“I know I owe the debt but I cannot afford to pay it so how can I protect my business from this aggressive legal recovery?”

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If you agree that you owe the money but do not have the cash to pay the debt then you need to consider if you or your business are solvent or insolvent or if the inability to pay the debt is a temporary cash flow problem or a lack of liquidity and potentially seek a more formal insolvency solution to get control of the situation.

Top Tip:

Understanding the current strength of your finances or balance sheet is not always easy and establishing solvency or insolvency and forecasting cash flow can be difficult, why not take advantage of 4R free and independent Solvency and Cash Flow Audit.

If in doubt, call us on 0800 902 0123 for advice. It’s free

The fact that you or your business cannot pay the debt is the clue that you or your business are probably insolvent but this insolvency could be the result of one off event such as a bad debt or legal claim that has impacted on cash flow or increased the debt burden. If the underlying cash flow is strong and the business fundamentals are good and given time you could pay the debt then 4R can offer you a number of resolutions to get back in control of your life and your business.

Time to Pay Agreements

You must contact the creditor asap and try to and make arrangement to repay the debt over time or even in some cases by offering to “secure” the unsecured debt by way of fixing it against an asset. You can do this yourself but it is worth considering turnaround specialist who would draw up a statement of affairs and an outcome statement and understand how to present your case and stands a better chance of securing a time to pay arrangement. For a small investment 4R can negotiate and get contracted time to pay arrangements in place that secure a discount in the overall level of debt and provide two or more years to repay the debt. Depending on your circumstances 4R’s fee will be based on successful outcome.

If you have other debts that are pressing or if creditors will not agree to “a time to pay arrangement”, then a formal insolvency solution would protect the company against aggressive legal recovery.

Formal Insolvency Protection

Formal insolvency processes such as Voluntary Arrangements either a Company Voluntary Arrangement or Individual Voluntary Arrangement, and Pre Pack Administrations offer legal protection to the individual or company against legal recovery action such as Winding Up Petition or Bankruptcy Petition and County Court or High Court litigation and claims.

If a Voluntary Arrangement either a CVA (Company Voluntary Arrangement) or IVA (Individual Voluntary Arrangement) is appropriate then by notifying the other side of the proposed VA is normally sufficient to ensure they do not start legal proceedings such as a Winding Up Petition or Bankruptcy Petition. HMRC own policy is that once a Voluntary Arrangement is received they stop all legal recovery action until the outcome from the Voluntary Arrangement proposal is known. Common sense or a quick phone call will stop most creditors continuing legal action when a formal insolvency process is in progress.

If the matter is very urgent then we can seek an Administration Order from the High Court within 24 hours which protects the company from being wound up or other litigation for a period of time to allow for restructuring or other formal insolvency processes such a CVA, a Pre Pack Administration or Liquidation and Pheonix.

Top Tip

If you have received a Statutory Demand and agree that the debt is due but need to protect your business then the faster you take action the better. 4R can protect the value of a business and provide that protection fast to allow for a considered review of the business and agree a resolution that works for all the stakeholders.

Get professional help now to independently assess the current situation and put you back in control.

If in doubt, call us on 0800 902 0123 for advice. It’s free

Whatever your circumstances are 4R Business Recovery can and will be able to help you. Simply get in touch with an expert today on 0800 902 0123 to get free advice that will help you cancel out the stress of dealing with any issues you may be facing.

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