What Happens During Your First Call With an Insolvency Practitioner?

Dealing with company finances can feel stressful but picking up the phone and calling a professional to seek advice can feel like a huge step. It might be daunting wondering what they could ask, the next steps, or them telling you the options your company has left. So, what actually happens during your first call with an insolvency practitioner?

The good news is that it gives you an opportunity to get a better understanding of the situation you’re in and explore some available options. You won’t need to have all the answers before you get in touch and seeking advice isn’t the end of your company.

Here at Simply Corporate, we understand that financial difficulties can be stressful for directors. Knowing what to expect from that first conversation can help you feel more prepared and confident about taking the next step.

Why Should You Make Your First Call With an Insolvency Practitioner?

When a business is struggling, a lot of people avoid asking for help. It’s easy to have hope that a contract will come through or cash flow will improve. Waiting for a miracle might hinder your business.

Your first call with an insolvency practitioner gives you the opportunity to discuss your company’s financial position early before the situation gets harder to manage. An insolvency practitioner can help you understand your options, explain the relevant procedures and identify potential next steps.

You don’t have to wait until your company has run out of money or creditors are threatening legal action. If you’re struggling it may be time to seek professional advice.

What Information Will You Need to Provide?

As a starting point, an insolvency practitioner will want to understand the situation.

You’ll be asked about your company’s financial position and the challenges you’re facing. This information helps determine what advice may be appropriate.

Some things you could be asked about are:

• Your company’s debts. How much is owed, and who are the main creditors?
• Cash flow. Is the company able to cover regular expenses?
• HMRC liabilities. Are there outstanding payments relating to VAT, PAYE or Corporation Tax?
• Assets. Does the company own valuable assets?
• Income and future work. Are sales continuing, and is there a realistic prospect of the business recovering?
• Creditor pressure. Have you received formal demands, statutory demands or a winding-up petition?

You don’t have to have every figure ready, the first conversation is about understanding the broad situation. Having a rough idea of your debts, income and immediate financial commitments can help make the discussion more productive.

Will the Insolvency Practitioner Judge Your Situation?

Financial difficulties can happen for many reasons. Rising costs, late payments, lost contracts and unexpected expenses can all put pressure on a business.

Your first call with an insolvency practitioner involves understanding the facts and identifying possible solutions. The more accurate the information you provide, the better the practitioner can assess your circumstances.

An insolvency practitioner will want to understand your role as a director, any decisions you’ve already made and whether anything urgent needs attention.

Remember, seeking advice is a responsible step. You don’t have to have tried everything before speaking to someone.

What Options Might Be Discussed During the Call?

Every struggling company will have different solutions. These depend on your company’s financial position, its ability to continue trading and the circumstances surrounding its debts.

During your first call with an insolvency practitioner, you may discuss several possible routes.

Continuing to Trade

If there’s a chance of recovery, it’s possible to explore ways to improve cash flow, manage liabilities and address the underlying financial problems. This will depend on the company’s circumstances and whether continuing to trade is appropriate.

A Company Voluntary Arrangement (CVA)

A CVA is a formal arrangement that can allow an eligible company to repay some or all of its debts over an agreed timeframe.

Administration

Administration is a formal insolvency procedure that provides protection from creditor action while an administrator considers the best way forward.

Creditors’ Voluntary Liquidation (CVL)

If it’s unlikely for a company to recover, a Creditors’ Voluntary Liquidation may be an option. This is a formal process for winding up an insolvent company, realising its assets and dealing with creditor claims.

These options won’t all be suitable for every business. The initial conversation helps establish which routes, if any, are worth thinking about.

What Happens After Your First Call With an Insolvency Practitioner?

Your first call is usually the start of the process rather than the point at which a definite decision is made.

Depending on your circumstances, an insolvency practitioner may ask for further financial information, such as management accounts, bank statements, creditor details and details of company assets.

This gives a more detailed assessment and allows them to explain the potential benefits, risks, costs and practical implications of the available options.

If there are urgent issues, it’s important to make these clear from the start of the process. You may need advice quickly, don’t assume the first call itself provides any legal protection from creditors.

You should leave the conversation with a clearer understanding of your position and what you need to do next.

How Can You Prepare For Your First Call With An Insolvency Practitioner?

Before the call write down your main concerns and any questions you’d like answered. Pull together whatever financial information you already have, including an approximate figure for your debts and details of any urgent creditor demands.

Remember to be honest about what’s going on, and don’t be afraid to ask the practitioner to explain anything you’re not sure of.

Speak to Simply Corporate About Your Company’s Financial Difficulties

If you’re worried about your company’s future, don’t hope that problems will sort themselves out.

Your first call with an insolvency practitioner can help you understand your options, assess the challenges and decide what to do next.

At Simply Corporate, we understand that every situation is different. Getting the right advice can help you make informed decisions and understand the implications for your business and your responsibilities as a director. Get in touch with our team today on 01282 222420.