Our team helps businesses that experience financial stress. We understand the pressures this brings, and the need to provide clear, practical support and advice.
We act for management teams, investors and funders across all sectors and we support clients of varying size from start-ups to large corporates. PKF’s global reach also enables us to provide support in scenarios where multi-jurisdictional expertise is required.
Occasionally financial problems can become so severe that a formal insolvency process is needed to give a business breathing space or to enable an orderly wind-down to be carried out.
We know that contemplating a formal insolvency procedure is stressful, and the range of options can be confusing. We can support you to alleviate cashflow pressure, negotiating with financial stakeholders and raising finance. In the most acute situations, we provide robust but empathetic guidance on formal restructuring options or insolvency processes aimed at achieving an optimal outcome in difficult circumstances.
Our services
Administration
Administration is a court based procedure which prevents creditors from taking enforcement action (such as a winding up petition) against a company.
Administration is usually used where there is a prospect of rescuing all or part of a business. It is used to protect a business whilst it is restructured (for example reducing costs or exiting onerous contracts), sold as a going concern or its assets are sold.
Company Voluntary Arrangement (CVA)
A CVA is a legally binding agreement with creditors to reschedule and/or reduce a company’s debts to allow it to carry on trading.
Whilst a CVA is in place creditors can’t take legal action against the company. The directors remain in full control of the business, although an insolvency practitioner must be involved in helping to draft the initial proposal to creditors and monitoring the arrangement if it’s approved.
Creditors Voluntary Liquidation (CVL)
A CVL is a legal procedure for closing an insolvent company where there is no prospect of preserving all or part of the business.
A Licensed Insolvency Practitioner (IP) is appointed as liquidator and is responsible for closing the company, realising its assets (typically selling vehicles, stock and equipment and collecting debtors) and distributing available funds to creditors.
Compulsory Liquidation
Compulsory liquidation is a legal procedure which forces a company to be closed and its assets distributed.
It occurs when a creditor has been unable to obtain payment and applies to court for the company to be liquidated.
Members Voluntary Liquidation (MVL)
A solvent liquidation (Members Voluntary Liquidation or MVL) is a method of winding down a company which has ceased to trade but is still solvent. This means that all creditors have been or will be repaid in full, and there are surplus funds to return to the shareholders.
The main advantage of an MVL is that it can be a highly tax efficient method for shareholders to be repaid their capital from a dormant business, because all distributions made in the liquidation are treated as capital gains rather than income. Capital gains treatment should lead to much lower tax liabilities than the equivalent dividends, especially if Entrepreneurs Relief also applies.
Personal Insolvency
There are several procedures which deal with personal insolvency.
Bankruptcy, traditionally the most common procedure, is a result of a court-based enforcement usually by a creditor and will result in the appointment of a Trustee overall an individual’s assets. It is usually an option of last resort for both creditor and debtor.
Restructuring Plan (RP)
A restructuring plan is a formal mechanism to enable a distressed company to achieve a compromise with creditors.
It is useful where there is a need to treat classes of creditors differently or compromise the claims of secured creditors or members.
Statutory Moratorium
A Statutory Moratorium is a legal procedure which provides a period of breathing space for a company, during which creditors (including secured creditors) cannot take enforcement action.
Although it is for use by companies who are suffering financial difficulties it can only be used where a company is reasonably likely to be able to continue as a going concern (rather than requiring a formal insolvency process at some future point).
Corporate Simplification
Large group structures can place a disproportionate burden on management resources. Maintaining too many corporate entities may also result in unnecessary duplication, onerous compliance and present additional risks in a constantly changing regulatory environment.
The simplification process is straightforward and extremely cost effective. We work directly with management teams to identify unnecessary, non-core and underperforming entities within your group and then produce a road map to a simplified structure. Working closely with our tax and regulatory experts, we also ensure that there are no financial or regulatory disincentives to the proposed transformation to ensure that w
Insolvent Estate
Specialist help with insolvent estates – protecting the personal representative during the Deceased Insolvent Estate process.
