A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Restructuring Options for Businesses
Restructuring means changing the financial, operational, or legal structure of a business to make it viable and sustainable. For a struggling but fundamentally sound company, restructuring can be the route back to health - and can avoid formal insolvency altogether.
Informal Restructuring
The simplest restructuring is informal - negotiating directly with creditors and stakeholders:
- Time to Pay arrangements with HMRC
- Payment plans with key suppliers
- Renegotiated terms with landlords or lenders
- Refinancing existing debt on better terms
Informal restructuring is fast and flexible, but it is not legally binding - creditors can change their minds.
Formal Restructuring: The CVA
A Company Voluntary Arrangement (CVA) is a formal, legally binding restructuring. The company proposes a plan to repay a portion of its debts over 3 to 5 years while continuing to trade. If 75% of voting creditors agree, all unsecured creditors are bound - even those who voted against.
A CVA suits a viable business burdened by historic debts it cannot pay now, but can service through affordable monthly contributions.
Operational Restructuring
Restructuring is not only about debt. Operational changes can restore viability:
- Cost reduction - cutting non-essential overheads
- Refocusing on the most profitable products or customers
- Improving cash flow - tighter credit control, faster invoicing
- Management changes - strengthening leadership or bringing in expertise
Legal Restructuring: Administration
Where creditor pressure is acute, administration provides a legal moratorium - a freeze on enforcement - giving time to implement a restructuring or sell the business as a going concern. Administration can be combined with a CVA for a powerful rescue.
When Restructuring Isn't Enough
If the business is not viable, restructuring cannot create viability. In that case, an orderly CVL is the responsible route - closing the company, realising assets, and protecting directors.
Speak to a Licensed IP
The right restructuring approach depends on whether your business is viable, the level of creditor pressure, and your goals. Our Manchester-based practitioners will diagnose the problem and advise on the best route - free and confidential.