Bryan's Blog: How to Defeat the Threat of Liquidation

How to Defeat the Threat of Liquidation

How to Defeat the Threat of Liquidation

As insolvency experts, we see companies go into liquidation everyday. The tragedy is that most businesses could have been saved if they had sought insolvency advice early. What causes this terminal event is often the result of legal action by a disgruntled creditor. In this blog post I explain how debtors can defeat the threat of liquidation.

Insolvency alters the way the world is viewed. Debtors become skilled at avoiding their obligations and creditors become impatient as amounts remain unpaid. This evasive debtor behaviour destroys creditor confidence and inevitably triggers action that results in liquidation. But it does not have to be this way.

Face creditors head on.

Businesses plan for predictable outcomes and strive to achieve certainty. Failing debtors damage that effort and cause frustration for the creditor. My advice to debtors is to face their creditors head on and disclose the economic situation of the business. By doing this, creditors will be able to see the extent of their rights in the company. More than likely they will make a rational decision to stay their legal recourse and work with the debtor toward an outcome that is better than liquidation.

Honesty is the best policy.

The first step comes from the debtor. They need an honest assessment of the company’s current position and the likelihood that it can survive. News, even bad news, has the benefit of certainty. The important point is that if the debtor wants the creditors on board then they need to be candid.

Of course the debtor may perceive this as throwing in the towel - but nothing could be further from the truth. What they are really doing is optimising the chances of the company’s survival by working with the people who can otherwise destroy it. That is not defeat, that’s sensible planning.

we can help

For further discussion please do not hesitate to make contact with me.

BWA Insolvency specialise in business recovery and are voluntary administration experts. For further information please read about Our Services or contact us on 0800 292 467.

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