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Partners & sole trader insolvency

The Enterprise Act 2002 introduced the most sweeping changes to corporate and individual insolvency for 18 years and has reformed some long-standing practices.

One of the key changes was the abolition of preferential creditor status. Previously the Inland Revenue and HM Customs & Excise would have ranked as preferential creditors ahead of ordinary creditors. Now, ordinary creditors can potentially receive more money.

The section of the Insolvency Act 2000 which allows partnerships to obtain a moratorium from their creditors came into force in 2003. This allows time to put together a partnership voluntary agreement. At present this has not been used a great deal, principally because of funding problems.

Business turnaround and cash flow problems

Cash flow is the life blood of any business. If you are experiencing problems controlling debtors and paying bills when they become due, then you should consider talking to our turnaround team. They can give you guidance on how to reduce debtor days and improve your cash flow situation. They can also negotiate with your creditors and the bank. Seeking early advice can often turn an ailing business into a successful one.

Independent review

An independent review can offer significant benefits to a business and its bankers. Proprietors are frequently unwilling or unable to see the facts and will unwittingly distort information to give a better picture. As all lenders are reliant upon the information supplied by the business, they need to exercise caution.

Critchleys will quickly investigate the current position and prospects, and report accordingly. A sound business should be organised so that it can thrive; if a business is in difficulty, it is often better to stop it at an early stage to protect the interests of the participator and the creditors.

Investigations and monitoring

Critchleys' experienced business recovery team will prepare reports and recommendations for investors, bankers and proprietors. They will also undertake viability studies and provide monitoring services to banks and other lenders.

Partnership Voluntary Arrangements

The team will prepare proposals to put to partnership creditors offering partial or scheduled payment of debts as an alternative to liquidation. Alternatively, particularly where there are a small number of partners, it may be more appropriate for each partner to put forward “inter-locking” individual voluntary arrangements. Our team will be able to advise you on the best option.

Soletraders

Our team can advise on individual voluntary arrangements and bankruptcy. More information is available on the Personal Insolvency area found here.