What you need to know

It is all about knowledge. What are the insolvency practitioners trying to achieve? Their main motivation is to collect their fees. What is the banks main motivation? To make money. What does a landlord want? To charge you a high rent and make you pay to improve the property.

What about you? You need to be prepared in case your business fails, and if that happens your financial world can fall down around you. So you need to be informed. Learn the options that you have and always have them in the back of your mind. You never know when you may need to use them.

You need to know about preference payments, how your activities can be looked at over a two year period to see you have paid someone in preference to someone else. This is true for either the director of an insolvent company or someone who has entered into bankruptcy. Although some of the rules are different the principles are the same.

Are you allowed to move assets? As a rule no but I will come on to that at a later stage.

CVA’s, IVA’s Prepacks, Administration and Liquidations. You can find definitions on line but I have the practical experience to tell you how they can be used. Do not wait until the last minute. Prepare yourself and learn what to expect if you have to go down one of these paths.

Of course you have to be careful when you obtain advice. If you talk to your bank or factor too soon you may spook them. They are there to help themselves not you, despite what the adverts may say. You could lose control of the situation quickly unless you know what you are doing. You have to be careful with your auditors as many are contacted by companies who pay them commission if they find a business in trouble. You can be easily talked into administration only to discover it’s in their best interests rather than yours.