Services For Companies in Financial Difficulty

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1 Services for Companies in Financial Difficulty Insolvency procedures are varied and complex and the sooner we are consulted, the more options are likely to be available. HBG understand the anxiety which financial problems can cause and is committed to finding a speedy solution. Managing Recovery Report A strategic review of a business with particular emphasis on managing a return to profitability. This can include a budgeted profit and loss and cashflow forecast so that actual performance can be measured against plan. Financial Reorganisation or Sale It may be possible to reorganise a company s affairs without the need for formal insolvency procedures. We can help formulate a strategic plan and negotiate with principal creditors. If necessary, we can advise on a sale of the whole or uneconomic parts of the business. Administration Order An administration is an insolvency process that is sanctioned by the Court and gives a company protection from its Creditors whilst it reorganises its affairs Company Voluntary Arrangement Often used in conjunction with an administration order to reorganise a company s affairs. In simple terms, it is a contract entered into with Creditors in satisfaction of their debts. It can often result in Creditors accepting a fraction of what they are owed in settlement of all claims against the company. Advice on Directors Responsibilities Directors responsibilities can be extremely onerous in insolvency situations including personal liability for a company s debts. We can advise Directors on the steps necessary to protect their interests as well as those of their creditors. Court Appointments Our Partners can act as special managers of companies in Provisional Liquidation and Court Appointed Receivers in disputes, investigations and other situations. HBG is committed to providing professional and courteous advice and the initial consultation is always without charge. HBG Liquidation Where a business cannot be saved, it may be necessary to liquidate the company. We can advise the Directors, shareholders and their advisors on the procedures and also act as Liquidators.

2 The Managing Recovery Report All businesses reach cross-roads, when the way forward needs to be appraised. This need may be identified by the management or its bankers. It is not necessarily a crisis time, but fundamental decisions may need to be taken to support the company s financial position as it moves forward. HBG s dedicated team of Chartered Accountants is well-versed in corporate financing. The value of our Managing Recovery Reports is well recognised by banks and their Clients. The review, which is independent, explores: the current financial position; the business strategy; the business viability; the trading projections; management capability; the true worth of bank and other lenders security; the level of ongoing bank support. The recommendations will include: structure of facilities and alternative financing options and security support needed; customer/bank reporting requirements; profit and cashflow improvement plans; changes to the corporate structure and management where appropriate; an action plan agreed with the Client. The benefits include: a consensus on the way forward; the flagging of potential problems; a discipline on management; the identification of opportunities for profit improvement; a level of comfort for the lender; a less threatening review than a viability report; usefulness to management. The report and recommendations will be made in a presentation to the bank and Client, as appropriate. There can be a follow-up review, normally after three months, to check that plans, monitoring and procedural recommendations have been put in place. There is a fee for this service, agreed at the time instructions are given. HBG

3 The Solvency Review This is an independent service for banks and other lenders provided by HBG s dedicated team of Chartered Accountants. The review is designed specifically for cases where there are serious concerns about viability. The review, which is independent, explores: current financial position; viability; short-term funding requirement; existing and projected security values; options; recommended action plan. There will normally be a fee for this service, competitively pitched according to the size of the company and the scope of the lender s letter of instructions. HBG

4 Property Receiverships HBG act as receivers under a fixed charge over both commercial and residential properties. We are experienced in keeping the business trading when this will protect the mortgagors and owners interests, and have a wide range of expertise in all types of business, particularly: care homes (residential & nursing); hotels; public houses; restaurants; night clubs This gives mortgagors: a clear view on disposal options; a fixed fee for disposals; regular progress information Through our working relationships with first-class commercial agents, we offer on a fixed fee basis: a viability report including business prospects, options to trade on or disposal with recommendations; receivers and agents fees. Advertising and legal fees are charged separately, as is a regular reporting programme to suit your needs. We can obtain quotations for legal work when instructions are received. HBG

5 Financial Difficulties - the Director s Checklist Is the company insolvent? The company is insolvent if: it is unable to pay its debts as they fall due, or; the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities. Responsibilities if the Company is Insolvent The Directors primary duty is to avoid further potential loss to the company s Creditors. Personal Liability of Directors If a Director has failed to take every step they ought to have taken, with a view to minimising the potential loss to the Company s Creditors, they could incur personal liability. They may also be disqualified from acting as a Director. Steps Necessary Once Insolvency is Identified Establish an up-to-date financial position. Consider prospects for survival, taking care not to be over optimistic nor unduly pessimistic. Where viability is not in doubt: keep full and proper minutes of reasons for this conclusion and of decisions which are believed to be in the best interests of the company and its Creditors; ensure that accurate and up-to-date accounting information is always available & fully understood; formulate and implement a prioritised action plan to remedy the company s financial difficulties; ensure that the company is up-to-date with filing accounts at Companies House and complying with all statutory requirements; where a Director disagrees with board policy but elects to remain a Director, ensure his or her views are properly minuted. Where viability is in doubt, seek the advice of a Licensed Insolvency Practitioner immediately. An initial consultation with HBG will generally be without charge. If the Insolvency Practitioner doubts viability, he/she will advise the Directors to: avoid taking further Credit and pay cash for future supplies; avoid paying any Creditors unless it can be justified (and minuted) as being in the best interests of the company and general body of creditors; avoid supplying customers who are also Creditors of the company; take appropriate action to stem losses, either by ceasing to trade or by commencing formal insolvency proceedings. There are a number of formal insolvency proceedings which may enable the business to survive. Dealing with the dilemma There will often be situations where the Directors identify insolvency and acknowledge that viability is in doubt, but believe there is a reasonable prospect of survival. In these circumstances it may be inappropriate to commence formal insolvency proceedings. However, expert professional advice should be sought to protect the interests of the company, its creditors and the Directors personally. HBG

