Tag Archive for Insolvency

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How to spot firms falsely offering a ‘legal alternative to using insolvency practitioners’

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By Julie Palmer on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

In its latest report, the Insolvency Service has warned of firms falsely offering a ‘legal alternative to using insolvency practitioners’, misleading directors and losing millions of pounds of assets in the process.

But how can small business leaders protect themselves against these firms when the stresses of business distress are leaving them vulnerable?

In recent years, we have seen a growing number of firms offering insolvency services they are not qualified to deliver, or making promises they cannot legally keep.

The Insolvency Service has acknowledged this issue by closing several such firms, and dedicating part of its annual report to showing how it is tightening its grip on them.

It is evident that these unlicensed firms are viewing the stressful experience of winding down a business as an opportunity. Many owners are seeking a way out and anyone offering a simple, quick and seemingly inexpensive solution will no doubt be welcome.

Yet, it is these promises that the Insolvency Service is warning against.

Challenging the firms themselves

A number of unlicensed corporate rescue firms have been identified as falsely claiming they can provide ‘a legal alternative to using insolvency practitioners’, misleading

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The true role of a liquidator – what every small business owner needs to know

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By Jonathan Cooper on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Key takeaways

Small businesses often turn to a liquidator without a full picture of what they do.

A liquidator works on behalf of a company’s creditors rather than the company itself.

You should understand your current financial position and potential liabilities before speaking to a liquidator.

Liquidators are heavily regulated, there are public records of any fines or sanctions available to view.

Contact your accountant, Business Debtline or a company director specialist for independent guidance before deciding on a liquidator.

The emotional toll of closing a business

As many small business owners will know from experience, running a company can be a lonely and stressful journey – especially when financial difficulties arise.

Directors often pour their heart and soul into their business, so when the times comes to make the difficult decision to close their company, the emotional toll can be overwhelming. Stress, uncertainty, and a desperate search for solutions, can quickly take hold, clouding their decision-making.

It’s in that moment that many business owners turn to a liquidator to act on their behalf. But this is where a critical misunderstanding can sometimes arise and one that can have serious personal consequences.

The truth

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Nearly 17% of small businesses at risk of insolvency

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Nearly 17 per cent of small and medium-sized businesses in the UK are at risk of insolvency in the next four years as financial support from the Government winds down, says research.

Euler Hermes, the trade credit insurer, has found that Britain’s small businesses are in a more vulnerable situation than their counterparts in France and Germany.

Only 7 per cent of SMEs in Germany are at risk of failure within four years, and 13 per cent in France.

>See also: Swap Bounce Back debt for employee equity, say industry experts

Euler Hermes investigated insolvency risk across 525,000 small businesses across Europe.

The trade credit insurer said that manufacturers and suppliers to the car industry ranked among the most vulnerable, with more than 33 per cent in the sector exposed to the risk of insolvency. About 25 per cent of those in the energy sector and 20 per cent in construction were said to be at risk.

British business failures remained low during the pandemic, thanks to unprecedented Government support, as well as measures to protect companies from insolvency, but distress is expected to rise as the economy reopens, support is

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Hot Business News Today

Nearly 17% of small businesses at risk of insolvency

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Nearly 17 per cent of small and medium-sized businesses in the UK are at risk of insolvency in the next four years as financial support from the Government winds down, says research.

Euler Hermes, the trade credit insurer, has found that Britain’s small businesses are in a more vulnerable situation than their counterparts in France and Germany.

Only 7 per cent of SMEs in Germany are at risk of failure within four years, and 13 per cent in France.

>See also: Swap Bounce Back debt for employee equity, say industry experts

Euler Hermes investigated insolvency risk across 525,000 small businesses across Europe.

The trade credit insurer said that manufacturers and suppliers to the car industry ranked among the most vulnerable, with more than 33 per cent in the sector exposed to the risk of insolvency. About 25 per cent of those in the energy sector and 20 per cent in construction were said to be at risk.

British business failures remained low during the pandemic, thanks to unprecedented Government support, as well as measures to protect companies from insolvency, but distress is expected to rise as the economy reopens, support is

Read more...

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Number of small businesses in distress triple pre-Covid level

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Originally written by Timothy Adler on Small Business
The number of small businesses in distress has tripled compared with the pre-pandemic average, according to figures from accountancy firm Mazars.
This month almost 135,000 businesses are showing strain, as the impact of a year of Covid-19 restrictions reverberates.
Businesses in the services and retail sectors accounted for almost three-fifths of those showing distress, said Mazars. Sectors allowed to reopen were faring better, with construction and manufacturing businesses making up 7.9 per cent and 6.7 per cent of those in distress respectively.
>See also: UK-EU exports fell by over 40% in January 2021
Paul Rouse, partner at accountancy firm Mazars, said: “During more normal circumstances, we expect between 40,000 and 50,000 companies to trigger one of our negative health markers. Today- even with many Government support measures still in place – we are seeing roughly three times that amount: 135,000.
Rouse said that even these higher figures represented “the calm before the storm” as “significant amounts of business distress” would be felt once the Government withdrew its coronavirus financial support.
London accounts for just over a quarter of businesses in distress (25.58 per cent) followed by businesses more generally in the South East outside the M25 (18.44 per cent).
>See

