Rescuing a financially distressed business

Helping a struggling business get back on track involves terms like business rescue, recovery, and restructuring. There are various ways to do this, such as getting money for the business, reorganising how the company works and manages money, and getting official help from an insolvency expert.


The Meaning of Business Recovery and the Potential for Company Rescues

When you ask a licensed insolvency practitioner for help, their main goal is to save your business and make it profitable again. They do this in different ways, depending on how much money your company owes and its unique situation.

You might have heard about ‘business rescue’ and ‘business recovery.’ These involve getting new money, rearranging a company’s money and assets, and using formal insolvency solutions like a Company Voluntary Arrangement or company administration.

If you realise your company has a problem and might go into insolvency, get in touch with a licensed insolvency practitioner. They’ll check your situation and help you figure out the best choices.

What could these choices be?


Alternative finance

If your business requires extra cash to tackle its current financial problems, there are various options to consider. Factoring and invoice discounting utilise your sales ledger value to provide regular cash injections throughout the month.

Companies that qualify can access more cash as their business expands, without the requirement for a strong credit rating or the hassle of complex loan applications. Additional funding possibilities include asset-based loans for companies with valuable assets like machinery, and peer-to-peer lending through online platforms.


Renegotiating existing debt

A Company Voluntary Arrangement, or CVA, is often used by companies facing a temporary setback. It helps them renegotiate debts and aims to let them trade out of future issues.

A CVA has advantages for struggling companies, including wiping off remaining debt at the end. Also, it stops all interest and charges, and creditors can’t take more legal action about the debts in the agreement.


Time to Pay (TTP)

HMRC provides eligible companies with an option to extend the time for settling overdue taxes, but only if the financial issues are considered temporary. To secure this extension, you must build a strong case supported by detailed facts and figures.

Engaging an insolvency practitioner when seeking extra time is advisable, given HMRC’s reputation for being challenging to work with. Demonstrating your commitment to addressing financial concerns through professional assistance may be beneficial—extensions of up to 12 months are possible, although the usual duration is 3 to 6 months.


Company administration

Company administration is a formal entry into insolvency, offering a temporary moratorium period for an insolvency practitioner (IP) to evaluate the optimal course for the company. Creditors are barred from pursuing legal action during this period, and the administrator aims for one of three outcomes:

  • Attaining a more favourable outcome for the company than liquidation would yield, or
  • Rescuing the company as an ongoing concern, or
  • Realising company assets to benefit secured or preferential creditors.


Reducing your operational expenses could prevent the necessity of formal insolvency and free up a substantial monthly sum for debt repayment or business expansion. Trimming non-essential costs, such as software subscriptions, staff training, stationery, and attending networking events, is a good start.

This business streamlining enhances efficiency and lays the groundwork for future profitability. Monitoring stock levels and implementing an efficient ordering system also contribute to generating more cash.




Sometimes rescue becomes impossible

Though we always hope for business recovery, there are instances where companies cannot be saved. In such cases, liquidation might be the most suitable or sole choice.

For an impartial and professional assessment of your company’s financial standing, reach out to the team at Vanguard Insolvency. With extensive experience in various industries, we provide free, confidential, same-day initial consultations.    

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.