6 Services for Sole Traders and Partnerships Financial difficulties inevitably cause uncertainty and anxiety for those involved. At HBG, we understand these tensions and know that speedy solutions and an understanding of the way forward are in everybody s best interests. These solutions may include the following: A financial health check encompassing a review of future prospects, funding requirements and recommendations. HBG is commited to providing: professional and courteous advice; speedy solutions to problems; an initial consultation without charge An individual or partnership voluntary arrangement, where the creditors contract to accept a portion of the debt outstanding, which is paid over a period. This avoids: the stigma of bankruptcy; the seizure of personal assets; the restrictions of bankruptcy, particularly the ability to incur Credit and act as a Director. Bankruptcy - normally recommended as a last resort. We will explain and lead you through the different processes and can act as your trustee in bankruptcy. HBG

7 Financial Difficulties - a Sole Trader s/ Partner s Checklist Personal liability Unlike a director of a Limited Company, a Sole Trader or Partner is automatically liable for the debts of the business. Steps necessary where financial difficulties are experienced: Establish an up-to-date financial position. Consider prospects for survival, taking care not to be over optimistic nor unduly pessimistic. Where viability is not in doubt, formulate and implement a prioritised action plan to remedy the financial affairs of the business. Where viability is in doubt, seek the advice of a Licensed Insolvency Practitioner immediately. An initial consultation with HBG will generally be without charge. Our Insolvency Practitioner will advise you whether there is a need for informal or formal insolvency proceedings, which could result in the survival of the business and avoid bankruptcy. HBG

8 Creditors Services Professional representation for you or your Client at Creditors Meetings We will attend Creditors Meetings anywhere in the UK on behalf of you or your Clients, free of charge. HBG The Benefits It can: Enhance the chances of recovery at no cost, Ensure that all the relevant facts, that haven t been revealed, are brought to the attention of the meeting. Modify proposals for a compromise of debt Remove the administrative burden of dealing with an insolvency. Our Approach We will take the opportunity to establish, at an early opportunity, the likelihood of a dividend being payable to unsecured creditors. We will provide a reporting option that meets your requirements. You can have confidence that we will proactively monitor dividend prospects and ensure that vital deadlines are met. The purpose of the Creditors Meeting depends on the type of insolvency. The procedures involved can include the following: Bankruptcy Where Creditors appoint a Trustee and a Committee to oversee the Trustees actions. Liquidation Where Creditors Appoint a Liquidator and a Committee to oversee the Liquidator s actions. Voluntary Arrangements Where Creditors vote on whether or not to accept proposals for a compromise of the customer s debt. Administrative Receivership Where the Receiver presents a report on the conduct of the receivership and advises Creditors of dividend prospects. The meeting can establish a Creditors Committee to oversee the Receivers actions. Administration Where the Administrator sets out proposals for dealing with the affairs of the company and where the Creditors decide whether or no to accept, with or without, modifications. The meeting may also establish a Creditors Committee to oversee the Administrators actions. What Next? If you receive a notice of a meeting, telephone our Creditor Services Manager or any Partner. We will assist you with the completion of the documentation and arrange to attend the meeting either with you or on your behalf.

9 Services for Private Individuals HBG has been acting for individuals with financial problems for over 100 years There won t have been many circumstances that we haven t been able to resolve in that time one way or another. Personal Financial Difficulties We provide your Client with a free initial consultation which is dealt with or overseen by a Licensed Insolvency Despite advice, individuals get into financial difficulties Practitioner. Unlike many other firms operating in this from time to time by; market, we do not charge up-front fees exposure to a downturn in the property market (particulary buy to let); depreciating investments funded by short term credit; excessive credit card debt to fund life style; personal guarantee liabilities for a failed business venture; loss of employment; divorce Any of the above issues can result in an ever-increasing debt spiral which, if not addressed, can cause family stress, job pressures and can eventually lead to formal insolvency beyond the individual s control. If the individual is in professional employment, in a specialist industrial sector or is a ccompany Director, and they are made bankrupt, then there is a strong possibility that the ability to continue in their role will be compromised. Help from HBG We have a specialised department that deals exclusively with people with personal debt problems. They provide a professional, countrywide service and are able to give your Client comprehensive advice on the options available to them, and the best course of action during an extremely difficult and worrying time. Whilst there is no magic wand, we have a number of solutions to ease the pain: consolidation of their unsecured debt by way of a remortgage, but depending on the client s financial status, and market conditions advice and guidance on the implementation of a Debt Management Plan putting a proposal for an Individual or Partnership Voluntary Arrangement to the Client s Creditors to accept a settlement that is less than owed; which will avoid the stigma of bankruptcy and can result in debt forgiveness, typically up to 60% to 75% of the debts assistance with the bankruptcy process, which in many situations may be the best option and can enable your Client to wipe the slate clean and get on with their lives without their current debt burden. HBG