The Administration must follow the procedure set out in the insolvency legislation. We will assist you with the preparation and application for Administration at each stage, including drafting notices, minutes and other documents where appropriate, but the ultimate responsibility remains with you. The following main steps must take place in each appointment:

Board meeting: A quorate meeting of the Board of directors will have to approve the issue of notices required by statute to place the Company into Administration and confirm that we are instructed to assist with the formalities. We will provide standard minutes that include resolutions that, among other matters, will deal with our pre-appointment fees and appoint us to assist with the Administration appointment.

Notice of intention to appoint: Where the Company has a floating chargeholder who is, or may be, entitled to appoint an Administrative Receiver or Administrator out of court, they must be given 5 business days’ notice of the intention to appoint an Administrator within statutory timescales. Upon filing the notice of intention to appoint in Court the Company will obtain an interim moratorium giving it protection against creditor action. It may also be necessary to give notice of intention to appoint an Administrator to other parties, such as the Company itself.

Appointment: A formal notice of appointment has to be issued to the court.

Post-appointment notices: After the appointment, the Administrator is required to issue and advertise a variety of notices for the attention of the Registrar of Companies, the Court, other statutory bodies such as HM Revenue and Customs and the members of the Company and creditors generally.

Statement of affairs: The Board will be required to complete a statement of truth to verify the accuracy of the contents of a statement of affairs on behalf of the Company. We can assist you in preparing a draft statement of affairs from information that the Board provides, but it remains the Board’s statement and those who complete the statement of truth will be ultimately responsible for any false disclosure or omission.

Administrators’ proposals: As soon as reasonably practicable after the appointment, but in any event within 8 weeks, the Administrators will issue their proposals to the Registrar of Companies, Court and creditors, setting out how they intend to achieve the purpose of the Administration.

Decision Procedure: The Administrators may also seek a decision from the creditors when they issue the proposals, although this will only be necessary if there is a prospect of a distribution to unsecured creditors. If such a decision is sought, the creditors will have the opportunity to modify the Administrators’ proposals, appoint a Committee to assist the Administrators and, if no Committee is appointed, fix the basis of the Administrators’ fees and disbursements and approve any pre-Administration costs not already paid if they are to be paid from asset realisations in the Administration. If a decision is not sought from the creditors, it will be for the secured and preferential creditors to fix the basis of the Administrators’ fees and approve pre-Administration costs in accordance with the legislation.

Company Directors’ Disqualification Act: Within the first three months following his appointment, the Administrator is required to complete a confidential online report to the Secretary of State on the conduct of those who have been directors, or shadow directors, of the Company in the last 3 years. The information contained in the online report could result in the Secretary of State taking action to disqualify one or more of the directors, or shadow directors, from managing a Company for a period of between 2 and 15 years.

Exit from Administration: The method used to exit from the Administration will depend on a number of factors and the most appropriate exit route will be considered by the duly appointed Administrator. It is possible that the most appropriate exit route may be through either compulsory or voluntary liquidation. Consequently, we would also like to take this opportunity to draw your attention to the provisions of Section 216 and 217 of the Insolvency Act 1986 which are briefly explained below.

We would also like to take this opportunity to draw the Board’s attention to the provisions of Section 216 and 217 of the Insolvency Act 1986, which are briefly explained below. If the Company is placed into liquidation after the Administration has ended, anyone who was a director within 12 months of the date of liquidation will be prohibited from using any name by which the Company was known, including any trading names, or a name which is so similar as to suggest an association with that Company.

The restriction from using a prohibited name applies for the period of 5 years beginning with the day on which the Company is placed into liquidation and except with the permission of the Court a director cannot:

a) be a director of any other Company that is known to be a prohibited name, or,

b) in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such Company, or,

c) in any way, whether directly or indirectly, be concerned or take part in the carrying on of an unincorporated business under a prohibited name.

There are, however, statutory exceptions to the restriction imposed by section 216 of the Insolvency Act 1986 and these are set out in rules 22.1 to 22.7 of the Insolvency (England and Wales) Rules 2016.