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Hot Business News Today

Number of small businesses in distress triple pre-Covid level

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Originally written by Timothy Adler on Small Business
The number of small businesses in distress has tripled compared with the pre-pandemic average, according to figures from accountancy firm Mazars.
This month almost 135,000 businesses are showing strain, as the impact of a year of Covid-19 restrictions reverberates.
Businesses in the services and retail sectors accounted for almost three-fifths of those showing distress, said Mazars. Sectors allowed to reopen were faring better, with construction and manufacturing businesses making up 7.9 per cent and 6.7 per cent of those in distress respectively.
>See also: UK-EU exports fell by over 40% in January 2021
Paul Rouse, partner at accountancy firm Mazars, said: “During more normal circumstances, we expect between 40,000 and 50,000 companies to trigger one of our negative health markers. Today- even with many Government support measures still in place – we are seeing roughly three times that amount: 135,000.
Rouse said that even these higher figures represented “the calm before the storm” as “significant amounts of business distress” would be felt once the Government withdrew its coronavirus financial support.
London accounts for just over a quarter of businesses in distress (25.58 per cent) followed by businesses more generally in the South East outside the M25 (18.44 per cent).
>See

Read more...

Hot Business News Today

Half a million businesses at risk of collapse without more support

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Originally written by Timothy Adler on Small Business
More than half a million businesses are at risk of collapse by the spring unless the government extends Covid business support.
So says thinktank the Institute for Public Policy Research (IPPR) in its latest report.
The 600,000 businesses at risk of collapse without more support together employ approximately 9m people, “whose jobs could be lost” said the left-of-centre thinktank.
Small businesses (which together are responsible for a large share of UK employment) are most at risk of bankruptcy. About 40 per cent of firms with fewer than 50 employees have less than three months of remaining cash reserves.
>See also: SME owners hold £1.2bn of personal liabilities linked to Covid-19 loans
Half of all hospitality, food and other specialist service companies have less than three months’ cash left, as do 40 per cent of arts and entertainment businesses.
Overall, the number of companies with “dangerously low” cash buffers has risen sharply over the four months to the end of January, as national lockdowns slash trading, the IPPR said.
The chancellor should use the March 3 Budget to extend the furlough scheme, due to end in April, issue more grants, and take equity stakes in businesses in exchange for cash injections,

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Hot Business News Today

Half a million businesses at risk of collapse without more support

by  •  • 0 Comments

Originally written by Timothy Adler on Small Business
More than half a million businesses are at risk of collapse by the spring unless the government extends Covid business support.
So says thinktank the Institute for Public Policy Research (IPPR) in its latest report.
The 600,000 businesses at risk of collapse without more support together employ approximately 9m people, “whose jobs could be lost” said the left-of-centre thinktank.
Small businesses (which together are responsible for a large share of UK employment) are most at risk of bankruptcy. About 40 per cent of firms with fewer than 50 employees have less than three months of remaining cash reserves.
>See also: SME owners hold £1.2bn of personal liabilities linked to Covid-19 loans
Half of all hospitality, food and other specialist service companies have less than three months’ cash left, as do 40 per cent of arts and entertainment businesses.
Overall, the number of companies with “dangerously low” cash buffers has risen sharply over the four months to the end of January, as national lockdowns slash trading, the IPPR said.
The chancellor should use the March 3 Budget to extend the furlough scheme, due to end in April, issue more grants, and take equity stakes in businesses in exchange for cash injections,

Read more...

Hot Business News Today

How going insolvent could be the best way to save your business

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Originally written by Andrew Shipp on Small Business
These are without doubt, unprecedented times. Small businesses in virtually every sector are struggling financially and facing concerns about what is ahead and how they will survive.
Since May over a million bounce back loans have been issued, the 100-per-cent Government-backed loan scheme to support small businesses during the pandemic. But according to banks, it’s expected that half of these loans won’t be paid back, with many small business kicking bad debt further down the road.
If your company is “insolvent” – meaning it’s unable to pay its debts – or you’re worried that this is likely to be the case in the near future, then it’s important to consider your options.
>See also: Where to find your £5,000 small business technology grant
As a director, not only do you owe various duties to the company, including to act in its best interests, but you also face the risk of personal liability for debts incurred by the company, if you continue to trade once you are aware, or should be aware, that the company is insolvent.
There is no “one size fits all” solution if your company finds itself in such a position. For some, liquidation may be

Read more...

Hot Business News Today

How going insolvent could be the best way to save your business

by  •  • 0 Comments

Originally written by Andrew Shipp on Small Business
These are without doubt, unprecedented times. Small businesses in virtually every sector are struggling financially and facing concerns about what is ahead and how they will survive.
Since May over a million bounce back loans have been issued, the 100-per-cent Government-backed loan scheme to support small businesses during the pandemic. But according to banks, it’s expected that half of these loans won’t be paid back, with many small business kicking bad debt further down the road.
If your company is “insolvent” – meaning it’s unable to pay its debts – or you’re worried that this is likely to be the case in the near future, then it’s important to consider your options.
>See also: Where to find your £5,000 small business technology grant
As a director, not only do you owe various duties to the company, including to act in its best interests, but you also face the risk of personal liability for debts incurred by the company, if you continue to trade once you are aware, or should be aware, that the company is insolvent.
There is no “one size fits all” solution if your company finds itself in such a position. For some, liquidation may be

Read more...