How Does Business Rescue Work?

Business rescue is possible even in the bleakest of situations and often there are parts of businesses that can be protected and saved even if things seem beyond your control. 

There are many methods of business rescue. Which method is best very much depends on the particular circumstances of your business turnaround requirements. It also depends on the issues which the business seeking company rescue is facing. 

In order to avoid what many dread, the formal insolvency process, a company looking for business rescue will often take advice on whether it is possible to mitigate any problems or arrange for circumstances which would allow them to avoid entering a formal insolvency process at all. 

Advice is often best taken from an independent business rescue expert, so you will more than likely feel guided through a process. The process will usually take a few weeks to complete its first few stages, but a qualified or experienced insolvency specialist will spell out just how long this process will take and the associated costs and steps before you commit to a plan. 

So what are your options as a company?

• A formal company voluntary arrangement process whereby a voluntary arrangement is reached on a contractual basis with the company’s creditors so that they won’t bring proceedings whilst the voluntary arrangement is in place.
  
• Company restructuring such as a sale of non-core assets, debt restructuring, enforcing share security, or obtaining an equity injection into the company.
• A scheme of arrangement, which is a more formal company rescue process sanctioned by the court, but it is not a company insolvency process.
  
• A full review of costs and expenses, including the employee and management structure.
  
• All of these can also be amalgamated to form part of a business turnaround and company restructuring plan, as part of a company restructuring or business recovery strategy. 

What are the advantages of business rescue?
There are many advantages to company restructuring and in using less formal business restructuring methods. Here are just a few:

• Restructuring allows for the goodwill of the business to remain intact and trading to continue and therefore provide better return to creditors and shareholders compared with formal insolvency proceedings.
  
• Costs can be a lot less with a business turnaround than one of the formal processes.
• There is less publicity and broadcasting to a company restructuring/business recovery than a formal company insolvency process, which can ‘save face’ when it comes to conducting future business or carrying on your current operations.
  
• Informal business restructuring can be very flexible, which is particularly useful if there are cross-border elements.
  
• Directors can usually remain in place in a company restructuring, and unlike formal insolvency proceedings, they are not subject to automatic investigations by a liquidator. This can be especially useful if a company depends on the core knowledge a director or owner has and would otherwise fail without it. 

Feeling the pinch? Talk to us today for free on 0800 975 0380 or email us with questions at [email protected]