Directors

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Directors

You are Director of a Company that is in financial difficulties

It is very likely that this is the first time that you have been in this situation. It is undoubtedly a stressful time for you and your co-directors. You will also be experiencing a significant number of unwelcome pressures.

To make matters worse, you need to think very carefully and clearly as the legislation affecting insolvent (and potentially insolvent) companies is vast and extremely complex. As a result, insolvency and corporate recovery is a very specialist area.

However, it is vital that you have a clear decision making strategy - so that you find the correct and appropriate solution.

Decision Making Strategy

You need to consider the key areas detailed below:

	Establish if the company is insolvent. (See Insolvency Tests) It is important to establish if the company is insolvent as it affects : 1. The options available. 2. The required conduct of the directors.
	If the company is insolvent - what should your objectives be? If the company is insolvent, it is important to lay down specific objectives to ensure that the correct option is taken. Therefore, during the planning process, you need to ask - what should you (as a director) be trying to achieve?

We can give help and suggestions as to what your objectives should be.

Having established your objectives - what are your options?

Having established your objectives, you need to examine what your options are, given the circumstances.

To find out these options - you need to look at the commercial and legal options available to the company.

Each option will have certain advantages and disadvantages.

Therefore, it is common in an insolvency crisis - for the chosen course of action to be a compromise.

Invariably it will be the best option rather than a perfect option.

Options Available to Directors
Trading On
Informal Workout
Refinincing
Restructuring
Company Voluntary Arrangement (CVA)
Administration
Administrative Receivership
Fixed Charge Receivership
Creditors Involuntary Liquidation (Insolvent)
Creditors Involuntary Liquidation (Solvent
Compulsory Liquidation (Winding up order by court)
Voluntary Dissolution

Now you choose the best available options to maximise your objectives.

When you have established :
1. That the company is insolvent or likely to become insolvent
2. Your corporate objectives
3. The options available to the company

You then choose the option that maximises your (or the company's) objectives - having fully understood the big picture.

Remember......it is vital to take professional advice from a specialist in insolvency.

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