INSOLVENCY | CORPORATE RECOVERY
When a company is in a state of distress, it is a particularly difficult & stressful time for Directors, Shareholders in fact all Stakeholders. The questions are should you take the Insolvency route…? Does your business have a chance of survival…? Should you seek Corporate Recovery advise…? If your business is facing financial difficulties, Excessive Debt, Costs or Cash-Flow Problems, we can help. Our simple Info Graphic will guide you through the routes and options.
Many small companies often lack the time to accurately recognise the cause of their difficulties. Therefore, corporate recovery expertise can have a very positive impact, as overall involvement in a company’s day to day management can be a hindrance to clear objective thinking and planning.
Corporate Recovery expertise can bring an immediate measured and strategic approach to effecting real positive change in a company by restructuring its business, finances and borrowings. Having personally completed in excess of 300 insolvency cases over 30+ years, PJ Lynch thoroughly enjoys the challenge of a tough Insolvency case, he equally enjoys finding the route to saving a business from collapse.
Negotiated Settlements and a collaborative restructuring process can often achieve what many thought impossible. A corporate recovery specialist will rapidly set about identifying the reasons for the business’s failings and it’s true causes. They will assess the business’s survival requirements, create a Business Recovery Plan, negotiate the participation of all the stakeholders, in the business’s recovery process, then monitor and assist the implementation of the Recovery Plan.
There are certain formal legal steps that must be taken. A formal meeting of the shareholders needs to be held to put the company into liquidation and to appoint a liquidator. A Creditors Meeting must also be held and notice of the meeting of creditors , together with proxy forms, must be sent by post to the creditors at least ten days before the date of the meeting. Notice of the Creditors Meeting must also be advertised in two daily newspapers circulating in the vicinity of the registered office or principal place of business of the company.
Statement of Affairs. Directors of the insolvent company are obliged to present a full statement of the financial position of the company’s affairs, together with a list of creditors of the company and the estimated amount of the creditors claims. At the creditors meeting this statement will show the book values of the company’s assets with the directors estimated realisable values in the winding up of the company.
Director's Statement. At the creditors meeting the nominated director, who acts as chairman of the meeting, will need to give a brief outline of the history of the company and the details of the causes of it’s failure. It is advisable for the directors to seek professional advice from a Specialist Insolvency Practitioner who will have expertise in insolvency matters and on the preparation of the statement of affairs.
Voting on the Nomination of a Liquidator. The nominated liquidator should not have previously acted for the company or its directors in a professional capacity. In order for the creditors to overturn the company’s nomination of a liquidator, they must have sufficient votes, both in number and value, of the creditors represented at the creditors meeting, to carry out the resolution.
- The creditors should be handed a copy of the directors estimated Statement of Affairs.
- The nominated director should read out his statement outlining the company’s history and the causes of it’s failure.
- Any creditors present may then ask questions.
- At an earlier meeting of the shareholders, a liquidator would have been nominated by the company. However, the creditors have the opportunity to nominate an alternative liquidator.
- If an alternative nomination for liquidator is proposed, a formal vote of the creditors needs to be taken.
- The creditors may also decide to appoint a Committee of Inspection. The creditors are entitled to nominate up to five people onto this committee, and the shareholders are entitled to appoint three of the 5 people.
- The purpose of the committee is to assist the liquidator in carrying out his duties. The committee can also approve the liquidator's fees.
- If a creditor of a company is owed in excess of €1,000 the creditor may present a winding up petition to the High Court.
- If the debt remains unpaid the court may grant a winding up order in respect of the petitioning creditor.