It is a criminal offence to contravene section 216 of the Insolvency Act 1986 and if a person acts in contravention of this section they are liable on conviction to imprisonment and/or a fine. In addition, by virtue of section 217 of the Insolvency Act 1986, a person who is involved in the management of a Company in contravention of section 216 is personally liable for any debts of the Company incurred during the period of that involvement.

Each director should seek independent legal advice both to ensure that they do not contravene section 216 and if they wish to take advantage of the statutory exceptions.

Any CVA must follow the procedure set out in statute. We will assist the Board and the Company with the preparation of proposals for a CVA and arranging the subsequent decision procedures of creditors and of the Company to seek approval of the proposals, including drafting notices, minutes and other documents where appropriate, but the ultimate responsibility remains with the Board. The following main steps must take place in each appointment:

Options and our role: We must set out our changing role and discuss the options available in a fair manner and consider the Company’s circumstances before the Board decides on an appropriate solution to its current difficulties. When the Board is happy that it understands the options and our advice, it will be asked to confirm that it agrees.

Proposals and Statement of Affairs: We will help to draft the Company’s proposals and statement of affairs from information that the Board provides, but the Board should note that they remain their documents and the directors may be held liable if they omit information from, or include wrong or misleading information in, the proposals that others subsequently rely on when approving the proposals. In addition, if any information is omitted, or incorrect or misleading information is included, the proposals may be rejected or any approved CVA may be challenged. This could result in the Company being in a worse position than if it was wound up now without first attempting a CVA.

Notices: We will help draft and submit notices to the Court and to the Company’s creditors and members in connection with the decision procedures to approve the proposals. If any creditor is threatening or taking court action the Board should advise us as a matter of extreme urgency so that we can consider applying to have their action halted while the proposals are drafted and submitted for approval.

Creditors’ decision procedure: Once the Company’s proposals are finalised and the required notices have been issued a decision of the creditors will be sought to consider the proposals. Proposals are only approved when 75% or more of those voting in the decision procedure have approved them. Creditors may propose amendments to the proposals and if they do the proposals cannot be approved until the directors have agreed to the modifications. The forthcoming interview will deal with some common modifications so that the Board have some advance warning of potentially onerous modifications and so do not have to make a decision without time to consider them properly.

Company Meeting; At the same time as sending notices of a decision procedure to the creditors, the members of the company will be invited to a meeting to consider the proposals. A resolution is passed by the members at the meeting of the company when a majority (in value) of those voting have voted in favour of it.

Post-appointment notices: After the appointment, the Supervisor is required to issue a variety of notices for the attention of the court, other statutory bodies such as HM Revenue and Customs, Companies House, and the creditors generally.

Supervisor’s duties: As explained above, once appointed Supervisor our IP’s main duty will be to the creditors; to monitor the progress of the arrangement and enforce the arrangement terms, including any modifications that may be proposed and accepted by the directors and the creditors. If the Company is unable to maintain the arrangement payments, or otherwise defaults on the agreed terms and an acceptable variation cannot be agreed, the Supervisor may have to fail the arrangement and potentially could even have to petition for the Company to be wound up. The Board will be required to co-operate with the Supervisor in providing information about the Company’s income and expenditure and copies of its management and other accounts from time to time and making any increased payments that he may require. It is important that the Board realises that if the Company enters a CVA which subsequently fails, resulting in the Company being wound up, the Company may be in a worse position than if it was wound up now without first attempting a CVA. The Supervisor will deal with enquires from the directors and the creditors promptly and will report periodically on the progress of the arrangement, including the level of costs, any changes and any other sources of income for the Supervisor or the practice in relation to the case. The Supervisor will report if the costs of the arrangement increase beyond previously reported estimates, and will close the CVA promptly on completion or termination.

