How to Close a Business that has Financial Problems
Understanding how to close a business if it is struggling with insolvency is crucial for a director in order for them not to increase the damage caused to creditors.
The majority of the time the reason why a company struggles financially is through no fault of the directors but either an industry or environmental issue. Directors must therefore understand that they will not be blamed for needing to close down their company by entering a Liquidation process but instead been seen as someone who is willing to minimise the risk to creditors and do the right thing for all parties involved.
Steps to Closing the Business
Contact your Accountant or an Insolvency Practitioners for advice
This is the most important step within the process of closing down a company as it is the point in which a Director is willing to seek help and advice on a problem they are experiencing with their company. It is never going to be easy admitting that your business is struggling; especially a micro or small business as the directors will often see the business as an extension of their family after having worked extremely hard to build it up and trade it for as long as they have. This is why you should seek professional advice as soon as an insolvency problem occurs. This way there will be more options available to the business; specifically business rescue options which can see the company trade forward out of their debt.
If you do not want to discuss these matters with your accountant, an Insolvency Practitioner will be the next best “go to” person as by law, they are the only people who are legally allowed to be appointed on a formal insolvency process. By going direct to them, it will save a Director time and most importantly money as there will be no third party advisory fee.
Meet an Insolvency Practitioner
There is only so much advice you can expect to receive over the phone. In order to gain the most out of your free consultation with an Insolvency Practitioner it is advised to arrange a face-to-face meeting. This way you will have more time to ask questions and allow the Insolvency Practitioner to give you more in-depth details regarding the different processes. It will also give the Insolvency Practitioner a chance to gain a clearer understanding of where the company sits and what help is available for them.
An Insolvency Practitioner will never put you on the spot and make you decide what you are going to do there and then. The timings of this entire process will be down to you as Director and so you need to make sure you take your time before deciding on a process as you will want to make sure it is the best solution to your situation.
Once a decision has been made and a process chosen the next steps will be to supply the Insolvency Practitioner with all of the relevant information they require for them to proceed. This information will include things like; company details, asset & liability details, company director details, any security given etc. Following on from receiving all of this information the Insolvency Practitioner will need to then schedule and advertise the relevant statutory meetings and begin preparing the statutory paper work to place the company formally into Liquidation.
The Liquidation Process
Depending on which process you have decided on will determine the next steps for you and your company. You will receive more details regarding this when you talk to an Insolvency Practitioner.
So what’s next in proceeding with closing down a company?
We hope that after reading through this it has put your mind at ease regarding closing down your business via a Liquidation process. As you can see, the decision and timing to begin any process is down to the Director. This is so they can proceed with what they feel is the best solution to their company’s situation.
To begin the process, and receive some free advice regarding closing down your company, call one of our Licensed Practitioners today on 01455 555 444 to receive free, confidential advice.