Company insolvency: Turnaround, formal and informal arrangements
Turnaround, formal and informal arrangements can provide an effective strategy if effectively managed. Most businesses will suffer a deterioration in trading at some stage either through economic conditions or the loss of a key customer.
If you are confident in the product or service being supplied and believe the company has a future then adopting one of these approaches could be the solution.
Taking the formal approach will require a turnaround specialist to achieve the desired outcome. Planning and implementing the required corrective action such as company restructuring, cost reduction, concentration on financially viable 'core products', and increasing financial control can help towards returning the company to profitability.
Taking the informal approach requires contact with the major creditors whose support will be required if the business is to move forward. A detailed explanation of the cash flow with a realistic time scale for the repayment of the debt will assist in obtaining the support of the creditor.
- Plan the cash flow and monitor performance
- Keep major creditors informed of the situation to maintain support
- Review and adapt the plan as circumstances arise
- If the position does not improve consider other options
- Insolvency options for limited companies
- Insolvency options for sole traders and partnerships