Liquidators - They're not all bad

July 3, 2020

Is someone you know avoiding a conversation about liquidation, or even bankruptcy, because of the stigma they feel is attached to it? Are they ignoring phone calls, letters, and emails, because it’s just another person asking them for money? Or have they been responding, but then receiving follow-ups because they haven’t kept the promises they’ve made?

Working in Insolvency, we’ve seen and heard it all. We know the signs, and this sort of behaviour is typical for someone who is struggling financially. But we understand. We understand how hard it is for their business to just suddenly be whipped out from under them. We understand it’s their baby – they’ve built it from the ground up, watched it flourish. We understand that they feel an obligation to their employees, to their creditors. If it’s previously been a long and successful business, they’re likely to be good friends with some of those employees or customers, or they may even be family. We understand that there will have been many sleepless nights.

It's hard for us too, going into a business that’s just been blindsided by a liquidation order, or even a shareholder appointment where the staff had no idea what their boss was planning, and telling everyone the doors are closing and unfortunately they no longer have a job. We’ve done this for a long time. We’ve seen the heartbreak. We’ve seen the tears shed.  We do our best to make the process as easy as possible.

But if there was one thing, we could tell people to make it even just a little bit easier, it’s get advice. Talk to an insolvency practitioner. Talk openly and honestly.

In a liquidation, the Liquidator’s obligations, first and foremost, are to the Creditors of the company, but if we have the Directors’ and Shareholders’ co-operation and can find out how the business was run, and get to know the detail of why the business failed, we can portray this to the Creditors, without them having to be the ones that put the point across. It’s easy for us to begin a report by saying the business failed due to a downturn in the market and serious cashflow issues. But what was the real reason? The numbers don’t always tell the whole story.

Often the director of a company in liquidation is the one that is most affected by the business’ failure. While we receive phone calls from aggrieved creditors saying, “they shouldn’t be allowed to do this!”, unfortunately, sometimes this is just the nature of business. Some businesses succeed and some fail. Sometimes the Director will have invested their life savings, maybe mortgaged their house (or their mother’s house). Sometimes this still just isn’t enough, and that’s ok. Sometimes businesses fail.

Unfortunately, there is a stigma associated with liquidation and bankruptcy. We can say time and time again that “it’s not that bad”, but what would we know? We’re not living it. We’re not going through it… but we are right there alongside our clients, the shareholders and directors, and the creditors. We are empathetic but impartial.

If you know someone with a business that is struggling financially, they need to get in touch with Nexia’s Insolvency & Recovery team. We have a team of specialist insolvency practitioners who are experienced dealing with an array of matters in this area. While we won’t be able to accept an insolvency appointment from our clients (because of prohibitions set out under legislation), we can put them in touch with the right people to talk to. Other insolvency practitioners that work like us, and who we trust, and we can assist them through the process. We can explain everything they need to know before they decide to make the call on whether to wind up their business, and we can talk to them about alternative options, or potentially even how to restructure to save the business if they talk to us early enough.

If you know of anyone in financial trouble, please get them to reach out. We can meet with them and see how we might be able to assist. Not only do we have expertise in insolvency, but we’re also experienced in restructuring, and that may be an option if they contact us early – and we can do this for our clients, as well as others. Tell them to pick up the phone and call us for a chat or flick us an email to get further information.

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