Potential delays or complications: We will not be able to start drafting proposals until we have received all of the information requested in the engagement letter, together with an updated business plan and cashflow forecast and details of the measures that the directors intend to take to avoid recurrence of the Company’s financial difficulties. Failure to provide any of the information could delay the whole process. When drafting proposals we may require further information and we will need some documentation signed and returned. Failure to provide prompt answers to queries or delay in returning signed documents could result in delay. It is essential that you provide complete and accurate information about all of the company’s assets and dealings. Providing inaccurate or misleading information in an attempt to procure approval of an arrangement is an offence and could result in delay or rejection of the proposals. If it is discovered after the proposals have been approved, it could result in the failure of the arrangement and the Company may be wound up. You should complete any outstanding tax returns and submit them to HMRC before the proposals are issued to creditors. HMRC will not approve proposals if returns are outstanding so failure to complete the returns could result in delay or the rejection of the proposals.

Challenge and appeal. If a creditor is bound into the arrangement without receiving notice then they can appeal to court. Similarly, any creditor can appeal to court within 28 days of the approval of the arrangement if they consider that they have been treated unfairly or they can show that the arrangement should not have been approved. Exceptionally, it may be possible for a creditor to appeal out of time if the court permits and the company and the creditors can apply to the court to have any act, omission or decision by the Supervisor reviewed.

Potential consequences of challenge or appeal. The court can make whatever order it sees fit in the event of a challenge or appeal. It may revoke the approval of the arrangement with or without ordering that a fresh decision procedure should be convened. It can order specific action by the Company or the Supervisor to rectify matters and it can make an order for the costs of any application and complying with any consequential orders.

Consequences if the CVA is not approved. If the CVA is not approved, the Company will remain in its current situation. It will have no protection from recovery action by its creditors and the Board will remain in control of it. We will be able to advise the Board further in that situation, but it is likely to need a further insolvency procedure. Because of the delay caused by proposing an arrangement the Company may owe more money and may be in a worse position than if it had entered an alternative insolvency procedure immediately without first trying an arrangement. If a creditor has petitioned for the Company to be wound up and has suspended action

or had the petition adjourned to allow the proposals to be considered, then if the proposals are rejected they may be able to get the Company wound up quickly.

Consequences if the CVA is not successfully completed. If the proposals are approved by the required majority, but the arrangement subsequently fails, the arrangement terms may require the Supervisor to petition for the Company to be wound up. Because of the time elapsed, costs incurred in supervising the arrangement and additional cost of petitioning, the Company may be in a worse position than if the Company were wound up now without first attempting a CVA. As an alternative to petitioning, it may be possible for the Company to be wound up voluntarily, with the Board convening decision procedures of the members and creditors to place the company into Liquidation instead of applying to court for a winding up order. In some circumstances this can be a quicker solution than applying to court. Another possibility is that the Company may be put into Administration if there is a chance that the business can be preserved or that a better result can be achieved that way rather than immediately entering Liquidation. If that happens an Administrator has a range of options he can pursue, including, but not limited to, trading the Company before either selling the whole or part of it, arranging for an immediate sale of all or part of it without trading, or simply closing the Company down and disposing of the assets. It is even possible, but less likely, that the Arrangement could be terminated without further action, leaving individual creditors to take enforcement action in due course that might result in action to recover assets or a petition for winding up.

All our Insolvency Practitioners are qualified having passed the Joint Insolvency Examination Board exams. Insolvency work carried out under the Insolvency Act 1986 is regulated – for example, acting as a liquidator or an administrator for a company, acting as a trustee in bankruptcy or acting as a supervisor of a voluntary arrangement. Only an insolvency practitioner can undertake these roles.
Only individuals (not firms or companies, etc) may act as insolvency practitioners. (JIEB)

All our IP’s are regulated by the Institute of Chartered Accountants England and Wales – ICAEW

In addition to our IP’s qualifications we are also members of the R3; Association of Business Recovery Professionals.

And we follow these procedures and adhere to the relevant frameworks

CORPORATE INSOLVENCY PROCEDURES

The UK’s corporate insolvency framework includes a number of procedures which help insolvent companies repay their creditors and can help rescue businesses and jobs.

