Preventing Open Position Liquidation in the United Kingdom

1. Get Quote About FAQs Blog Contact Make Payment Recent Post Understanding the UK Insolvency Register and Common Misconceptions 24/08/2024 Different Types of Bankruptcies in the United Kingdom 21/08/2024 Do Companies in the UK Give Compensation When It Closes Down? 13/08/2024 Financial and Tax Implications of Creditors’ Voluntary Winding Up 01/08/2024 Post-Liquidation Options for Limited Company Owners in 2024 24/07/2024 Preventing Open Position Liquidation in the United Kingdom 0 Comments / Liquidation / By Viv1 If a creditor wants to put your company into liquidation, they will need to file a winding up petition in court. If this winding up order is granted, your company will enter into compulsory liquidation, which will involve the sale of your assets so that you can use the money generated to pay off your creditors as much as possible. If you would like to avoid this happening, then it is important that you are aware of the financial position your company is in and take the necessary action if you have a creditor considering this route. So, if there is a chance your company is going to be forced into open position liquidation, what steps can you take in order to prevent this? Enter into Negotiations A lot of the time, if you maintain good communication with your creditors, this is an excellent way to avoid any kind of potential liquidation. You might believe that a positive outcome cannot come from negotiating, especially if you’ve tried this before, but the fact is that having a reasonable discussion with your creditors can often yield really positive and mutually beneficial results. Something that could help you is getting professional support for these negotiations. This can help when it comes to instilling confidence in your creditors and reassuring them that you will eventually be in a good enough position to pay them back. These negotiations can be as informal or formal as you would like depending on the tone you’re trying to set. Try HMRC Time to Pay If you are a new business or if you are in a position where you are struggling financially, then taxes can really creep up on you, and you may not be in a position to pay them. This might not seem like a big deal when you consider the likes of creditors, but the fact is HMRC are actually quite quick to close down businesses if they believe those businesses are insolvent. As such, if you are not going to be in a position to pay your taxes, then you should be sure to contact them as soon as possible, as opposed to just avoiding payment all together. Chances are HMRC are going to be keen to offer a Time to Pay (TTP) arrangement. What usually happens with these payments is that you will be given some extra time to pay off your remaining taxes. During this period, you are also going to need to stay on top of your current tax liabilities as well. Again, it is a good idea to enlist the help of professionals who will be able to assist with putting forward a proposal for Time to Pay. Pay Off Debt with Alternative Finance If you have a creditor who is being stubborn and is completely closed off from the idea of negotiation, then your business should consider looking out for additional finance, which will help with paying off debt either in part or in full. You can always borrow from a bank, but there are other options, too, such as invoice finance and asset-based funding. Both of these options offer you good flexibility and a boost in your organisation’s capital, which will help when it comes to paying off any outstanding debts. The type of funding available to you will depend on how your organisation is structured. As such, be sure to consider the different options that you have so you can pay off your creditor before they officially take legal action. Consider Entering into a Compulsory Voluntary Arrangement If you have a few debts outstanding, then it may be worth entering into a Company Voluntary Arrangement. This is one of several options that will help to prevent creditors from forcing your organisation into liquidation. A CVA is always a good option because it means that you can carry on trading with your business whilst repaying your creditors a monthly amount which you can afford. You are going to need to hire insolvency practitioners in order to carry out this process, as they will be responsible for assessing your company’s finances and then also putting forward the proposal to your creditors on what your business is likely able to pay. Getting good support throughout this process is crucial as for a business to enter into a CVA, 75% of all creditors need to agree to said CVA.

2. Enter into Company Administration Another effective solution for your business could be entering into company administration, as this will also prevent liquidators from placing your company into liquidation. When you enter liquidation, you get an eight- week moratorium period where you are going to be able to put together some kind of business recovery plan, which will provide you with a number of different positive outcomes for your organisation. Once you enter into administration, one of the potential exit strategies could be to enter into a CVA (as discussed above). There are also going to be other methods you can consider as well. Giving yourself these eight weeks to have a proper think over what you can do to overcome these financial issues is crucial. Do You Need Assistance with Your Businesses Finances? Running a business can be difficult, especially throughout the current periods of economic uncertainty that we find ourselves in. As such, it’s normal to find yourself owing some money to creditors. The problem with being in debt is that it means creditors might try and force your company into open position liquidation, which would mean that you have to stop trading and shut down operations. Naturally, this isn’t something that you want to do. If you require help with running your business, then you may well want to consider taking the time to speak to professionals such as Simple Liquidation. Our team of experts will be happy to sit down with you in order to understand your organisation’s current situation further and then put together a plan to get you on a more solid footing. If you require further information or have questions, do not hesitate to get in touch. ← Previous Post Next Post → Sponsored Texas: Low Mileage Drivers Should Claim This Large Reward UltimateInsurance 0 Comments Login  1 Start the discussion… LOG IN WITH OR SIGN UP WITH DISQUS ? Name Share Best Newest Oldest  Be the ?rst to comment. Subscribe Privacy Do Not Sell My Data Sponsored Texas: Low Mileage Drivers Should Claim This Large Reward UltimateInsurance Privacy Policy T&Cs Simple Liquidation

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