Before the Punks outline a guide to rescuing your business, it is important to define what we mean. When a company is in a state that it needs rescuing, this often refers to the state of its arrears. In some cases, a company may have been issued with a winding-up order from its creditors (those to who the debt is owed). However, in most cases, the company that needs rescuing has either fallen behind on debt in the short term. This may be with a supplier, HMRC, a landlord, or with anyone else where contractual obligations are made. But how does a company level its debts in order to continue its commercial viability?

First and foremost, a company must understand how to calculate if it is insolvent. Read our guide on how to test for insolvency to get a definitive idea of how to do this. This will give you a benchmark for business performance against which to develop a business turnaround strategy. Once this has been calculated, a company can begin to take the necessary steps to clear the debt.

If the debt is relatively new or is not too excessive, then it may be possible to come to an agreement with the creditors. One option is negotiating what is known as a Company Voluntary Arrangement (CVA). This will give a company extensive time to pay the debt, and they usually last between three to five years. At least 75% of creditors must agree to a CVA for it to be finalised.

If most of a company’s debt is because of tax arrears or VAT bills, you will need to negotiate with HMRC. Similar to a CVA, a time-to-pay (TTP) arrangement can be agreed upon between a company and HMRC. In this case, a company will have an additional 12 months to pay off a debt, and the debt payments will be organised so that they can be sustained over the agreement.

Depending on the actions of creditors and HMRC, negotiations may be needed with a county council or courthouse. These circumstances usually apply when a winding-up petition has been ordered, or there are difficulties in paying the commercial rent to a landlord.

With all negotiations, a company needs to highlight their intentions to pay. Displaying the ability to pay will greatly increase the chances of receiving an agreement during the negotiation phase. Intent will also show creditors and HMRC the likelihood of receiving payment even if something goes wrong. For instance, a company could face unexpected circumstances, such as the loss of staff or a supplier. This will impact the agreement, yet if payment has been made up until this point, and there is transparency to continue with the payment, then it is likely that they may re-negotiate terms.

If a business needs external help, then it may want to consider a formal insolvency procedure such as administration. In the process of administration, an external advisor will be brought in. They will analyse the state of the debt and possible ways to pay off this debt. They may also look at the business model and the existing shareholders. If they decide that the assets can be sold to rescue a company, they will begin to organise a sale of them to existing shareholders or those who register new interest in the company. This is known as a pre-pack administration.

Administration can be daunting for a director as it may mean losing control over the assets and direction of a company. Most bog-standard insolvency practitioners will consider the solutions alongside insolvency and creditors. However, we are different in that we always prioritise the business. If the Boardroom Punks can find a way to save a company, then we will certainly exercise this option.

Other solutions include financial options like loans that will be paid over a lengthy period, an analysis of cash flow and balance sheets, logistical solutions applied to a business model, and extensive discussions with those to who the debt is owed. All the options above can be explored by a company independently or with experts like ourselves at hand.

The Boardroom Punks always look to exercise every option to rescue a business in conjunction  with the existing management. With the application of all the options above, we already have a good chance of saving your enterprise. However, after we have extensively examined your business model and had ongoing discussions, we will know where and how to apply our innovative methods.