Insolvency
Corporate
Personal
Corporate Voluntary Arrangements
Company Voluntary Arrangements (CVAs) can be used to rescue an insolvent company by agreeing a composition or arrangement with its creditors and thus avoiding insolvent liquidation. We are pioneers in using this procedure with innovation and creativity to offer real solutions.
The advantage of a CVA is that it allows the company and its creditors flexibility in reaching a binding agreement that can be tailored to specific circumstances.
Our team has significant experience in assisting directors in the preparation of proposals for CVAs and in acting as supervisors in approved arrangements.
Administrations
Administration was introduced by the Insolvency Act 1986 and modified under the provisions of the Enterprise Act 2002. The company and its assets are placed under the control of an administrator and the protection of the court with the rights of creditors in effect “frozen” until the administrator produces his or her “proposals” to deal with the company’s affairs and assets. Our insolvency team has thorough and well practiced expertise in dealing with administration.
We are able to accept the appointment as administrators when:
- out of court by the company or its directors
- by the court or upon application of the company or its directors (or one or more of its creditors, the holder of a qualifying floating charge or an appointed liquidator)
- out of court by the holder of a “qualifying floating charge”
We will advise on the following options:
- the rescue of the company as a going concern and, if this is not reasonably practical
- to achieve a better result for the company’s creditors as a whole, than is likely in liquidation; and finally
- where the above are not reasonably practical, the only objective must be to realise the assets for the benefit of one or more secured or preferential creditors
Where a rescue of the company is not possible such an appointment would be made with a view to maximising the return to creditors as a result of selling the business and assets as a going concern, in whole or in part.
Such a sale may be concluded either:
- on a “pre-packaged” basis to a known purchaser or
- following a period of administration trading, during which the business would be extensively marketed for sale.
Pre-packaged administration sale of business and assets
A pre-packaged sale of the business and assets as a going concern would be possible should a purchaser be identified in advance of administration. A sale contract would be agreed prior to the administration and would be completed by the administrators, immediately upon their appointment.
A purchaser may insist upon this option to avoid the transaction being overturned at a later date. In addition, the directors of the company would normally seek the protection of the administration to facilitate the sale due to the insolvency of the company and the sale proceeds being insufficient to pay all creditors in full.
The administrators have a duty to maximise the return to creditors and would need to be satisfied that the pre-packaged sale represented the best, or indeed only, deal available to them. We are able to use our transaction support department to provide valuation advice.
We are able to provide assistance in providing sources of funding to facilitate such a transaction.
Sale of business and assets during Administration
Alternatively, an administration trading strategy could be adopted: this would centre upon marketing the business within the relevant community with a view to concluding a sale of the business and assets.
This strategy will often rely upon a party being identified who would be willing to fund the costs of administration during this period.
We can assist in certain circumstances in identifying such sources of finance.
We can advise an overseas company on the use of this procedure by establishing the centre of main interest within the UK and thereafter utilise the european regulations and uncitral law.
Receiverships
In the area of receiverships we are experienced in:
- administrative receivership
- Law of Property Act
- acting under the direction of the court
Administrative receivership
We are able to advise a senior lender or other lender when a company breaches the terms of its borrowing and the creditor wishes to use this enforcement remedy. It is only available to a creditor holding security which includes a floating charge over all (or substantially all) the assets of a company. In general it is no longer possible to appoint an administrative receiver under a security instrument created after 15th September 2003.
There can be tax advantages including the non payment of rates which we will assess in recommending such an appointment in order to maximise the return to the appointor.
We would ensure regular and bespoke reporting as would be expected, where the principal duty of care is the appointor, unlike Administration.
Law of Property Act (LPA)
An LPA receivership is effectively a fixed charge appointment generally covering the debtor’s property to enable the receiver to recover debts and rents. We can advise on the extent of the security taken together with the ability to trade and realise the property itself. We will also advise on the option of administrative receivership or administration as an alternative.
We will often work closely in conjunction with surveyors offering a solution where they are not licensed office holders.
Court appointed
In cases of commercial dispute we are experienced in acting under the direction of the court as receivers.
Liquidations
We deal with:
- creditors’ voluntary
- compulsory liquidation
Creditors’ voluntary
We will consider all of the available options but if liquidation is most appropriate, we will ensure that the law and appropriate professional standards are complied with and that the rights of all the parties are protected.
A voluntary liquidation is initiated by a meeting of directors with our assistance. This initial meeting resolves to convene:
- a meeting of shareholders with at least 14 days' notice, unless the timescale is abridged
- a meeting of creditors with at least seven days' notice
The shareholders’ meeting resolves to pass an extraordinary resolution that the company should be placed into voluntary liquidation and that a liquidator be appointed. A director acts as chairman of the meetings.
Smith & Williamson prepare a report on behalf of the chairman to contain relevant information concerning:
- the company's affairs
- a statement of affairs
- a summary of the financial position
The creditors are then asked to approve the appointment of the liquidator, by a simple majority in value or to propose an alternative liquidator and decide whether they wish to appoint a liquidation committee to supervise the conduct of the liquidation.
Upon appointment we would realise the company's assets and distribute realisations according to the claims of various classes of creditor. We are prepared to consider agreeing our remuneration on a performance basis with a view to maximising the return to creditors within an agreed time scale.
Compulsory liquidation
Compulsory liquidations instituted by an order made by the court usually on the petition of a creditor, the company, or a shareholder.
We will accept an appointment to act as:
- liquidator following a meeting of creditors at which we will provide representation to creditors and/or their representatives at no charge
- secretary of state appointment
- provisional liquidator pending the hearing of the petition and the assets are in jeopardy or under dispute
Our specialist teams will assess and pursue claims for:
- fraudulent trading
- wrongful trading
- misfeasance
- preference
- transactions at an undervalue
- unpaid capital
- recover any avoidable dispositions
Individual Voluntary Arrangements
An Individual Voluntary Arrangement (IVA) is a rescue procedure for individuals as an alternative to formal bankruptcy.
Advantages of IVAs
- debtors maintain more control over their affairs since the IVA is not publicly advertised
- creditors avoid the duties, expenses and fees due in bankruptcy
- useful and constructive way to achieve a better deal for both creditors and the debtor. However, the creditors require a strong commitment from the debtor, so it is by no means an easy option
We have a national network of insolvency practitioners and have successfully acted for debtors utilising IVAs.
Bankruptcy
We will accept an appointment to act as:
- trustee in bankruptcy following a meeting of creditors at which we will provide representation to creditors and/or their representatives at no charge
- Secretary of State appointment
- interim receiver pending the hearing of the bankruptcy petition and the assets are in jeopardy
Our specialist teams will assess:
- if the bankrupt has surplus income above his needs and those of his dependants and require contributions to his creditors
- claim any property acquired by the bankrupt for as long as the bankrupt remains undischarged from his bankruptcy, such as assets left to him in a will. Such acquisitions will be realised to the benefit of creditors
- recover any avoidable dispositions
- reverse any antecedent transactions
We can advise the bankrupt and representatives as to his/her rights to retain property including pension rights. We can also assess the possibility of proposing an IVA as an alternative.
Contact us
For more information contact a member of the team.
