If your business experiences serious problems, there are options available – other than closing it down –such as divesting, restructuring and/or increasing capital.
If e.g. you do not follow up on delinquent debtors, fail to pay invoices for an extended period, have problems with your cash flow and inflict losses on your creditors, you may be liable for this. As the proprietor of a business, you are obliged to act if your business is insolvent.
The survival of your business depends, amongst others, on whether you have enough cash to carry on operations. And this includes fulfilling your obligations as and when they fall due.
Finding a solution
The options available to you depend on your / your business’ actual financial position and several other factors. You need to find a solution in collaboration with your creditors. Openness and honesty are important, as is presenting the situation such as it is. This makes it easier to gain the cooperation of your bank and your creditors.
Selling your business
Selling your business is an option when making a profit is no longer feasible. It is then a good idea to look into whether other businesses within your trade are interested in purchasing your business.
If you are minded to selling, you must, first and foremost, ensure that you are ready for a sale. If there is a charge on your business, this means, amongst others, that the charge holder(s) must be well-disposed and able to recognise the advantages of selling. You cannot sell assets subject to a charge without the acceptance of the charge holders.
Moreover, the business must be trimmed, and agreements as well as the general legal set-up must be in hand. Being abreast of the situation is an advantage so that your business is always trimmed and ready for sale. ADVODAN can help you review your business from A to Z and advise on your options.
Restructuring your business
Restructuring is a possibility if your business is in trouble and you cannot reach a voluntary agreement with your creditors.
Through the restructuring process your business may enter into an arrangement with its creditors or may transfer to a different format. However, you should be aware that restructuring also carries a risk of bankruptcy.
Winding up your business
In some cases, the best option is to wind up the business. If e.g. the cash flow is insufficient for the day-to-day operation, it is very difficult to continue operations.
If you are faced with having to wind up your business, you should seek legal advice. It is important that you do not start paying off your creditors or start transferring assets.
Petitioning for bankruptcy
If you choose to wind up your business because it is insolvent, you may petition for bankruptcy or petition for restructuring. ADVODAN will assist you in the bankruptcy proceedings and will help you gather the threads, so that your business is wound up in the best possible manner.