Employing Restructuring Advisers to Help Save Your Company #003

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Published on 16 September 2010 by Tony Groom

Employing Restructuring Advisers to Help Save Your Company

There are a number of options for companies who find themselves in financial

difficulties, but a real challenge is finding someone to help.

It’s made more difficult if the directors/owners take the view that they know their

business better than anyone else and infer from this that if they don’t know the

solution, then no one else will.

A second issue is trying to solve the situation alone, via a self-help route. It may be

that research has revealed a number of options and in a situation of financial

difficulty there is a temptation to latch onto the cheapest or first solution. Indeed, you

are likely to think you can’t afford help and as a result persuade yourself that the

cheap solution is the right one. It is no surprise that a lot of companies fail having not

sought any advice.

In either situation eventually a squeeze on cash flow or pressure from creditors tends

to be the catalyst that galvanises action and you are likely to start looking for a

solution.

Who do you turn to for help when feeling as boxed in as this? What’s needed is a

business rescue adviser, but how do you go about the process of finding one from

among the insolvency, turnaround, accounting and consultancy advisers?

Finding business rescue advisers is difficult. It requires a thorough vetting process to

confirm they have suitable experience and offer a rescue process rather than selling

only one rescue solution.

The rescue process should involve a thorough business review to identify a viable

business that can emerge from the process, then developing and implementing an



operational reorganisation and financial restructuring plan. One aspect of the

financial restructuring plan will be how to deal with all the company’s liabilities.

In addition to bank and trade creditors a key creditor is likely to be the HMRC (Her

Majesty’s Customs and Excise).

Too often companies are advised to enter a Time to Pay arrangement with the

HMRC to deal with tax, VAT or PAYE arrears or to enter a Company Voluntary

Agreement (CVA) to deal with debts without a realistic assessment of the other

demands on the company’s cash.

The first thing to find out, therefore, is whether the adviser is selling something or has a

vested interest in the company pursuing a particular solution. Having established

they are truly independent, the adviser will conduct a review to establish the core

issues. This should involve looking at more than just the financial problems.

After carrying out a thorough review the rescue adviser’s processes should include

developing a realistic forecast which pulls together the results of its investigation,

including a business plan and updated accounts.

It should demonstrate an understanding of where business is going to come from, ie

what is going to drive sales towards the company, as well as how the company

makes a profit out of servicing them.

It should also demonstrate a real understanding of the strengths and weaknesses of

the business and be able to identify the right restructuring tools to support the

business.

If the business in trouble is seeking help at a fairly late stage, for example as a result

of receiving notice of a winding up petition in the High Court, and the business

rescue adviser’s review has established that the business is viable despite its current

financial problems, the adviser should also demonstrate experience of the High

Court processes to be able to obtain an adjournment that provides sufficient time to

come up with a restructuring plan.

While it is possible to come to the rescue of a struggling business even at a late

stage, the advice is to talk to the Revenue or creditors before they file a winding-up

petition. There are a number of options for dealing with HMRC liabilities even if you

can’t pay.

Either way, support from business rescue advisers with broad commercial

experience, not just insolvency, will help manage the process while at the same time

helping find a realistic solution.

The important thing is that they will work with you as part of the team and in the

interests of helping a viable business to survive in difficult times



We are not Insolvency Practitioners. We operate within the law to protect our clients and their wealth. Our team has worked for over 20 years to help stabilise and return hundreds of businesses to profitable growth. Once appointed, Insolvency Practitioners do not work for you, they work for creditors and use your company’s assets to pay themselves. We work for you, not creditors.

More Free Resources for Directors and Business Owners in Difficulty www.rescue.co.uk

We Save Businesses We provide experienced advice to directors

We negotiate with HMRC and creditors We are on your side

Need Immediate Help – Call Tony Groom on 0844 8040 540