Restructuring | Insolvency | Phoenix Companies
Sometimes the severity of a deficiency in a corporate entity requires some form of creditor compromise or creditor payment deferment. As a business moves from underperformance through to distress and ultimately to a state of crisis the need for the level of compromise inevitably increases. Ultimately without the issues being addressed the business will fail.
Our turnaround | restructuring services we designed provide comprehensive advice throughout the spectrum of business difficulty and the weaker the business the more radical the treatment. As the “value break” in a business deteriorates the deficiency increases hence the need for more severe treatment.
There are broadly 2 types of compromise:
- Informal, and
- Formal
Informal Schemes
Informal compromises are where a compromised settlement payment or a payment deferment is needed with one (usually dominant) creditor, a group (or class) of creditor or all creditors without going through a formal insolvency or rescue procedure under the Insolvency and Companies legislation.
Informal schemes are usually more used where there is underperformance bordering on distress or early signs of distress but are sometimes available in cases of crisis.
The compromise must be sought in tandem with structural changes to the business otherwise the same issues | difficulties are merely being delayed to another day.
Formal Schemes
These are where there are “formal” compromises under the Insolvency and Companies legislation, for example, Schemes of Arrangement; Company Voluntary Arrangements and Administrations and in some cases Liquidations.
Formal compromises are usually required when the balance sheet and working capital (“the deficiency”) is so excessive that it cannot be plugged without a discount (where informal arrangements cannot or will not work) and is the area in which the pre pack and | or much unjustifiable maligned Phoenix company arises. See our pages dedicated to Pre Pack | Administrations and Pre Pack | Liquidations for some further detail.
Such schemes are normally applicable where a business or parts of it are in distress and parts if not all are in crisis. Without help failure is inevitable.
Again schemes should be concluded in tandem with a change in the structure of the business otherwise the same difficulties will appear again. There is a growing tendency for many companies who are restructured to fail again as the main causes of the difficulties have not been addressed as part of and subsequent to the restructuring process. It has merely been a temporary fix delaying the inevitable complete failure.
Phoenix Companies
See our pages dedicated to Phoenix Companies and when they are suitable to be used; how we ensure they are used properly for your benefit and if used how to ensure all the objectives are achieved in full compliance with the Insolvency and Companies Act and ancillary legislation.
We deal with all key issues affecting a Tunraround | Restructruing including and this is not an exhaustive list
- Customer Contracts
- Supplier Contracts
- Retention of Title issues
- Personal Guarantees
- Licensing Issues
- Deal Structures
- Payment Terms
- Acquisition of name and goodwill
- 216 issues
- Debtor collection structures
- Commercial Records & Customer Lists
- Data Protection issues
- TUPE and how to deal with all the key issues
- Consultation
- Finance agreements | leased assets
- Release of existing security
- Finance for the turnaround | restructured | phoenix company
- Constitutional governance
- Shareholdings
- Security for new further investments
- Liabilities acquired through a restructuring
- Legal issues and claims and proceedings
- Directors Duties & Liabilities
With decades of expertise in advising lenders and insolvency practitioners and directors and entrepeneurs we are suited to help you through whichever process is utilised ensuring your best interests are preserved and enhanced throughout whichever process is utilised and beyond. The aim is to work with you to provide a permanent fix.
The Venture Consulting Team