Helping businesses in trouble
Helping your business decide on a strategy that will produce the best outcome without exposing your executives to unnecessary personal risk
When the assets of a business exceed its liabilities or it cannot pay its debts on time, it is generally considered to be insolvent.
This does not mean the business has to cease trading.
Nor does it mean the business cannot continue trading at a loss.
Your business may be the culmination of a lifetime’s work, or the product of significant investment by shareholders, or of vital importance to the local community.
Under the Companies Act 2006, directors’ duties include promoting the success of the company for the benefit of the shareholders, having regard to the interests of employees, suppliers, customers, and others. If the company becomes insolvent, however, directors owe a duty to act in the best interests of the company’s creditors.
To make things more interesting, the duties set out in the Companies Act do not apply to partners, members of an LLP, or trustees of a charity. In each situation, the duties are different.
Thus directors have difficult decisions to make in trying to satisfy the differing demands.
We believe it is impossible to provide helpful advice to a business in difficulty without first understanding the key components of the business, the context within which it is trading, and why it is in financial difficulty. Our experience helps us get to grips with your situation quickly. We build a relationship with you so that you trust our judgment and to identify your objectives.
Then we develop a plan of action with you. That plan may involve a restructure of the whole or part of the business, with or without formal insolvency proceedings.
Along the way, we advise you on your relevant duties, and on the balance that needs to be struck between the various competing interests. We do this in such a way that the decision making is left to you, in the knowledge that the courts will seldom criticise those who make honest judgments based on an appropriate assessment of the situation.
We try to give you maximum protection by helping you do what you can rather than chastising you for failing to achieve the impossible.
For more information on our services and to start a conversation on how we can help you please contact Andrew Frake, Associate, Dispute Resolution.