It has been announced that from 1st October 2021, creditors can now start to use winding up petitions as a debt collection tool though the debt level has been increased to £10,000 from the previous £750.
The creditor must also give the debtor company 21 days to propose a repayment plan.
This will be welcome news for cash starved suppliers but could cause problems for their customers and in some instances, the directors of those companies as the protection from wrongful trading actions was lifted in June 2021.
If you are a business coming out of lockdown and conditions are tough, now is the time to look at your business and establish whether it is viable.
If its is viable and you receive a winding up petition, or ideally before that, agree a sensible and affordable repayment plan with your creditors, including HMRC.
Only propose what the business can realistically afford
Being proactive will help you and give your creditors confidence in you and your business
We can help you with a business plan to see if your company is viable and to see what it can realistically afford to pay each month.
We would also look at the funding of the business as a change of funders or refinance of assets will increase the cash available to make a repayment plan more attractive to creditors
It could be that the business is viable but needs support in areas where the management team have skill gaps to help improve profitability
We work with specialists in a range of fields from marketing, to process change, cash flow management to HR etc who will be able to help and are partners with the Association of Business Mentors
It may be that some creditors don’t agree the repayment plan at which point we may need to use an insolvency process to protect the business while a formal repayment plan is put in place
That may be a company voluntary arrangement (CVA) that may give creditors a payment from ongoing profits. It may be that the administration process is used to give the company protection from creditors while the CVA is prepared and agreed
If it looks like your business is unviable, as a director you need to act in the interests of all creditors if you are to avoid any sort of personal liability and it may be that you need to take steps to place the company into liquidation.
Simply applying to the registrar of companies to strike the company off, will not remove the risk to the directors personally.
If you think your company is unviable, speak to us to discuss the range of options open to you
We will also advise you on the personal risk you face from ongoing trading while you know the business isn’t viable
Click here for professional impartial help https://www.harrisonsbusinessrescue.co.uk/contact-us/