I have recently been able to resolve some major creditor-related problems for a number of companies. I believe I may be able to help your business as well.
The company owners who approached me were anxious to avoid any of the formal insolvency alternatives such as Company Voluntary Arrangements (‘CVA’s), Administrations or Liquidations. Because such procedures would be made public, my clients thought these would impact adversely on their relationships with customers and suppliers, as well as with their bankers. They also had concerns about their credit ratings. To them, any form of insolvency was unthinkable.
The solution I offered them was quite simple and didn’t require any insolvency procedures at all. It involved my clients talking me through their cash flow problems and providing me with a list of their creditors so that I properly understood their issues. I then contacted each creditor on an individual basis to alert them to the problems, and to discuss potential alternatives with them. Having over 30 years’ experience of advising companies, shareholders, directors, and other business owners, (as well as their advisers) on a wide range of company, commercial and corporate issues, I felt comfortable doing this.
I explained to each creditor that the problems were not the result of any wrongdoing on my clients’ part, but, were caused by the impact of coronavirus and the government shutdown. I also made it clear that there was no compunction for anyone to agree with any proposal I might subsequently put forward.
After a period of gaining their confidence and understanding their issues as well, I presented each creditor with a very simple proposal that enabled either all or a part of my clients’ debts to be reduced, delayed, paid in installments or, in some cases, completely written off. It didn’t take long to agree them.
The upshot was that my clients’ debts were reduced substantially, without there being any publicity, CVA, administration, liquidation or other form of insolvency. Equally, the relationship between my clients and their creditors was maintained.
I don’t pretend to have discovered alchemy or how to turn water into wine. But I do think I have been able to help some very good businesses of varying sizes and with great workforces, find solutions to this terrible viral storm. Sometimes, thinking the unthinkable leads you to a better place and a more elegant solution. This was one of those times.