How Fast-Track Company Rescue Plans Can be Used to Save Businesses

A fast-track debt management plan for limited companies

Fast-track company rescue plans are used in cases where a company is struggling to pay its day-to-day bills, but with some help could well become profitable again. They are used as a more cost effective, informal solution to a Company Voluntary Arrangement (CVA).

In simple terms, all the company debt is moved into one manageable monthly payment so that the company can continue trading whilst making affordable payments to its creditors. And, because it is an informal process it is usually very quick to set up and get running, as long as their is no serious action being taken by any of the creditors.

This plan gives the company breathing space to be able recover and become viable once again.

Is your company eligible?

• The company must be insolvent (can’t pay it’s debts as and when they fall due)
• Projected cash flow forecasts must show that the company will be able to pay the agreed amounts of repayment to creditors
• The directors must be confident that the business has a viable future and a good prospect of recovery

The main benefits of using a fast-track company rescue plan

• Pressure from creditors and HMRC is relieved while the arrangement is being prepared
• Usually costs much less than a formal Company Voluntary Arrangement
• All payments to creditors will be centralised into a single monthly payment
• Company directors and shareholders do not lose control of the business
• The plan is not public information: advertisement in the London Gazette is not required (as would be the case if the company went into any form of administration)
• Cash flow is inevitably improved with reduced payments
• The deal is mutually beneficial for directors and creditors, who enjoy repayment of the debt in a reliable manner

What does a fast-track company rescue plan proposal have to contain?

The Fast-track company rescue plan proposal will contain information about the business and ourselves (Names, addresses and contact details). It will include and in-depth information on the company’s affairs, including profits, losses, and significant transactions or events.

After this introduction will be the main proposals of the Fast-track company rescue plan, followed by information about the company’s creditors and debts. Documentation will need to be prepared to supplement the fast-track company rescue plan.

How long does a fast-track company rescue plan usually take to set up?

In usual circumstances, it will take an average of 4 weeks altogether. Around 1 month will pass between our appointment posting the proposal to creditors. Keep in mind, however, that contributions to the plan could be required for up to 5 years depending on the agreement made.

When can a fast-track company rescue plan be used?

A fast-track company rescue plan must be proposed before a winding up order has been granted against your company and there is a good chance the company is viable.

If you have already been served a winding up petition, or your creditors are threatening to issue one, then you must act quickly as it may be more appropriate to use a Company Voluntary Arrangement (CVA). We would recommend getting in touch as soon as possible to prevent costs spiralling out of control.

Once the winding up order is granted, compulsory liquidation will commence, and at this point the possibility of the business recovering through any means is unlikely.

It is possible that if your company enters into administration, the administrator or liquidator will propose a CVA during the course of the procedure as a way to bring about a turnaround.

This is likely in the case of business with minimal assets, as they are likely to believe that a CVA would be more beneficial to creditors than to use the company’s assets to recover the debt. Likewise, a company in a CVA can also enter into liquidation.

How much does a fast-track company rescue plan cost?

The main expense that will need covering will be to formulate and present the fast-track company rescue plan on your behalf to the company creditors and this will vary depending on:

• The amount of work involved
• The particulars of your case

On average, the fee will vary between £2,000 and £5,000, usually much less than a Company Voluntary Arrangement which can cost upwards of £10,000. The fees come out of the monthly payment so there are no sudden surprises and we always tell you what they will be upfront.

At Forbes Burton we offer highly competitive rates, and we’ve helped hundreds of businesses avoid formal liquidation and dissolution processes. If your company is insolvent, the most important thing is to act quickly and avoid being accused of wrongful or fraudulent trading (never mind accumulating more debt than is needed).

Could a fast-track company rescue plan work for you?

Can you use a fast-track company rescue plan to help your business? Find out with our free online test today →

Need to speak to someone?

If your company is struggling with unmanageable debts, poor cash flow, or an uncertain future, you are not alone.

We speak to company directors struggling with the same issues as you every single day, and we are here to give you the help and guidance you need.

If you would like to know more or think that a fast-track company rescue plan may be suitable for your business get in touch with us today on 0800 975 0380 for a free, no-obligation chat.