Insolvency and Restructuring

Business restructuring

A company can be restructured at any time – if it is doing well and is growing, or if there are challenges that must be resolved, including if:

• You are in debt
• You are experiencing cash flow problems
• Your business is performing poorly
• There are disputes among directors
• It is necessary to become more tax efficient.

Restructuring by reducing costs helps to improve financial performance and profitability and our expert team can support and advise you, exploring the options that will work best for your business.

There are different types of restructuring, but the most common are:

• Debt restructuring: This is a way for companies in financial distress to continue trading. This option may involve a company voluntary arrangement (CVA), which means company debts are transferred to one payment obligation and it is paid off regularly – often monthly. This option enables you to continue running your business, without having to liquidate assets.
• Merger and acquisition: If you have completed a merger or acquisition, you may need to restructure the business to meet the needs and demands of the new business.
• Demerging: – or splitting off part of your assets / activities. Having a new entity can unlock capital value and improve performance.
• Divestment: This occurs when a business disposes of all or some of its assets by selling or closing or through an individual’s bankruptcy. Divestment may also happen if that part of the company is no longer profitable or is no longer part of the core offer.
• Legal restructuring: This can occur when there are changes in the company’s management, as a result of a merger or acquisition, for example. A new company structure can lead to a new constitution.

Bankruptcy

Bankruptcy is a formal legal process that declares an individual is unable to pay their debts. It is not applicable to a company or partnership.

An individual can seek relief from debt and declare themselves bankrupt by filing a debtors petition. Creditors can also petition for the bankruptcy of an individual if that individual owes more than £5,000 and fails to make payment of the debt on demand.

On the making of a bankruptcy order all assets of the bankrupt will automatically vest in the Official Receiver, a civil servant working on behalf of the Insolvency Service, and it is the Official Receiver job to manage the first steps in the bankruptcy process and determine what assets are owned by the bankrupt. If there are assets, the Official Receiver may appoint a Trustee in Bankruptcy, an insolvency practitioner, whose job it is to realise those assets for the benefit of the bankrupt’s creditors.

Where the bankrupt owns property (including any property that is subject to a mortgage and/or jointly owned by a non-bankrupt third party) it is likely the property will need to be repossessed or sold by consent in order to settle the debts in the bankruptcy estate. For this reason, bankruptcy may not be suitable for an individual with considerable assets and other options, such as an Individual Voluntary Arrangement should be explored.

Our expert team advises on all areas of personal insolvency including:

• Bringing and defending bankruptcy proceedings
• Advice in relation to Individual Voluntary Arrangement
• Claims made by Trustees in Bankruptcy
• Annulment and rescission of bankruptcy orders.

Corporate insolvency

We understand how difficult it can be to face company insolvency – it is rarely an option directors want to take.

It happens if your business can no longer pay its debts, either when invoices are due to be paid or because you have more liabilities than assets on your balance sheet.

Our dedicated team have huge amounts of experience in guiding directors sensitively when their business is going through this difficult process.

It is stressful, complex and challenging, but our caring, expert lawyers will leave no stone unturned to ensure it is navigated smoothly, helping you to minimise your losses and to meet your legal obligations, supporting you every step of the way.

Insolvency disputes and litigation

When a business collapses, it affects multiple stakeholders, which can easily lead to disputes. Whether you need to defend against any claims made against you or wish to make a claim against an insolvent company or its directors, our experienced team of insolvency solicitors can help you to resolve your legal dispute as quickly and as efficiently as possible.

Disputes can be costly and time-consuming, so we will work with you to gather all the necessary information from you, taking time to understand your case, before providing a timely and detailed opinion on the most effective, painless and strategic way of pursuing or settling your case.

Our professional team has vast amounts of experience in advising insolvency practitioners, creditors, company directors and those affected by bankruptcy and are committed to providing a first-class service.

Our work includes advising on matters such as: breach of directors fiduciary duty claims, misfeasance, wrongful trading, transactions at an undervalue, preferences, director disqualification proceedings, bankruptcy and all other claims that can be pursued under the Insolvency Act 1986.

Buying an insolvent business

Buying an insolvent business could be an opportunity for you to grow your own enterprise at a competitive price but it also comes with risks.

You must seek robust legal advice to mitigate against the risk of such an acquisition – and our expert legal team is ideally placed to help you. We have significant experience in advising potential buyers of insolvent businesses and we also act for office holders (administrators and liquidators) who sell them.

If you are the owner of a business in financial difficulty wanting to continue trading without the creditor pressure and risk of a terminal insolvency process it may be possible for you to set up a new company and purchase the assets (free of the liabilities) from administration or liquidation.

Whether you are the owner of a distressed business or an unconnected third party, we will work with you to establish whether the distressed business can be acquired either before or after a formal insolvency process has taken place.

As a team we understand how vital it is to undertake a thorough due diligence process when buying a business, especially when it is insolvent. We will examine all aspects of the purchase documentation and advise on any existing contracts, including employment contracts and property leases/licenses. We can also advise on any personal guarantees and indemnities that are required to make sure you fully understand an liabilities arising as a result of the purchase.

Director disqualification 

If you are a company director whose business has entered the insolvency process, the office holder (liquidator or administrator) will submit a report to the Insolvency Service, outlining any role you may have had in the company’s failure.

This means the Insolvency Service could carry out an investigation into your conduct and if it finds you are culpable, it could initiate proceedings to disqualify you from being a director for anywhere from 2 to 15 years.
Don’t leave the organisation to come to its own conclusions; contact our expert team so we can help you get back on track sooner.

We understand fully how the Insolvency Service works and have considerable experience in representing clients in these situations. We will carefully analyse your case, building a picture of what led to your company becoming insolvent and what your involvement was, and will advise on how best to proceed.

As well as dealing with the Insolvency Service and making expert submissions on your behalf, we will work to negotiate down the voluntary disqualification period or persuade it to discharge it altogether. We will also defend you in any court proceedings that may arise.

We’re proud of our track record in supporting directors who have been disqualified – contact our expert team and we will look at your case.