The Corporate Restructuring and Insolvency department has extensive experience in assisting clients in all forms of corporate restructuring, rescue and liquidation, giving prompt practical and strategic advice to the clients, be they creditors (secured, unsecured or suppliers with retention of title), debtors, examiners, liquidators or receivers.

When advising a company the first consideration given is whether the company would benefit from a restructuring. The other options available are only then considered if this option is not appropriate to the circumstances.

Examinership:

If a company is experiencing financial difficulties, or expecting to, it may be able to successfully reorganise its affairs under a court-ordered process known as examinership. In an examinership the company is protected from its creditors for a determined period, during which the company will seek new investment to allow proposals for a scheme of arrangement to be formulated. Such schemes usually involve the writing down of the company’s liabilities. If the proposals are approved by the court, the proposals become binding on the company’s creditors.

It is essential for a company finding itself in such circumstances to seek early advice and that the problem is not ignored.

Liquidation:

If a successful reorganisation is not possible, the directors of an insolvent company owe particular duties to the creditors of the company. Again, it is vital that the directors seek advice as to those obligations as soon as they become aware of the situation so as to not find themselves potentially being held personally liable for some or all of the company’s debts.

The Corporate Restructuring and Insolvency department advises companies on the procedures necessary to wind up their affairs in compliance with the directors’ obligations. This is done either by way of creditors voluntary liquidation or court ordered liquidation.

Court ordered liquidation is also known as involuntary liquidation as it may be "imposed" on a company. Where a 21-day letter of demand is delivered to a company it is essential that the company seek immediate advice as the company will be presumed to be insolvent if the demand is not satisfied within the 21 days and the creditor is then entitled to apply to the court to wind up the company. This procedure cannot be used as a means of debt recovery.

Where a company has gone into liquidation the directors may find themselves facing an application to have them restricted or disqualified from acting as directors of any other company or other proceedings. The Corporate Restructuring and Insolvency department can advise on the merits, and assist in the defence, of such applications.

Solvent liquidations, known as members voluntary liquidations, also feature where the company decides to be wound up and it has sufficient assets to pay or make provision for full payment of all creditors within a period of 12 months. Again, the Corporate Restructuring and Insolvency department can assist in this process.

Receivership:

The most common form of receivership is where security has been granted to a third party, for example a bank, and an event of default as provided for in the security document occurs. In such circumstances, the secured creditor may appoint a receiver to the company to realise the company’s assets in order to discharge the liability to the secured creditor.

In such instances, the right to appointment a receiver is contractual and the receiver may also be appointed to manage the company and operate the business for the benefit of the secured creditor. Before appointing a receiver a secured creditor is usually required to make a demand of the company for payment. The demand need only give the company sufficient time to pay the liability and there is no obligation to give time to the company to raise the finance necessary to meet the demand. Therefore, demand and appointment can occur within hours of each other.

If no such security exists, a creditor may apply to the court for the appointment of a receiver in certain circumstances.

Notwithstanding the appointment of a receiver, a company to which the receiver has been appointed may still be able to apply to the court for the appointment of an examiner. However, where a receiver has been appointed the application to the court must be made within 3 days of his appointment, otherwise it will not succeed.

Where the financial difficulties are cash-flow issues arising from non- payment by debtors, rather than a more fundamental issue, our Litigation and Dispute Resolution department can assist in recovering sums due.