Early action and proactive assessment of a potential insolvency matter, with a goal for recovery and business survival always takes precedence.
Choosing the right form of external administration depends on the individual circumstances of the matter and in some cases, an informal appointment, is all that’s required.

Early action to remediate a difficult financial situation typically enhances the recovery value of a business’s assets, which benefits employees, trade creditors and Directors’ personal guarantee exposure to a business’s external debt obligations.

Early, proactive, assessment of a potential insolvency issue may result in the business, or at least part of it, surviving, and typically enhances the recovery value of assets. Whereas, winding up a corporation typically has a devasting impact on a business’s residual asset values.

Whilst the genesis of a corporation’s breakdown can be years in the making, identifying and accepting the prospect of possible failure, and then taking preventative or mitigating steps, greatly assists the realisable value of business assets.

The early, proactive, assessment of a potential insolvency issue is a valuable approach to adopt, as it:

1. benefits the corporation’s creditors who rely on distributions to reduce their total loss;
2. provides an asset base to leverage the provision of fresh working capital against in a possible workout scenario; and
3. reduces a director(s)’ debt load assumed under personal guarantees granted in respect of the corporation’s debts.