Rescue, Recovery, and Closure Options for IT Companies

If you’re thinking about shutting down your information technology company, putting your business into liquidation is usually the last step for companies facing financial difficulties. 

It’s crucial to find the right liquidation method to get the most money back for creditors and safeguard your role as the director of an insolvent limited company.

The prosperity of IT businesses is crucial for both individuals and businesses, as we all rely on innovative technology for communication. The IT sector is a worldwide industry, acknowledged as one of the fastest-growing commercial sectors, with a current workforce of over one million people.

Winding Up Your IT Company Through the Liquidation Process

If you’re considering closing your IT company because you can’t afford to keep it running anymore due to mounting debts and pressure from creditors, company liquidation can help sort out your financial matters and bring your IT company to a structured end. 

A Creditors’ Voluntary Liquidation is a formal insolvency procedure initiated by the director that leads to the closure of your IT business.

Following advice from a licensed insolvency practitioner, you can opt for a CVL, which involves notifying creditors of your intention to liquidate the business and providing them with a Statement of Affairs. 

This document outlines your business’s financial position, including asset value and liabilities.

For your company to enter the liquidation process, a minimum of 75% of shareholders must agree to wind it up. 

However, if you’re the sole director, only your consent is needed. The appointed insolvency practitioner will realise company assets and distribute funds to creditors following a priority order outlined by the Insolvency Act 1986. 

Afterwards, your company will be struck off the Companies House register, ceasing to exist as a legal entity.

How can you rescue your IT business?

Our licensed insolvency practitioners can promptly assess whether your IT business can be saved through a restructuring strategy, like a Company Voluntary Arrangement (CVA), Fast Track CVA, or Company Administration.

A CVA is a formal insolvency procedure managed by a licensed insolvency practitioner to restructure your creditor liabilities into manageable repayments. This can alleviate the burden, freeing up cash to sustain company operations effectively.

For a Company Voluntary Arrangement to be put into effect, at least 75% of creditors (by value) must agree to the proposal. Consent is probable only if you can prove the viability of your company and its capacity to meet the proposed repayments outlined by the CVA throughout the agreement’s duration.

By consolidating your creditor liabilities into a single monthly payment, you can more effectively monitor your finances and predict company cash flow. If your business is facing creditor pressure and legal action, opting for a CVA can safeguard your business.

If your business possesses assets, the Company Administration can aid in rescuing it by liquidating assets and using the proceeds to settle creditors. This can alleviate cash flow strain and sustain long-term financial stability, considering your current commitments and repayment capacity. 

Throughout the administration process, your business will be shielded from legal action by creditors.

If your business needs an immediate cash infusion to foster growth, accessing commercial finance can facilitate expansion without constraints on company cash flow. Various forms of commercial finance exist to help you seize opportunities, meet consumer demand, and fulfil large-volume orders.

Finding capital suitable for your IT business can promote sustainability and facilitate long-term growth.

If your business experiences prolonged waiting times for invoice payments between contracts, leading to significant cash flow concerns, invoice finance can bridge this gap. 

Opting for an invoice factoring or discounting facility can help unlock funds tied up in invoices for services rendered before clients settle their invoices.

Accessing these funds in advance allows you to compensate for time that would otherwise be lost waiting for payments to arrive.

If you need new equipment, machinery, or vehicles to meet growing demand or expand your service offering, asset finance options like hire purchase can help you acquire the necessary equipment affordably. Asset finance enables immediate access to equipment that might otherwise take years to purchase, boosting your business’s growth potential.

We offer access to various finance options from trusted and competitive sources. Contact a member of the Vanguard Insolvency team to determine the best route to rescue or refinance your IT business.