PERSONAL INSOLVENCY PROCEDURES

The UK’s personal insolvency framework is designed to help people repay their creditors using a procedure which is appropriate to their situation.

THE INSOLVENCY FRAMEWORK

Find out about key roles in the UK’s insolvency and restructuring framework, and how key decisions are made at R3

RESTRUCTURING PROCEDURES

R3 members can work with companies outside of insolvency procedures to ensure that their business remains in good financial health.

The CVL must follow the procedure set out in the Insolvency Act 1986 (as amended). We will assist the Board with the preparation and administration at each stage, including drafting notices, minutes and other documents where appropriate, but the ultimate responsibility remains with the Board. The following main steps must take place in each appointment:

Board meeting: A quorate meeting of the Board of Directors will have to approve the issue of notices convening the members’ meeting required by statute to place the Company into CVL, nominate someone to convene the decision procedure for creditors to appoint a Liquidator and state which Directors are to verify a statement of affairs on behalf of the Company by completing a statement of truth. We will provide standard minutes that include resolutions that, among other matters, will approve our pre-appointment fees and appoint us to assist with the convening of the decision procedure to appoint a liquidator.

Notices: Notices have to be issued to members and creditors within statutory timescales convening a meeting of members to wind up the Company voluntarily and appoint a Liquidator, and to convene a decision procedure where creditors appoint a Liquidator and authorise the payment of any outstanding pre-liquidation fees incurred in connection with preparing the Statement of Affairs and convening the decision procedure from the assets of the Company. Notices will need to be sent to all creditors on the same business day.

Statement of Affairs: The Directors nominated by the meeting will be required to prepare a statement of affairs on behalf of the Company. We will assist you in preparing a draft statement of affairs from information that the Board provides, but it remains the Board’s statement, and those who verify the

accuracy of its contents by completing a statement of truth will be ultimately responsible for any false disclosure or omission. The Statement of Affairs must be provided without delay as it must be sent to the creditors so that they receive it no later than the business day before the day that they make a decision as to who will be appointed Liquidator. It is the responsibility of the Directors, as those initiating the liquidation process and convening a Decision Procedure of the creditors to appoint a Liquidator, to ensure that this statutory timescale is adhered to, as failure to do so is an offence under the insolvency legislation that could lead to a fine being imposed.

The Director nominated to convene the decision procedure to appoint a Liquidator, will also be required to provide additional explanatory information in support of the statement of affairs, which will be sent to the creditors so that they receive it no later than the business day before the day that they make a decision as to who will be appointed Liquidator. Although we will assist in preparing the explanatory information, it remains your responsibility as Directors to ensure that it is accurate. In addition, where a meeting of creditors is held the nominated Chair may have to answer questions raised by creditors in response to any disclosure made in it.

Company meeting: A general meeting of the Company will be convened at which members will be required to pass a resolution placing the Company into voluntary liquidation and appointing a Liquidator. You have indicated that the members will appoint the relevant IP of this Practice, as Joint Liquidators.

Decision by the creditors: After the Company meeting the creditors have the opportunity to nominate Liquidators in place of the Liquidators appointed by the members, appoint a Committee to assist the Liquidator, and in the absence of a Committee, approve any pre-liquidation fees not already paid, where they are to be paid from asset realisations in the liquidation. There are two ways the creditors can nominate a Liquidator. First, by a Deemed Consent procedure, where the Liquidators appointed by the members will be automatically nominated by the creditors, unless sufficient creditors object; and secondly by way of a Virtual Meeting, that is one where the participants are not present in the same location, but where they can communicate directly with one another and the chairman of the meeting. We then advise the Board on the most appropriate way for the creditors to nominate a Liquidator. If a virtual meeting is held, one of the Directors will need to act as Chair of that meeting.

