Rescue, Recovery, and Closure Options for Professional Services

The professional services sector makes up a quarter of UK businesses and creates a total turnover of £400 billion. 

It includes consultancy, recruitment, accountancy, and property services. This sector heavily depends on employing skilled and qualified staff due to its nature.

In the uncertain economic environment, the steady flow of consumer demand and income streams is under threat. Directors in the professional services sector are compelled to initiate cost-cutting measures to safeguard their businesses’ financial standing.

Winding Up Your Professional Services Company via Liquidation

If you’re thinking about closing your professional services company, opting for company liquidation can assist in resolving outstanding matters with creditors and officially ending your business, overseen by a licensed insolvency practitioner.

A Creditors’ Voluntary Liquidation is a formal procedure for insolvent businesses to close down, involving the settlement of company debts and cessation of operations. It is usually chosen voluntarily after months of accumulating debts, with little hope of recovery.

A licensed insolvency practitioner can evaluate whether your professional services business should undergo liquidation or if there’s potential for rescue, based on the cash flow and balance sheet to determine insolvency.

A licensed insolvency practitioner acts as the liquidator, tasked with selling company assets to raise funds for repaying creditors. If your business lacks significant assets and cash, the remaining debt may be written off, potentially reducing the business’s overall value.

If you’ve signed a personal guarantee agreement, you’ll be personally responsible for settling the outstanding amount. 

Upon appointing a licensed insolvency practitioner and deciding to wind up your professional services business, creditors will be informed of your intent to liquidate. They’ll receive the Statement of Affairs detailing your business’s financial status.

Following the notification, the liquidation process begins, with the insolvency practitioner staying in touch with creditors. Company assets are sold off, and the proceeds are distributed to creditors according to priority, as outlined by the Insolvency Act 1986.

Following the Creditors’ Voluntary Liquidation (CVL), your professional services business will be deregistered from the Companies House register, effectively ending its legal existence.

Opting to liquidate your professional services business and initiating the process can be challenging, especially given the uncertain trading conditions due to the coronavirus pandemic. 

Contact a member of the Vanguard Insolvency team for a complimentary consultation to explore solutions. We recognise the significance of accessing timely and confidential advice during this unprecedented trading period.

Taking this step early is crucial to expand your available options and shield your business from mounting creditor pressure, which might swiftly lead to legal action, ultimately compelling your business into compulsory liquidation.

How can I rescue my professional services business? 

Our licensed insolvency practitioners can promptly determine whether it’s feasible to rescue your professional services business through restructuring strategies like a Company Voluntary Arrangement (CVA), Fast Track CVA, or Company Administration. 

Additionally, emergency funding or commercial finance options might be accessible through various competitive and reputable sources.

If there’s a realistic chance of rescuing your professional services business after obtaining some relief from creditors, a Company Voluntary Arrangement (CVA) could be the solution. 

A CVA is a formal insolvency procedure overseen by a licensed insolvency practitioner, enabling you to renegotiate payments into a manageable plan usually spanning 3-5 years.

A Company Voluntary Arrangement (CVA) requires approval from 75% of creditors (by value) before initiation, and it often presents the optimal opportunity for creditors to recover funds. 

The proposed payments must be realistic, as failure to meet them could lead to the termination of the agreement.

If your business urgently needs restructuring support, a Fast Track CVA could expedite the recovery process. This approach condenses a traditional CVA into as little as six weeks, making it suitable for businesses severely impacted by the coronavirus pandemic.

If your professional services business faces overwhelming creditor pressure, placing it into administration can shield it from legal action. Administered by a licensed insolvency practitioner, this formal procedure aims to rescue your business, safeguarding it from compulsory liquidation throughout the process.

To pursue this route, your business must be deemed contingently insolvent, possess significant asset value, and maintain predictable cash flow. 

A licensed insolvency practitioner will assume the role of administrator, tasked with supervising the sale of company assets. The proceeds generated will be allocated to repay creditors, thereby clearing the debts of the business.

If the performance of your professional services business is hindered by constrained cash flow, commercial finance can inject cash into the business. This infusion enables you to reinvest in the company, enhance services, and expand operations. Various forms of finance options are available to meet the needs of your business, including invoice finance, asset finance, or a business bank loan.

From financing industry equipment to bridging the income gap between invoices, there are commercial finance options accessible through Vanguard Insolvency. 

We collaborate with over 50 finance lenders, providing competitive rates and a variety of product choices. Contact a member of the Vanguard Insolvency team for a free quotation.