Online liquidations – insolvency finally drags itself into the 21st century
2016 will be mentioned in history books of the future; depending who the authors affiliate with, and what will happen when it's all over, Brexit and its repercussions will be either glorified or vilified. But so far, almost a year later, 2017 has been a year filled with uncertainty for everyone. Ongoing political instability, like a noxious pandemic, is hitting grass-root start-ups and SMEs alike.
A poor economic climate has seen many companies cutting their losses before things get any worse. The last quarter of 2016 and the first of 2017 saw a huge leap in business insolvencies; the issue over tax rate increases making up the minds of anyone wavering. So catastrophic have the changes being that some say it's comparable to the aftereffects of WW2. So, if your business looks to be in trouble, take some comfort in knowing you're not alone.
New online liquidation process softens the blow
2017 has also seen a shift in the way insolvencies are actioned. In April, changes to legislation now means that company directors, by embracing modern technology, can speed up the process by communicating with any relevant bodies via email and attend creditors' meetings virtually (if necessary). For various reasons, the dreaded Section 98 initial meeting of creditors was often a long-winded, expensive process lacking its attendees, so it was removed back in 2015. And now, the final meeting of creditors has also been vetoed.
Thanks to the birth of online liquidations, small businesses facing insolvency can at least get it over with in a relatively short amount of time.
Online liquidations and the rule of 10s: deemed consent
Another change in legislation is deemed consent. What this means is liquidators are no longer entirely at the mercy of slow-moving creditors holding up the process and wasting more money. The ability to expedite liquidations online means business directors can make timely decisions and submit them digitally to their creditors. If either 10 individual creditors or 10% of all creditors raise no objection to the proposals, then the liquidator can presume all parties agree and help move things forward.
Please note that these changes don't affect how the office-holders remuneration package is set.
When it's time to get help
Often, most people know they're in trouble some time before they confide in anyone besides their paling accountant; their business slowly declining towards the point of no return. They lessen employee hours, with joviality say, 'It's just a slow period, things will pick up.'
The weight of responsibility (invoices left unpaid, utility reminders, HMRC clipping at their heels like the Grim Reaper) becomes suffocating. It's an extremely stressful situation to be in. Yet, the spirit and drive which got them into business tells them things might, just might get better.
When we catch ourselves facing insolvency, soon the stress of the situation can cloud our judgement and cause us to act irrationally; seeing the situation as either easily manageable or it being the end of the world. Clarity goes out the window. Whether you find yourself in trouble overnight due to sudden unforeseen economic circumstances or it's been bubbling under for a while, you can weather the storm alone or you can get professional help to facilitate the inevitable.
Type of help available when your business is facing bankruptcy
First, it's worth noting that when a business faces hardship, the last thing they want to do is spend more funds they don't have. This can prevent them from reaching out. But chances are, if they brought a professional onboard, they could save money.
Although online liquidation means it can now be a swift process, there are still rules to follow. Having the right support can make a huge difference to directors facing running the liquidation gauntlet.
If you're the one left to pick up the pieces, hopefully it's the first and last time you'll liquidate a company, but insolvency specialists deal with them day in day out. It's the kind of help you benefit from when the pressure of stress incapacitates your ability to make sensible decisions. Use their expertise, take advantage of them.
You're only human and people break sometimes. Knowing there's someone on your side really can make a huge difference.
What do they look at?
Everything. They'll analyse the overall health of your business, its assets, debts and past dealings with creditors. They'll also spot any immediate threats you might have missed. Most will work with you from the moment you make contact. Meetings will be arranged. You get to offload a lethal dose of stress to someone who can handle it.
If you bring someone onboard when in your heart you know you should, before the pressure skews your judgement, it's not uncommon for directors to learn insolvency isn't necessary. They missed a trick, there's a solution to salvage their business.
People break. They also mend
With everything that's happened over the past year; the legislative changes and economic unrest, there are many unknowns facing everyone. Like with the last financial crash which removed many household names from our high streets, some might say it's a convenient time to go bankrupt, cut your losses, etc. If only it felt that way for the thousands of small businesses who've folded so far this year.
But what is true is that we all have the ability to bounce back. Dust ourselves off and return stronger than before. Lessons learned, a new lease on life.
For more information on the matters discussed in this article, please feel free to contact one of our directors on 0800 955 3595 for a no obligation, confidential chat. Or alternatively, drop us an email at firstname.lastname@example.org.