Whichever approach is taken, it is also possible for the creditors to requisition a physical meeting of creditors if the statutory minimum number of creditors in value, number, or as a percentage of total creditors, make a request in writing before the decision is made by the creditors as to who is to be Liquidator. One of the Directors will need to act as Chair of that meeting.

Where there is doubt over a prospective participant’s authority or entitlement to participate at a virtual or physical meeting, and/or over the amount for which a participant should vote, then it may be appropriate for the Chair of the meeting to consider obtaining independent assistance to determine the appropriate action to take. Similarly, where a Deemed Consent procedure is used, then it may be appropriate for the Directors as conveners of the procedure to consider obtaining

independent assistance to determine whether it is appropriate to allow, or refuse to allow, any objections. If that situation arises then will not be able to assist as we will not be independent given that one of our Insolvency Practitioners is seeking the appointment as Liquidator, but we will direct you to an appropriate firm of solicitors who will be able to provide such advice.

Post-appointment notices: After the appointment of the Liquidators, the Liquidators are required to issue and advertise a variety of notices for the attention of the Registrar of Companies, the Secretary of State, other statutory bodies such as HM Revenue and Customs and the members and creditors generally.

Fee approval: After appointment the Liquidators will need to seek approval for the basis of their fees for acting as Liquidators. The basis of their fees will be approved by the Committee if one is appointed. If no Committee is appointed, then the Liquidators will seek approval from the creditors by seeking a decision from the creditors. Where a Virtual Meeting is held for the creditors to nominate Liquidators, the Liquidators may seek approval for the basis of their fees at that meeting, if no Committee is appointed.

Company Directors’ Disqualification Act: Within the first three months following his appointment, the Liquidator is required to complete a confidential online report to the Secretary of State on the conduct of those who have been directors, or shadow directors, of the Company in the last 3 years. The information contained in the online report could result in the Secretary of State taking action to disqualify one or more of the directors, or shadow directors, from managing a Company for a period of between 2 and 15 years.

Any IVA must follow the procedure set out in statute. We will assist you with the preparation of proposals for an IVA and arranging the subsequent decision procedure to seek approval of the proposals, including drafting notices, reports and minutes, and other documents where appropriate, but the ultimate responsibility remains with you. The following main steps must take place in each appointment:

Options and our role: We must set out our changing role and discuss the options available in a fair manner and consider your circumstances before you decide on an appropriate solution to your current difficulties. When you are happy that you understand the options and our advice, you will be asked to confirm that you agree.

Proposals and Statement of Affairs: We will help to draft your proposals and statement of affairs from information that you provide, but you should note that they remain your documents and you may be held liable if you omit information from, or include wrong or misleading information in, the proposals that others subsequently rely on when approving your proposals. In addition, if you omit any information from, or disclose incorrect or misleading information in, your proposals, they may be rejected or any approved IVA may be challenged. This could result in you being in a worse position than if you petitioned for bankruptcy without first entering an IVA.

Notices: We will help draft and submit notices to the court, if required, and your creditors in connection with the decision procedure to approve the proposals. If any creditor is threatening or taking court action you should advise us as a matter of extreme urgency so that we can consider applying to have their action halted while your proposals are drafted and submitted for approval.

Creditors’ decision procedure: Once your proposals are finalised and the required notices have been issued a decision of your creditors will be sought to consider the proposals. Proposals are only approved when 75% or more of those voting in the decision procedure have approved them. Creditors may propose amendments to the proposals at the decision procedure and if they do your proposals cannot be approved until you have agreed to the modifications. The forthcoming interview will deal with some common modifications so that you have some advance warning of potentially onerous modifications and do not have to make your decision without time to consider them properly.

Post-appointment notices: After the appointment, the Supervisor is required to issue a variety of notices for the attention of the court, other statutory bodies, such as HM Revenue and Customs and the Insolvency Service, and the creditors generally.

