How to keep your business afloat during the Coronavirus pandemic
The national coronavirus lockdowns have been extremely effective in protecting the NHS and the nation’s health overall, but they’ve also created an economic crisis that businesses are finding difficult to survive.
If your company is struggling to survive this third national lockdown it’s important to understand the options that might be available to you, and also your obligations as a director.
On becoming insolvent, it’s incumbent on you to stop trade and seek help from a licensed insolvency practitioner (IP). Even if you haven’t yet reached this stage, obtaining professional insolvency advice is crucial.
Company liquidation during the third lockdown
It’s important to take care if you believe liquidation is inevitable due to the third coronavirus lockdown, as your priorities change when your company is insolvent. UK Liquidators has extensive experience of helping directors to voluntarily place their companies into liquidation, and can provide the advice you need.
You must prioritise your creditors and minimise their losses, and entering Creditors’ Voluntary Liquidation (CVL) allows you to do so. It also offers you the potential to claim director redundancy.
Redundancy pay can cover the professional fees associated with this process, and/or support your personal financial situation, but you need to have worked as an employee of the company to be eligible.
How does Creditors’ Voluntary Liquidation work?
Directors have a degree of control of the process – you can decide when to enter liquidation, and also choose a liquidator. When you voluntarily place your company into liquidation you’re protecting your creditors from further financial loss, and can reduce the risk of any future wrongful trading allegations.
CVL involves selling company assets for the benefit of creditors, and any remaining debt is written off in most circumstances. There are instances where you could be held personally liable for outstanding debt - these include when personal guarantees have been provided.
Claiming director redundancy when your company cannot survive
When you place your company into liquidation you may be able to claim statutory redundancy pay if you’ve worked as an employee. It isn’t widely known that directors can be eligible in this respect, but director redundancy typically represents a considerable sum.
The eligibility criteria include:
- Working under a written, oral, or implied, contract of employment for at least two years
- Working for a minimum of 16 hours per week
- Receiving a regular salary through PAYE
- Carrying out work that isn’t just advisory
- Being owed money by the company
Professional insolvency help during the third lockdown
For more information on claiming director redundancy, and for professional guidance if you believe your company cannot survive the third lockdown, please contact our expert team. There may be other options open to you that you haven’t considered, and we will clearly present these so you can make an informed decision.
The UK operates a supportive insolvency regime to help eligible businesses recover financially. This includes formal restructuring of debt, for example, and a moratorium on creditor legal action.
UK Liquidators provide reliable advice on these and other appropriate options. We can also let you know if you’re eligible for director redundancy pay, and guide you through the liquidation process. We work from offices around the country, and will arrange a free, same-day consultation to quickly assess your situation.
If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.
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