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What rescue options are there for companies?

When a business is facing significant financial problems, it can be a difficult and worrying time for everyone involved.

Trying to juggle the running of the business alongside a restructure or rescue is a challenge, especially if you don’t know where to start. Understanding what options you have will ease the pressure and burden, allowing you to focus on saving the business. 

Below are a few rescue options to consider:

Trading out

If there are only a few problems, you might be able to avoid any formal procedures by looking at ways to cut costs in your business or securing extra finance. By selling the company car or downsizing company premises, you could raise the extra cash you need to help with cashflow. If you’re looking for a loan or quick cash, consider using alternative lenders, like crowdfunding platforms or invoice finance providers. 

Time to Pay (TTP)

A Time to Pay deal is a debt repayment scheme made with a creditor, most frequently HMRC. If your company is struggling to keep up with VAT or PAYE payments, this arrangement can give you more time to pay back the debt, easing financial pressure. Generally, you have can have up to a year to make repayments.

Company Voluntary Arrangement (CVA)

This is a formal deal between your company and its creditors. Maybe you are behind with tax payments, the business is suffering a financial loss or legal action has been threatened. A CVA allows you to repay debt over three to five years (from future income). You stay in complete control of the company and it continues to trade. This type of arrangement is a powerful rescue tool that can turn around the company.

Pre-pack administration

A pre-pack administration deal is the quick sale of a business to a third party or new company. The old company is put into administration at the same time as the sale.  A pre-pack can stop legal actions against a company and can safeguard jobs. Most importantly, the business itself can continue running and customers should not see any interruption in service.

If you’re not sure what the best solution is for your business, seek legal or insolvency advice as soon as you can. While problems may seem small now, they can escalate very quickly if ignored.

Anna-Lisa Searle writes for turnaround and insolvency specialist firm, KSA Group, and is a contributor to Rescuing struggling companies since 1997, KSA Group is an Insolvency & Rescue Awards finalist for Corporate Recovery Firm of the Year 2014.

This information should not be interpreted as financial advice. Commercial mortgage rates are subject to change. Speak to our advisors for a mortgage illustration.