Ted Wetton FCA FABRP FIPA MICM

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• Ted Wetton FCA FABRP FIPA MICM
• www.gibsonboothinsol.com

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Introduction

• About Gibson Booth
• Discussion Subjects
• Duration
• Questions

Member of
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Are you Insolvent?

• The 2 Main Tests for Insolvency
• Individual/Company are unable to pay their debts
  as and when they fall due.
• Value of Assets is less than the amount of its
  liabilities. (Including contingent liabilities)

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Signs of Insolvency

• Diminishing bank balance
• Static sales
• Final demands and writs being served
• In arrears with HM Revenue Customs
• Exceeding your overdraft limit/at the limit
  regularly
• Issued with statutory demand
• Increasing borrowing or using personal money to
  fund business

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Signs of Insolvency

• Additions 2008/09
• Banks increasing margins on borrowings
• Banks using Libor as against base rate
• Banks reducing facilities

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Cashflow, Top tips to Improve your Liquidity

• Cut down costs
• Draw down from loan accounts
• Dividend v Salary
• (Major pitfalls but save tax)
• Re-organising Contracts!
• Reviewing debtor schedules
• Selling unwanted assets
• Re-negotiate with Landlord.
• Restructuring

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Avoiding Insolvency

• Create a business plan
• Review costs, overheads and sales on a regular
  basis.
• Prepare regular management accounts
• Hold regular Directors/Management meetings to
  discuss financial situation.
• Prepare cash flow forecasts and compare with
  actual performance.

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Directors Duties Responsibilities

• Wrongful Trading (Trading Whilst Insolvent)
• When a company is facing insolvency and a
  Director fails to take all steps necessary to
  minimise the loss to the companys creditors.
• Trading Whilst Insolvent Necessary Steps
• Trade in cash - so the creditors are no worse
  off.
• Avoid any last ditch risky rescue attempts.
• Cease trading.
• Consult with a Qualified Insolvency Practitioner.
• Stop taking deposits.
• Minute all decisions relating to the above.

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Directors Duties Responsibilities

• Consequences of Wrongful or Fraudulent Trading
• If found guilty Directors will be asked to
  contribute to assets of the company to increase
  return to creditors.
• Director Disqualification Proceedings

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Insolvency Options - Rescue

• Company Voluntary Arrangement
• Company/Business rescue procedure
• Company can return to profitability
• Directors have control over trading and assets
• Support from bank and key suppliers required
• Administration
• Company/Business rescue procedure
• Protection from creditors actions
• Administrator control any trading and all company
  assets
• Can facilitate going concern sale to increase
  realisations for creditors

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Insolvency Options - Rescue

• Administration
• PRE- PACK
• (The in thing)

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Insolvency Options The End

• Creditors Voluntary Liquidation
• Director lead procedure
• Seen as responsible procedure
• Appoint own Liquidator
• Compulsory Winding Up (Creditors Petition)
• Court orders that company is to be wound up
• Official Receiver appointed as Liquidator
• Perceived as Directors not taking responsibility

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Bankruptcy and IVAs

• So you think someone you know is insolvent?
• The Individual Insolvency Register
• www.insolvency.gov.uk - Bankruptcy/IVA Search
• Insolvent Company
• www.companieshouse.co.uk WebCheck service

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Getting the Right Advice

• Ensure you get advice from a Qualified Insolvency
  Practitioner.
• Gibson Booth offer a free initial consultation.
• Have a customer who owes you money Gibson Booth
  in most cases will represent you free of charge
  at any creditors meeting.

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Any Questions?
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