Posts Tagged ‘corporate debt’

What is a Zombie Company?

 

what is a zombie company?

 

What is a zombie company?

A zombie company is simply a company that is neither dead or alive.

In other words, the company is so overwhelmed by debt that any cash generated, is being used to pay off the interest on the debt owed to creditors. In many cases, the debt is not being reduced. With this, the majority of ‘Zombie’ Companies are unable to invest in any future growth of the business. Therefore, are unable to employ more staff.

The first sign that a company is turning into a zombie will often seem like symptoms of unusual health.

However, in some instances, the company will appear to be thriving and its executives will be justifiably proud of this success. But Zombie companies, like zombies in movies, slowly move forward, but only just.

Since they’re only just managing to get by week by week. They can’t hire anyone new and they can’t afford to pay out redundancy, as there’s no cash for a payout. The business stagnates slowly but surely, with sudden growth being as much a problem as a downturn in business.

If you’ve seen any films about these members of the undead, you’ll know that zombies don’t tend to last long. This could be the fate of any zombie company that doesn’t properly address its issues. If you’re paying off the interest on a loan and the interest is suddenly raised, your company can die. If someone business-critical leaves their role for a better job at a company that is enjoying healthy growth and you can’t afford to get someone of the same caliber, your business will slowly die.

Ignoring a zombie company won’t do any good. Unfortunately, they’re often created because businesses ignored signs that all wasn’t healthy in the company finance book. That’s why it’s so crucial businesses get help early on, raising their company back to the land of the living.

How Bell & Company can help

Whether it’s worth refinancing the debt, selling off a non-crucial asset in order to reduce the debt and giving the business a little more cash, or speaking with a business consultancy to achieve a company turnaround, there are ways of helping your business to get back on its feet again.

A business consultancy move will help advise you on the best course of action, bringing a fresh pair of eyes to your company and seeing what you work with daily, before coming up with a plan to rescue your business.

Call 0330 159 5820 for further information if your company is in a zombie state.


https://www.bellcomp.co.uk/blog/insolvency-worst-happens/

How loan sales and vulture funds could result in thousands of people losing their homes

A financial advisory company that specializes in dealing with personal and professional insolvency is warning how a state bank’s decision to sell off troublesome and underperforming loans could result in thousands of people losing their home.

Bell and Company are keen to alert homeowners in the North that are likely to be affected by Permanent TSB’s decision to put under-performing mortgages up for sale as part of Project Glas.

Terry Bell, Bell & Company Principle, said: “This decision by Permanent TSB is going to have lasting and damaging effects for those who own properties in certain regions. We are currently working with a number of clients that we know will be put out by this decision.

“The bank is 75% owned by the state and is planning on selling a loan book worth €4 billion to vulture funds. It’s important to recognize though that in some circumstances, not all of the customers who are going to be affected by this are underpaying or are guilty of not engaging with the bank and their financial responsibilities.”

“Often in these kinds of circumstances, customers who have engaged with their bank and have established financial arrangements are still classed as “non-performing”, despite their clear intentions of paying off their loans.”

“This sale will undoubtedly “stoke the fire”, of the many homeowners and investors who have been able to avail of extremely low tracker-rate mortgages, and the lender will definitely come under pressure from the new owner.”

“We are now urging anyone that is concerned about the implications of this proposal to get in touch with us today and allow one of our specialized financial advisors to help you find the best possible outcome for your problems. We are experts when it comes to providing strategies for people keen to overcome property debt.”

Those facing these property problems should also be aware that attempting to negotiate with vulture funds can be hazardous, especially when it comes to restructuring mortgages.

Terry continues: “With figures revealing that the amount of mortgages in arrears held by private investment funds has risen and home possession is also rising, perhaps it is time for politicians and parties to stand up against the damaging effects that vulture funds can have on ordinary families.”

For more information about managing debt or to get a free financial review, call Bell & Company on 02895 217 373 or email [email protected].

A Guide to Director’s Personal Guarantees

 

A Guide to Director’s Personal Guarantees

A Guide to Director’s Personal Guarantees

What is a personal guarantee? Why would I need one?

At the height of the business boom, banks were often very happy to provide loans to companies. They often required the directors of these businesses to sign an agreement, stating that in case of the company being unable to repay these loans, the signer, or guarantor, would be personally responsible for the repayment.

Although these agreements are not a problem as long as the business is repaying its loans under the agreements agreed by the lender, they have become more of an issue since the 2008 financial crash. Suddenly, companies have found themselves in difficulty, and lenders are entitled to pursue bankruptcy against the guarantor if they cannot repay the terms agreed when the original agreement was signed.

Limited company vs. sole traders/partnerships

Personal guarantees were generally only signed by directors of limited companies. Sole traders or those who work in a business partnership will often have been issued loans in their names.

Both kinds of loans put individuals at risk of losing assets or even being declared bankrupt if repayment fails.

What if I can’t pay?

If you signed a personal guarantee for your limited company and both the company and you fail to keep up with repayments, your lenders will pursue you to recover the outstanding debt. If you go straight to an Insolvency Practitioner, you will find they are legally obligated to try and get the best deal possible for your lenders.

