Even companies advising distressed businesses can end up being closed down. It raises questions about where struggling enterprises should seek help for the best possible outcome that will avoid piling on even more woe.
Provisional liquidators have been appointed to Atherton Corporate (UK) Ltd and Atherton Corporate Rescue Limited. The companies offered a service to facilitate the sale of distressed companies as an alternative to using insolvency practitioners.
A winding-up petition against Atherton Corporate (UK) Ltd was set to be heard on Tuesday 27 August. A date for the winding-up hearing against Atherton Corporate Rescue Limited has yet to be confirmed. Both companies changed their names in July 2024.
Using a qualified, licensed and regulated insolvency practitioner is the only sensible route for stricken businesses needing to explore options for handling their affairs – including restructuring and turnaround. We have no view or comment on what Atherton was licensed or not licensed to do, but there is no shortage of unregulated, paid-for false hope offered to businesses as a way out of insolvency.
Some of these advertise brazenly on LinkedIn; others will physically turn up at hearings for winding up petitions, many of which are brought by HMRC, and engage in conversation with directors who have obtained an adjournment while they source funds to settle. They will offer to ‘buy’ a company, complete with debts, at a cost to the ‘vendor’ of at least £5,000. All forward discussions with creditors, including HMRC, will apparently be handled by the new owner and the former directors are led to believe they can legitimately walk away.
This is not the case, by any means. The Insolvency Service has publicly taken action against such unscrupulous operators and the individuals behind them. Former directors of ‘sold’ businesses will remain under scrutiny and at risk of disqualification.
Many troubled small businesses being preyed upon by unlicensed advisers are caught in a cycle of late settlement with suppliers and non-payment of tax. Managers can’t afford to bury their heads in the sand: they MUST take action sooner rather than later to keep their enterprises afloat and, in particular, stay on the right side of HMRC:
- Get on the front foot with tax. Engage and explore a ‘Time to Pay’ arrangement. Being unresponsive only aggravates HMRC and hastens a winding up petition.
- Look at extending credit terms. Revisit repayment profiles for loans and propose realistic, achievable amendments. A loan that remains serviced, albeit differently, is still profitable for a lender.
- Consider the moratorium framework to gain a short period of “breathing space” while pursuing a rescue or restructuring plan. During this legal moratorium no creditor action can be taken against a company without the Court’s permission.
SMEs unable to pay tax should seek professional advice on communicating with HMRC, the potential for debt restructuring, credit management, invoice discounting, overdraft planning, and contractual terms to explore a last-ditch attempt to stay afloat. Avoid unlicensed ‘insolvency advisers’ offering an easy, blame-free exit.
Written by Anoushka Desai, Senior Analyst at Buchler Phillips, a UK based independent boutique firm with an impeccable Mayfair heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.