TECHNICAL REPORT

When should a business speak to an insolvency practitioner?

A question that is on any businesses owners’ mind when facing financial and operational challenges that threaten the continuity of the business. Many assume that an insolvency practitioner should be contacted at the point the company becomes insolvent, but this is not what we would recommend – it is far more beneficial for an IP to be contacted much earlier.

Typically, we have two scenarios when we are contacted. Either the business is having problems and the management are aware of the cause OR, the business is having problems and the management are at a loss of the clear route cause; which is more often the case. Common problems we regularly see are:

1) Battling overdraft facility 2) Arrears in HMRC payments 3) Supplier issues affecting delivery of own products/services 4) Staffing issues e.g. can’t find staff or can’t hold onto staff 5) Balance sheet and/or turnover reduction 6) Client erosion

All too often, multiple indicators are showing themselves and with the overwhelming pressures, the management are in the thick of trying to resolve the problems, convinced they can fix them without external help, often patching up issues rather than implementing longerterm fixes.

Current Challenge

An insolvency outlook report by Atradius(1) forecasts business failure rates will increase by 10% this year in Britain. External influences and economic change can often be the final blow for a business that has already been struggling. There are many businesses across the UK which have been ‘surviving’ rather than thriving and one small change such as an increase in interest rates can send them over the edge. In light of growing challenges, it is important that companies act with speed if the owners/Directors identify problems in the business; before the challenges become too big.

Often, when we are engaged earlier, there are likely to be more options to rescue a business rather than implement an insolvency process. We want to be working with businesses as early as possible so that we can help them with solutions to recover their business rather than taking them down the insolvency route. This is where we can best support the management team. As well as recommending and implementing known and tried methods to help the business, we have a number of contacts who can help the struggling business if a new viable plan can be identified.

Stephen Berry, Partner at Opus

For more information about our services, please call us on 0151 705 9115, email liverpool@opusllp.com or visit the website

www.opusllp.com.

1. https://www.cityam.com/global-insolvency-rates-tipped-to-reach-10-per-cent-in-the-uk/

RESTRUCTURING & INSOLVENCY

Taking the Stress out of Distress

At the point a business is in distress, the business owners and/or Directors need support from people they can trust, that are visible and readily contactable.

For your clients, we know that means not only having people who understand the nature of their work, but also the local business market.

Opus is a business advisory, restructuring, insolvency and exit management practice. The Partners are focused on commercially driven results and take a proactive approach towards tackling business challenges with an assurance of confi dentiality. 0151 705 9115 liverpool@opusllp.com www.opusllp.com twitter.com/opus_llp linkedin.com/company/opus-llp/