Insolvency Services

Eric Brightwell, one of our former partners, has been an insolvency practitioner for over 30 years and can deal with all aspects of recovery and insolvency, acting for company directors or partners of LLPs, creditors, lending institutions and shareholders. Drawing on his extensive knowledge and experience he can provide a range of solutions for financially distressed companies.

In all cases we recommend an early consultation in order to improve the outcome and keep the widest range of options available. Involvement at an early stage is necessary to enable any advisor to take a proactive approach, and directors need sound guidance as soon as insolvency becomes a possibility if they are to avoid the risk of personal liability.

Corporate services

• Advice for financially distressed companies: as a preliminary step we can prepare cash flow projections in order to establish the prospects for continued trading, and offer advice on raising finance to rectify temporary cash flow problems.

If it is not possible to save a company, then it may still be possible to rescue the business, usually by way of a formal insolvency procedure. The other advantage of a formal insolvency procedure is that it can protect the directors from possible personal liability for some or all of the company’s debts. The main alternative procedures are:

• Administration Order: initiated by the directors in order to:

1. Sort out temporary problems with a view to the company returning to profitability and continuing to trade
2. Achieve a more beneficial realisation of assets than possible with a liquidation

• Corporate Voluntary Arrangement: initiated by the directors in order to propose a settlement of all the company’s debts by part payment out of future profits, capital introduced, or the sale of some assets. In order to succeed, this requires the agreement of 75% of those creditors voting on the proposal.
• Members Voluntary Liquidation: a formal procedure for winding up a solvent company. It is often desirable in order to protect the directors from subsequent claims, and is required where the share capital and/or assets exceed certain thresholds.
• Creditors Voluntary Liquidation: a formal procedure for winding up an insolvent company. This is usually instigated by the directors in order to protect their position and avoid the risk of personal liability.
• Compulsory Liquidation: a Court procedure which is usually instigated by an aggrieved creditor serving a winding up petition on the company in respect of an overdue debt. Once the petition is served there are legal restrictions on those transactions which are allowed to take place, with strict penalties for non-compliance. The Official Receiver acts as the initial liquidator and will prepare a report on the conduct of the directors. With the support of the creditors a professional liquidator can be appointed to take over dealing with the assets and agreeing creditors' claims.

Eric Brightwell can also act for creditors who are owed money by an insolvent business, offering an evaluation of the alternative courses of action, and becoming involved in the insolvency process itself if necessary.