With Midas Construction set to appoint Administrators, Scott Bebbington, Senior Manager at PKF Francis Clark highlights how this could affect you or your clients’ business and…
When you hear the word insolvency, it can automatically make you think of a negative outcome and being the last resort. Paradoxically, we believe that a good insolvency practitioner is one who takes every step to try to avoid the actual use of the insolvency process.
The skill set of an insolvency practitioner certainly includes looking at the potential outcomes of a business insolvency for creditors, and, of course, dealing with all different types of creditors. However, understanding the effect of company failure on creditors is just the first step. That knowledge should then be used to see if there is a more creative and positive outcome than formal insolvency.
Having looked at the worst outcomes, which is usually an administration or liquidation involving the disposal of company assets in very distressed circumstances, if there is a viable or potentially viable business, a good insolvency practitioner should then look to formulate a restructuring plan and consider how this can best be implemented for the various types of creditor.
If there is a viable plan, the next step is to negotiate an informal agreement with creditors to ensure the survival of the company. Depending on the particular circumstances of the company, negotiation may only need to involve certain classes of creditors, for example landlords or asset financers – it may be in their interest to revise terms rather than deal with the closing of the business.
Only if this is not possible should formal insolvency process be considered.
If you are concerned about your business, PKF Francis Clark can help with a Covid Business Review – helping you to understand your current situation and the best steps forward from there. We have a team of experts experienced in restructuring and negotiating with creditors and our focus is always on rescue and survival.