Supervisor’s duties: As explained above, once appointed Supervisor our partner’s main duty will be to the creditors, to monitor the progress of the arrangement and enforce the arrangement terms, including any modifications that may be proposed and accepted by you and the creditors. If you are unable to maintain the arrangement payments or otherwise default on the agreed terms, the Supervisor may have to fail the arrangement and potentially could even have to petition for your bankruptcy. You will be required to cooperate with the Supervisor in providing information about your income and expenditure and formal accounts, if maintained, from time to time and making any increased payments that he may require. It is important that you realise that if you enter an IVA which subsequently fails resulting in your bankruptcy, you may be in a worse position than if you entered bankruptcy now without first attempting an IVA. The Supervisor will deal with enquires from you and the creditors promptly and will report periodically on the progress of the arrangement, including the level of costs, any changes and any other sources of income for the Supervisor or the practice in relation to the case. The Supervisor will report if the costs of the arrangement increase beyond previously reported estimates and will close the IVA promptly on completion or termination.

Potential delays or complications: We will not be able to start drafting proposals until we have received all of the information requested in the engagement letter, together with an updated business plan and cashflow forecast and details of the measures that you intend to take to prevent to avoid recurrence of your financial difficulties. Failure to provide any of the information could delay the whole process. When drafting proposals we may require further information and we will need some documentation signed and returned. Failure to provide prompt answers to queries or delay in returning signed documents could result in delay. It is essential that you provide complete and accurate information about all of your assets and dealings. Providing inaccurate or misleading information in an attempt to procure approval of an arrangement is an offence and could result in delay or rejection of the proposals. If it is discovered after the proposals have been approved, it could result in the failure of the arrangement and the Supervisor may have to petition for your bankruptcy. You should complete any outstanding tax returns and submit them to HMRC before the proposals are issued to creditors. HMRC will not approve proposals if returns are outstanding so failure to complete the returns could result in delay or the rejection of the proposals.

Challenge and appeal. If a creditor is bound into the arrangement without receiving notice then they can appeal to court. Similarly, any creditor can appeal to court within 28 days of the approval of the arrangement if they consider that they have been treated unfairly or they can show that the arrangement should not have been approved. Exceptionally, it may be possible for a creditor to appeal out of time if the court permits and you and the creditors can apply to the court to have any act, omission or decision by the Supervisor reviewed.

Potential consequences of challenge or appeal. The court can make whatever order it sees fit in the event of a challenge or appeal. It may revoke the approval of the arrangement with or without ordering that a fresh decision should be sought from creditors. It can order specific action by you or the Supervisor to rectify matters and it can make an order for the costs of any application and complying with any consequential orders.

Consequences if the IVA is not approved. If the IVA is not approved, you will remain in your current situation. You will have no protection from recovery action by your creditors and it is possible that one of them may petition for your bankruptcy. We will be able to advise you further in that situation, but it is likely to need a further formal or informal insolvency procedure. Because of the delay caused by proposing an arrangement you may owe more money and may be in a worse position than if you entered an alternative insolvency procedure now without first trying an arrangement. If a creditor has petitioned for your bankruptcy and has suspended action or had the petition adjourned to allow the proposals to be considered, then if the proposals are rejected they may be able to obtain a bankruptcy order quickly.

Consequences if the IVA is not successfully completed. If the proposals are approved by the required majority, but the arrangement subsequently fails, the arrangement terms may require the Supervisor to petition for your bankruptcy. Because of the time elapsed, costs incurred in supervising the arrangement and additional cost of petitioning, you may be in a worse position than if you were made bankrupt now without first attempting an IVA. As an alternative to petitioning, it may be possible for you to propose a debt management plan or alternative formal or informal insolvency procedure. The range of possible alternatives will be similar to those discussed above, but because you will have tried and failed an IVA your circumstances will be different and we will need to reassess the suitability of all options taking your changed circumstances into account. It is even possible, that the arrangement could be terminated without further action, leaving individual creditors to take enforcement action in due course that might result in action to recover assets or a petition for your bankruptcy. There have even been cases where the creditors took no further formal action, but continued to chase the debt from time to time for several years.