What is company rescue?
The reality of running a company is that at some point in time, it will likely face problems that require some form of urgent action. How you deal with these kinds of situations, and what kind of strategy you design and implement, will have a massive impact on your company’s ability to weather the storm.
Here, we take a closer look at company rescue, including the services you’ll need to hire and the different kinds of available legal arrangements, to help you take your business through this difficult period.
Company rescue defined
Company rescue refers to a diverse range of potential solutions that can be applied to help save companies going through a difficult time. Due to its relatively broad frame of reference, exactly what a company rescue solution looks like will depend on the kinds of problems your business is facing, the legal structures that govern your business, and the goals and needs of the parties (such as creditors and other stakeholders) involved.
Services that can help
To plan and enact your company rescue, you’ll likely need help from a diverse range of different services. This includes insolvency practitioners such as Chamberlain & Co, solicitors with experience in your area of business law, banks and other creditors, and company restructuring experts.
It’s crucial that you’re able to assemble a team from these different specialist areas, so that you can operate based on a broad, informed perspective of both the issue itself and potential solutions.
Example solutions
Below, we go through a couple of potential structures that can be used to save a company, especially one going through insolvency issues.
CVA (creditors voluntary arrangement)
In many cases, you might be able to enter into a CVA to get your business out of a sticky financial situation. CVAs are essentially a contract that binds a company and its creditors to a specific strategy, providing both sides with certain assurances. This can allow the company to act in a more confident manner, without the imminent threat of legal proceedings.
Administration
Administration is a relatively similar process to a CVA, with some important differences. Perhaps most importantly, businesses placed into administration will be run by an appointed insolvency practitioner, while those in a CVA will still normally be run by their directors.
Compulsory liquidation
For businesses that are insolvent, and don’t have any other reasonable chances of escaping that financial situation, they may be forced into a compulsory liquidation. This will normally be a last-ditch effort, used by creditors who have not been able to come to any kind of agreement with the company that owes them money.
Which approach to company rescue you pick can have huge ramifications on whether your business makes it through or not. It’s crucial that you get advice from a range of different specialists so that you can make an informed decision about how to take things forward. It will likely be a stressful experience, but it’s imperative that you take your time and don’t make any rash commitments.
