Company debt advice for commercial linen and laundry companies

If your commercial linen and laundry business faces mounting debts and an uncertain trading environment, acting quickly is crucial. 

If you’re considering closing your commercial linen and laundry business or giving your all to rescue it, options like a Company Voluntary Arrangement (CVA), Company Administration, or Creditors’ Voluntary Liquidation (CVL) must be considered.

Effective Options for Rescuing, Recovering, and Closing Linen and Laundry Businesses

If you run a commercial linen and laundry company, the past few years might have brought unprecedented challenges. Whatever issues your business encounters, be it operational or financial, various company rescue and closure procedures are available to assist.

How to Rescue Commercial Linen and Laundry Service Providers?

If your commercial linen and laundry company is facing difficulties, several formal and informal processes may offer assistance.

1. HMRC Time to Pay (TTP) Arrangement

If the decline in demand for commercial linen and laundry services has caused you to fall behind with HMRC payments, negotiating a Time to Pay (TTP) arrangement could provide a solution.

A TTP provides a company with extra time to settle their tax arrears. Typically, TTPs last between 3-6 months, though in certain cases, terms of up to 12 months can be negotiated.

During the TTP period, agreed monthly repayments will be made to HMRC to cover accrued arrears. Companies must also ensure they stay up to date with any current or future tax liabilities that arise.

2. Company Voluntary Arrangement (CVA)

A CVA is a formal payment plan agreed upon by a company and its outstanding creditors. Unlike a TTP arrangement, a CVA can involve multiple creditors, not just HMRC. 

Typically lasting between 3-5 years, the company makes a single monthly repayment during this period, distributed among creditors proportionally by the appointed licensed insolvency practitioner.

Since CVAs rely on future earnings to settle existing debts, they are suitable only for companies that can prove their ongoing viability as successful and profitable entities.

Creditors will vote on the proposed CVA, likely agreeing only if they are confident in your company’s future. A minimum of 75% (by value) of creditors must approve the CVA, and once agreed, all included creditors are bound to its terms irrespective of their individual votes.

Consider closing your linen and laundry company

If the challenges have made your commercial linen and laundry company unviable, and prospects of a turnaround are slim, you may need to consider placing the company into liquidation. 

This can be done through a director-initiated process called Creditors’ Voluntary Liquidation (CVL).

The licensed insolvency practitioner appointed will manage the entire process on behalf of the company, including communicating with creditors and ensuring the company’s closure is orderly. 

Remaining debts will be written off once the company is liquidated, provided they haven’t been secured with a personal guarantee.

Although staff will be made redundant as part of the liquidation process, eligible individuals can claim redundancy. In numerous cases, directors of an insolvent limited company may also have a valid claim for redundancy payout. Your insolvency practitioner will provide further information on this matter.

How Vanguard Insolvency can help you here? 

If your commercial laundry limited company is facing financial difficulties and you need free advice to explore your options and plan the way forward, contact the experts at Vanguard Insolvency today. 

You can speak to a licensed insolvency practitioner confidentially, who can assist you in understanding the most suitable next steps for you and your business.