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. Informally, you may be able to renegotiate terms with creditors, agree a Time to Pay arrangement with HMRC, raise new finance, cut costs, or improve credit control to close a cash-flow gap. Formally, a Company Voluntary Arrangement lets a viable company repay a proportion of its debts over three to five years while it keeps trading, and administration provides a legal moratorium that protects the company from creditor action while a rescue or sale is arranged. There is also a standalone moratorium procedure for breathing space. 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. A Licensed Insolvency Practitioner can tell you quickly which applies. Insolvency Service; gov.uk
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- Informal alternatives
- Renegotiation, Time to Pay, refinancing, cost cuts, credit control
- Formal alternatives
- CVA, administration, statutory moratorium
- The deciding question
- Is the underlying business viable?
- If viable
- An alternative may save the business, jobs and value
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.
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.
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