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Financial restructuring is the reorganisation of a business’s assets and liabilities. Most businesses go through a phase of financial restructuring at some point, though not always necessarily to address any shortfalls. However, when a company is in crisis it may attempt to renegotiate with its secured and unsecured creditors to reduce or eliminate some of its debts. In some instances the creditors will often work to adjust the terms of the repayment, including lower interest rates and/or extending the repayment schedule. Debts may also be commuted in part, often in exchange for the creditor gaining some equity in return. SCR can assist in exploring the following options:
Debt-for-equity swaps or re-capitalisations
Capital Raising through our venture capital strategic partners
Managed exits or return of capital through a solvent winding up process
Schemes of Arrangement
A Creditors’ Voluntary Liquidation is a process which enables Directors to voluntarily & formally close an insolvent company. This option of closure is often chosen by directors as a means of taking control in the face of continued creditor pressure and the imminence of a Winding up Petition. One of the benefits of a CVL is that unlike in a Compulsory Liquidation, the directors are able to choose and nominate their prefferred Liquidator. Once appointed, the Liquidator will deal with realising any assets of the company and making distributions to creditors. A licensed insolvency practitioner at SCR is able to act as Liquidator of a company in order to assist directors in the legal formalities of convening both shareholders and a procedure at which the company is placed into liquidation. It is important for the directors to take advice at an early stage, as they need to understand their responsibilities. Company directors of an insolvent company have a duty to minimise the loss to creditors. The failure to do so might lead to potential personal liabilities for the company directors in the future.
A Members Voluntary Liquidation (MVL) is a formal process for closing down a solvent company in a cost-effective way. MVLs are often utilised as an exit planning tool when a profitable company has reached the end of its useful life, where shareholders are keen to extract the profits of their investment, or if its directors are approaching retirement or otherwise looking to depart from the business for any other reason. Why might a company be placed into Members Voluntary Liquidation? Here are the reasons why a company might be placed into Members Voluntary Liquidation:
A compulsory liquidation is the result of a winding up order. It is the last resort for creditors seeking to reclaim monies when all else has failed. Even if your initial debt is paid to the petitioning creditor it is possible for other creditors to take over the petition and continue the court action. Nonetheless with the right business plan and early action it may be possible to turn your business around. Before a winding up order is made the creditor has to file a winding up petition in Court. This comes at a considerable cost to the creditor and starts the process of shutting your company down, triggering the sale of its assets at a later point, which will be used to against the debt. Most companies suffer distress at some point during their lifespan. By talking to SCR you access sound accounting, business rescue and legal knowledge assisting you in salvaging value even at this late stage.
