Most of the headlines concentrate on liquidations being up 0.2% on the previous quarter and 4.3% on the same period last year and administrations being up 10% on the previous quarter. Whilst true I think these rather miss the key point which is that overall corporate insolvencies are flat lining at historically very low levels, especially given that the UK economy has officially slipped back into recession. Since 2008 we have not seen the volume of business failure we would normally expect in a recession which seems to be because banks and other creditors are showing remarkable levels of forbearance. This had resulted in thousands of “zombie” companies – insolvent and making losses but with just about sufficient cash flow to trade – stumbling on.

For directors of companies in this position we understand how difficult this is and are here to help – if early advice is taken there are always more options – just call us on our free helpline number 0800 085 5070.

We have decided to roll this format out to Cambridge and the launch event is to be held on Friday 27 April in Cambridge at the Fountain Inn in Regent Street from 12:30pm.

If you would like to attend please contact Helen Ratcliffe on 01223 903028 or by email on cpn@mw-w.com or register to attend at http://tinyurl.com/cuuvn2a

If you are concerned about talking to an IP don’t be. A high proportion of the people that ask for my advice don’t end up shutting their businesses down.

At a first meeting the IP is going to want to try and understand your business – warts and all. You need to think about whether the business is generating a profit, or could it be capable of generating a profit if changes are made – what are those changes?

At any early stage of the meeting the IP is going to want to ask about the cashflow. What money is due in over the next few weeks, what is due out, what can be delayed. All of this information helps to workout how long the business has got to devise a rescue plan. It could be just days or hopefully weeks.

Usually the IP will then sketch out a statement of the companies assets and liabilities called a statement of affairs. This tells him who is going to get paid and if not everyone what the short fall is. This is a very important tool especially if the directors have given any guarantees to the bank or other creditors.

At this stage it is also important to understand what the directors want the outcome to be. It is at this stage that the IP’s experience in dealing with distressed businesses really pays off. For an experienced IP there is not much that they have not seen before. For the directors this is usually the first time this has happened and although they may have an idea of what is possible, the IP has the expertise to guide them through the many different options that are available to try and achieve the directors desired outcome.

Having established the financial state of the company and the desired outcome, the directors and the IP can then formulate a plan to turnaround the business.

So the prospects are poor but you are still in business right? But for how long? Most businesses have cut and cut again hoping that the answer to their problems lies just around the corner. The insolvency world has coined a new phrase for these businesses – Zombies. Companies that have no prospect of recovery, yet they are not closing down. You may think this is a good thing but I say that it is only delaying the inevitable.

Directors will often put money into a company that is insolvent without thinking about it. This can take many forms

• · Paying for essential supplies with personal credit cards
• · Not taking a salary
• · Putting your savings into the business
• · Borrowing on a personal loan

But stop and think before you do this. I have seen a number of businesses recently where if they had sought my advice six months ago it would have a made a big difference to their lives both personal and business. They would have had the resources to restart their lives but instead they ploughed it into a lost cause.

It is always a difficult time to contemplate the closure of your business. The emotional tie to the customers, suppliers and employees can cloud your judgement. But before you think about investing in your insolvent business think the unthinkable. Could you use those resources in another way? Should the business be restructured or cease being in business. Call me on 07974 458101 and chat it through – I’m sure I’ve seen worse and I like solving problems. There is always an answer to the problem.

The court of appeal has held in this case that the question whether section 123(2) applies does not simply turn on the question whether the liabilities of a company (however they are assessed) exceed its assets (however they are assessed).  As the judge puts it “In practical terms, it would be rather extraordinary if section 123(2) was satisfied every time a company’s liabilities exceeded the value of its assets.”

Instead each case must be taken on its own merits and judged on whether or not the company will reasonably be able to pay its debts in full.

“We are facing a real threat to vital funds at a time when demand is increasing, and will continue to increase, as all the financial and social changes come into effect. Hundreds of thousands of people may not be able to get much-needed help next year.”

This comes at a time, of course, when personal debt levels remain high and getting the right sort of impartial (and free) advice has become more difficult. Some observers have called for greater resources to ensure that those struggling with debt are able to get the advice they need. The reality is that such a reversal is very unlikely. In all probability, the spending cuts could begin to bite deeper.

Historically, the Citizen’s Advice Bureau has provided invaluable free advice and assistance to thousands of people facing financial difficulties. However, like many other public sector bodies, the CAB has been badly affected by the government spending cuts particularly as they have had direct knock-on effects on spending on ‘front line’ debt advisory services.

These ‘front line’ debt advisory services are funded by the Financial Inclusion Fund, which ends at the end of March. As a result, the CAB has announced that it has had to cut five hundred debt advisor positions.

The CAB is not however ending specialist debt advice services altogether. Their chosen option is to reduce the number of advisors in line with the funding cutbacks. Bad news is always bad news of course and these cutbacks will come as a disappointment to the thousands of people seeking debt advice. In some cases the situation does indeed look serious.

As an example Birmingham city council funding has ended completely leading the CAB to announce that the city’s five centres will close down this month.

The picture nationally is not as clear-cut. CAB debt advisory services are likely to still be available but with less staff, shorter hours and much longer queues. The story of the umbrella not working just as it started to rain comes to mind.

He had set up  an estate agents and letting agent in Rugby in 1985, and was the sole director and shareholder until it closed for business in October 2009, and went into liquidation in November owing a total of £382,000.

When he was arrested he said he had run into financial difficulties with people who owed him money and he was taking money from different accounts to pay bills to continue running his business.

Whilst it is tempting to try and continue running a business to try and turn it around, this story shows how easy it is to step over the line and end up in more trouble.  As always seek advice early.