Business Recovery Specialists

Successful Action Curbs Creditor Pressure – Case Study

Here at Business Recovery Specialists our aim is to help businesses that are encountering difficulties to recover before insolvency occurs, so that their fortunes improve and profitable trading resumes. Businesses encounter difficulties for many reasons, including: cash flow problems, creditor pressure, HMRC Debt and problems with funding and finance. This case study is from a client whom we successfully helped recover and avoid the need to appoint an Insolvency Practitioner.

Creditor Pressure Was One of The Main Problems

We recently completed an assignment for a client who was under severe pressure from creditors, amongst other problems, that involved a unique set of circumstances. In particular urgent negotiations were required with a number of creditors to avoid a formal insolvency process and put the business on the road to recovery.

The company was at an advanced stage of negotiation with a potential investor, but required time to complete those negotiations.  The company could then agree sensible and actionable settlement agreements with its creditors.

Creditors can include HMRC, banks, trade creditors and suppliers and Landlords. Pressure for payment can easily lead to insolvency. Indeed creditors are perfectly within their rights to employ debt collectors and take legal action. This is when the insolvency process starts, which could lead to a winding up order from creditors.

Our job in these circumstances is to identify the cause of the problem(s) and find a solution. Most important, however, is to act quickly to implement the solution, before action is taken by the creditors that could lead to insolvency.

The Outcome Was Successful Following Negotiations With Creditors

A successful and final outcome was achieved swiftly. The company was protected against recovery action, whilst the investment was completed. Key creditors were kept updated as to progress.  In the meantime the company was able to continue with its business. So, despite a very difficult set of circumstances and a very short time period to work in, the result was the survival of the business.

The details of the case have to remain confidential due to some sensitive issues involved, but the client commented on:

“the sensible and pragmatic approach taken by you and your team which has been invaluable”

…. and went on to thank us for:

“working tirelessly to turn an impossible looking situation into one with a very positive future.”

 It is worth remembering that company directors are responsible for ensuring that creditors are paid on time. Failure to do so can be considered wrongful trading. Under these circumstances, the director can be personally liable for the debt (as opposed to the company). In addition, other severe problems can result, including director disqualification. The whole process can cause significant stress and sleepless nights, which is why taking early action is always advised.

Contact us if Your Business is suffering Creditor Pressure

Clearly there are more causes of business difficulties than being under pressure from creditors. Whatever the cause, however, our long experience in delivering business recovery solutions helps us to turn round challenging business scenarios without having to resort to formal insolvency procedures.

If your business is facing difficulties, then the sooner you contact us for an initial chat the better. That way we can discuss the options that are available and take the appropriate action. Contact us or call us on 0333 222 8065.