insolvency’ Mean?

‘Formal insolvency’ refers to any insolvency process agreed upon between you and your creditor(s) that is enforced by law. The most common forms include:

• Bankruptcy (of directors)
• CVA
• Administration
• Liquidation

Why Should I Avoid Insolvency?

Formal agreements can lock you and your company into inflexible arrangements. They also often disadvantage the debtor (i.e., you). On top of this, options like Bankruptcy can have other repercussions like disqualification from being a director and a negative impact on your credit score. Overall, they provide less flexibility, leave you worse off financially, and mean you have to stick to stricter rules. We always recommend informal agreements as they offer the best possible approach for both you and the lender.

Alternative Solutions to Formal Business Insolvency

You might be surprised to learn that there are other ways to resolve your situation before formal insolvency. Your creditors might even prefer this route. There is often more flexibility in negotiations, plus reduced costs on both sides. If you enter a formal arrangement, an Insolvency Practitioner is appointed. Their job is to get the best deal possible for the creditors chasing your debt.

Pre-insolvency consultants like Bell & Company work for you. This means they will try and get the best outcome for you. This means they’ll spend time understanding your circumstances as well as the particular challenges your business faces. Bell & Company’s strategies include reworking existing financial agreements within the company and with creditors, advising on the best ways to restructure your business to reduce costs, as well as exploring alternative cash streams. We stand between you and your creditors. This gives you a chance to make the best decisions for your company without the stress of insolvency.

It can be daunting to confront the full scope of your debt, but the best time to act is as soon as you notice there’s a problem with your business. Pre-insolvency offers you more options and freedom than formal procedures, with expert consultants who will work for you and not your creditors.

Call Bell & Company on 0333 305 4331 or email us at [email protected] to start your journey out of debt. If you are worried about your business’s viability, you can watch our free webinar here to find out more about your options and how we can help.