Even if your bank account is overdrawn, your creditors can take legal action against you, and you could even find yourself under investigation.

What do I do next?

There are always options. You don’t have to face the stress and uncertainty of being liable for repayments by yourself. Bell & Company, as pre-insolvency consultants, specialise in helping people like you. If your loan has been sold off by your original lenders to a so-called ‘vulture’ fund who aggressively pursue debt repayment, Bell & Company’s involvement can help take some pressure and strain off your shoulders.

Bell & Company are fully informed of the most effective methods in order to get you the best possible outcome. They have numerous success stories, helping clients who were being pursued aggressively by lenders and creditors start fresh, without the threat of further repayments hanging over their head.

Contact Bell & Company here to see what they can do for you.

Can I be considered personally liable or be pursued for the Debts of my Business?

A primary question that many will ask as their Business beings to fail is, “Can I be considered personally liable or be pursued for my  business debts?”

SOLE TRADERS/PARTNERSHIPS
Many people in business will operate as an individual, Sole Trader or Partnership.
If this has been your chosen trading style, it is most likely that any borrowings from Lenders to support your Business will have been issued either in your personal name or that of the Partnership. That being the case, you will no benefit from limited liability status and, resultantly, are liable to be pursued for the full amount of the monies borrowed.

Where a secured business facility that has been issued to an individual(s) Partnership debt falls into difficulty, the subject Lender will work through the sale of any security held in order to seek to reduce the balance owing. Once this has been completed however, the individual(s) are fully exposed and can be pursued for the crystallised shortfall, up to and including Bankruptcy in which case personal assets can be at risk.

It is imperative that anyone in this position prepares themselves pro-actively in order to maximise protection as otherwise, home and other assets of importance could be materially exposed.

LIMITED COMPANIES AND PERSONAL GUARANTEES
If you operate as a Limited Company, then it is likely that any business debt will be taken out in the Company name, i.e. an entirely separate entity from the individuals operating the business

HOWEVER
In the event that you have signed a Personal Guarantee(s) on any facility obtained for the benefit of the Company, for example on a business loan or property lease, and the Company is rendered incapable of meetings its obligations under the terms of the agreement then you, as a Guarantor, will be personally responsible.
If you don’t meet the payment schedule/terms and conditions of the agreement, then the Lender, whether a Bank, Landlord or other, will pursue you personally for the debt and will take whatever action required to recover the full amount due under the Personal Guarantee.

OVERDRAWN DIRECTOR’S LOAN ACCOUNT WHEN COMPANY IN LIQUIDATION

If there is an overdrawn Directors’ Loan Account when a Company goes into liquidation, then the Directors will be held personally liable for repaying that loan. The IP appointed on the liquidation will demand and pursue repayment on behalf of the Creditors.

The IP is fully entitled to take legal action against the Director(s) personally which could, once again, lead to Bankruptcy if repayment cannot be facilitated.

Having an overdrawn Director’s Loan Account in a liquidation situation can also lead to personal Revenue liabilities and investigation if over a certain level.

MOVING FORWARD 

The expert team of Corporate Debt Strategists here at Bell & Company can provide Impartial and tailored advice to suit your needs. Contact us today for a free consultation on 02895 217 373 or contact us  where we can quickly review your case and point out your options.

FIXED CHARGED RECEIVERS OVERVIEW

For Corporate clients or those suffering business debt issues you may have been advised by a Bank that if your account is not rectified and arrears reduced then a Fixed Charge Receiver (FCR) may be appointed.

Why and FCR is appointed.

Fixed Charge Receivers are appointed once a Banking Institution has chosen to proceed to Recovery on a connection.  FCR are basically the Bank’s own Agents, appointed in order to proceed with the sale of property secured to the Bank.

A Fixed Charge Receiver will be chosen from a Banking panel list, shall be given instruction by the Bank to actively market properties on their behalf in most instances and shall give same Bank on-going advices/recommendations in respect of any offers that are forthcoming.

Consequences of having an FCR is appointed.

They can negatively affect your business through a loss of control. The sale converts from a consensual process into a forced sale scenario. This will ultimately reduce the sales proceeds as forced sales typically result in 70% of market value being achieved, this loss in value will reflect on the borrower with a higher shortfall to repay. FCR fees may also be added to your account. Communications from any potential purchasers will go straight to FCR as opposed to through Borrower direct.

Furthermore, any rental income will be collected by FCR directly. They will honour tenancy agreements where they correctly hang together and where there has been consent however may look to change locks where no tenancy agreements in place. Unfortunately, the borrower is still liable for rates if property is vacant even after FCR appointed.

Our experience with FCRs.

In dealing with FCR’s Bell and Company from experience have found it best to be co-operative & maintain communications. We have had some very positive experiences of working with FCR in progressing sales/transactions. It is also good to keep them informed regarding any interest in property/properties & provide all paperwork requested.

Maintaining a positive relationship with FCR can benefit all parties involved.

If you have any Corporate Banking Issues including issues with Fixed Charge Receivers, then please call Bell & Company today on 0330 159 5820 to arrange your free initial consultation. We look forward to assisting you.