My company has debts it can no longer afford – what can I do?

Dealing with company debts is like navigating a tricky maze that every business faces at some point. Some debts are just part of the daily grind, but there are times when a company gets hit with debts so hefty that it’s like trying to swim against the current. When your expenses are playing tag with your income, that’s when the company hits the red zone—basically, it’s insolvent. But no matter if your company is a shining star or on a rocky road, there are ways to tackle this financial pickle.

• Creditor Pressure: Let’s talk about the elephant in the room: creditor pressure. It’s like dealing with that persistent friend who just won’t take a hint. They start with letters and calls, and if you keep ignoring them, it can escalate to court judgments and even bailiffs showing up. Ignoring it won’t make it go away because, surprise, creditors have the legal green light to chase what they’re owed.
  • To ease this pressure, you’ve got a couple of moves. If you think you can eventually settle your debts, a heart-to-heart with your creditors might work wonders. They usually just want to get paid, so there’s often room for compromise.
  • If that’s not your vibe, formal repayment plans like a Company Voluntary Arrangement (CVA) can bundle all your debts into a more manageable monthly chunk, putting a timeout on the creditor hustle.

Now, let’s say things are so dire that shutting down shop is on the table. It’s not as simple as turning off the lights; you need a licensed Insolvency Practitioner to do it by the book.

• Shutting Down Shop: This process, known as Creditors Voluntary Liquidation (CVL), involves saying goodbye to your team, selling off assets, and divvying up the cash among the remaining creditors.

If your company’s debts are in that awkward space between “we can sort this out” and “we’re done here,” administration might be the middle-ground superhero.

• Administration: An insolvency practitioner takes the reins, gives your company some breathing space, and makes changes to hopefully turn things around. It’s like hitting the refresh button and making your company more appealing to potential buyers.

In a nutshell, dealing with company debts is no walk in the park, especially with creditors hot on your heels. Luckily, there’s a bag of tricks—from friendly negotiations to admitting it’s time to wrap things up. The middle path involves a makeover for your company, with the main goal of wiping out that pesky business debt.