Alternatives to liquidation
Liquidation is the right answer for many insolvent companies, but it is not the only option, and if the underlying business is viable there are several alternatives worth considering first. The deciding question is always viability: if the business can trade profitably once the immediate pressure is dealt with, an alternative to liquidation may preserve it, the jobs and more value for creditors. If it genuinely cannot, an orderly liquidation is the more honest route. Insolvency Service; gov.uk
- The deciding question
- Is the underlying business viable?
- Who can tell you
- A Licensed Insolvency Practitioner, usually quickly
- If viable
- An alternative may save the business, jobs and value
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At a glance
| Alternative | Type | What it does |
|---|---|---|
| Renegotiate terms with creditors | Informal | Agree new terms with the creditors you owe |
| Time to Pay with HMRC | Informal | An instalment plan for tax arrears |
| Raise new finance | Informal | Brings in funds to close a cash-flow gap |
| Cut costs or improve credit control | Informal | Closes a cash-flow gap from inside the business |
| Company Voluntary Arrangement | Formal | Repay a proportion of debts over three to five years while trading |
| Administration | Formal | A legal moratorium protects the company while a rescue or sale is arranged |
| Standalone moratorium | Formal | A breathing space procedure |
Start with viability
If the business can trade profitably once pressure is dealt with, look at a CVA or administration before liquidation. If not, liquidation is usually the right close. Our business rescue guide covers the routes, and a Licensed Insolvency Practitioner can tell you quickly which applies.
Common questions
What are the alternatives to liquidating a company?
Informal options include renegotiating with creditors, HMRC Time to Pay, refinancing and cost-cutting. Formal options include a CVA and administration. The right choice depends on whether the business is viable.