There are various options available to insolvent companies. Even when a company is placed into formal insolvency proceedings all is not lost.
We will first look to see if there is anything that can be done to preserve the business and jobs. The rescue procedure may involve:
- Company voluntary arrangement
- Turnaround and restructuring
If none of the above are appropriate and it is not possible to save the business, the final option is liquidation, which is a terminal process for a company.
Creditors’ voluntary liquidation
A creditors’ voluntary liquidation is instigated by the directors and shareholders of an insolvent company, where other options are not appropriate.
This procedure is initiated by a petition to the court, usually by a creditor, that the company be wound up on the grounds that it is unable to pay its debts as they fall due.