There are a number of alternatives available to companies that will allow them to avoid going through liquidation.
These alternatives are ideal for companies that wish to find a procedure that enables them to comfortably pay off debts, whilst getting the business back on its feet.
An informal arrangement between the company and its creditors is ideal for companies that wish to pay off debts at a pace that is suitable for them.
The company director will usually produce a timetable indicating when and how much will be paid to the creditor.
If the creditor accepts the payment plan then the company can begin paying off debts at a comfortable pace.
An insolvency practitioner will usually ensure that the correct payments are made and that they are made on the dates that were provided by the company director when the arrangement was first accepted.
A more formal option available to companies is a Company Voluntary Arrangement (CVA).
This procedure is the same as an informal arrangement, but instead involves the company directors applying to the court with the help of an insolvency practitioner.
The insolvency practitioner will then make sure that the company directors follow the payment plan accepted by the creditors.
Another option is Administration, which is a procedure that involves a court.
This is ideal for companies that would like to involve the court in order to prevent creditors from taking any action against them.
The Administration procedure will enable the company to continue business and to organise payments with the creditors.
A fully qualified insolvency practitioner will act as administrator during the procedure.
Before undertaking informal arrangements it is important that companies ensure that any financial problems can easily be dealt with.
If a company's financial problems are too severe then liquidation or bankruptcy may be the only options available.
A financial advisor will be able to help companies to decide which procedures are best.