“Stop all the clocks, cut off the telephone” wrote W H Auden in his haunting poem “Funeral Blues”.
Many directors of companies with multiple creditors whose debts they are trying to service might recognise the sentiment themselves. The ability to stop or pause time and not be chased or harassed would be pretty close to the top of a wish list when they’re struggling with running a business themselves.
Back in 2020, not many people would have predicted that three years after the pandemic and three lockdowns that the economy would be at best anaemic and on some indicators such as inflation and interest rates, worse.
Otherwise viable businesses across a range of sectors could function and be profitable but the accumulation of debt and inability to clear existing arrears is making this impossible for thousands of companies and their owners.
But what if there was a way of pressing a virtual pause button on your debts and stopping all impending legal and enforcement actions from creditors while you put in place concrete steps to restructure and rebuild your business on firmer and hopefully more profitable terms?
The good news is that there is and it’s part of a process called administration that provides not just directions but a full roadmap and a driver to bring a business back.
Administrations are growing again
| Period | Number of administrations |
| Jan – Jun 2022 | 596 |
| Jul – Dec 2022 | 635 |
| Jan – Jun 2023 | 742 |
The number of businesses going into administration has grown in the past few months consecutively with an increase of 24% from the first half of 2022 to the first half of 2023.
This shows that more directors are taking advantage of the procedure to protect their business while they work with an administrator to sell part or all of the company to raise funds or cut costs sufficiently to achieve profit sooner.
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “Administration can really be a win/win proposition for both directors and their creditors.
“The benefits for the directors are obvious. An insolvency moratorium applying straight away will freeze their debts and any live legal action in place to allow them to make quick and reasoned decisions with an administrator to help get the business back on its feet.
“It will also generally be a net benefit for creditors too. Administrations will generally provide a better return for them than a liquidation because the business in question will either return to profit by continuing to trade and will be able to repay the original debt (albeit over a longer than agreed period) or if it is sold to new owners through a pre-pack administration deal, the value of its assets will be protected.
“If the business eventually fails and has to be liquidated then creditors will receive whatever the liquidator can realise through the assets of the business but it is very rarely 100% of their debts and they will be one creditor among several so will have to make do with a share rather than have the opportunity to recoup the entirety of their lending.”
If you feel your business has a chance to recover but just needs some help to get there then get in touch with us today.
We offer a free initial consultation for any director or business owner to discuss the best way through their current issues whether it be an administration or another process that might be even better suited to their position.
The sooner you contact us, the sooner you’ll know what’s achievable for you through administration or something else more appropriate but the longer you wait, the harder it could be to implement your ideal scenario.