In saving the business that can work the business is turned around and a platform is created for revitalisation and ongoing success. However, not every event is successful and some companies are too far gone to be turned around.
So when a business cannot be rescued what then?
Then it becomes necessary to realise assets and pay creditors as much as possible. Life doesn’t end with a company liquidation, it is necessary to look to the future, A future where credit will again be necessary. One of the worries in this situation for the directors is whether all assets of the company or outstanding and owed invoices will be realised and set against monies owed. If this is followed through conscientiously the company may well have paid enough of its debts for the directors to be well received with a new company.
The introduction of the Insolvency Act in 1986 provided unsecured creditors of insolvent companies and individuals, with far greater powers of redress than ever before. The new legislation was also designed to have certain transactions overturned, if necessary, and assets to be restored to the failed company, a fact either often not recognised or not bothered with by the liquidator.
Unfortunately, the powers of recovery in the Act are seldom used to their full effect perhaps because the appointed insolvency practitioner, responsible for the liquidation, does not have sufficient funds or resources to take the matter further. More probably he or she doesn’t simply doesn’t bother once the winding up process is under way, after all that’s what they’re really paid for. Why create extra work especially if it is of no benefit to the directors?
Consequently, the vast majority of outstanding monies and potential recovery claims are not pursued; money that could be realised by an expert insolvency practitioner who is prepared to ensure that corporate debt is paid. For this reason in insolvency situations Capital Brokers recommend DFW when corporate recovery is not possible. The insolvency practitioner used by them is prepared to do the extra work on behalf of debtor companies to recover monies owed to them. This is something that can be extremely important for failed entrepreneurs who are starting again, after all a supplier that has been paid will give credit, a supplier owed unrecovered money will think twice in extending credit to the same directors.
