Wednesday, July 23, 2008 49THE JOURNAL w w w. n e b u s i n e s s . c o. u k

Delay canbe fatal forb u s i n e ssp ro b le m s

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MANY companydirectors are bracingthemselves forturbulent economic

times brought about in part by thecredit crunch.

The lack of credit options in thecurrent economic climate is pushingthem along a path that can all tooquickly lead to administration orliquidation.

The answer is simple. Seek earlyadvice from specialists such asWatson Burton’s corporate recoveryand insolvency group. The key tolong-term company health is torecognise a business in decline andto take action to turn it round beforeit is too late.

Too many organisations try tobattle on alone without engaginghelp from professional advisers.Often it is a case of not knowingwhere to turn. Doing nothing is theworst course of action. It takes onlyone creditor to put in a winding-uppetition and your bank account willbe frozen. That’s when businesscomes to an abrupt stop.

Legal advisers like Watson Burton’scorporate recovery group can workclosely with the management team,in complete confidence, to see howbest to resolve each situation,however complex it may be.

Early intervention can be a toughdecision to make, especially if yourcompany is still making a profit.

Often the thought of taking advicefrom insolvency professionals at thisstage is unpalatable to themanagement team as they fear thatinsolvency professionals are likevultures – circling prior to the

terminal insolvency event. This is notthe case and if insolvency is to beavoided, it should not be about crisismanagement.

It is about taking appropriateadvice at the earliest opportunity.

Turnarounds require early advicebeing taken which provides enoughtime to make changes such as cuttingcosts, renegotiating deals withsuppliers, raising profit margins,diversifying, downsizing orretraining staff. The sooner you act,the better the prognosis for yourbusiness.

Watson Burton’s corporate recoveryand insolvency group has resolvedcomplex problems quickly andcommercially for local companies,both large and small.

We are members of the Associationof Business Recovery Professionals –known as R3 – which is a nationalbody whose members are recognisedfor providing professional advice inall aspects of insolvency.

Because of our long-standingexperience, we have built up strongrelationships with R3 memberinsolvency practitioners. Our highstandards are replicated by theadvisers with whom we choose towork, to ensure your business isgiven the best possible care.

Pre-packaged administrations areone answer for some strugglingcompanies, particularly thosewanting to keep employees’ jobs safe.Pre-packaged often means that thebuyer is identified before theinsolvency takes place. All aspects ofthe deal are put in place to ensure asmooth transition of the business onthe day the administrator isappointed.

The upside is that employees’ jobsare preserved. The downside is thatcreditors can feel aggrieved that aphoenix has been allowed to risefrom the ashes, leaving them withtheir bad debts in the administration.

The administrators need to besatisfied that the pre-packaged sale isthe best deal available in thecircumstances and that market valuehas been obtained for the assets.

The key for directors faced withfinancial problems is to keep talkingto your advisers and to your bank. Ifbanks see management takingpositive steps to turn round abusiness, they are more likely to besupportive. If a company turns its

back on mounting problems, thenthe banks will move in to protecttheir own position. This could spelllong-term problems for the companyand its directors.

The credit crunch is biting hardupon many local companies,particularly smaller businesses. Themessage is to engage your advisersand keep talking to them. My ownfirm provides up to an hour of

specialist corporate recovery andinsolvency advice free. That initialconsultation can set your business onthe right path.

Get in touch with experiencedadvisers as soon as you realiseproblems are surfacing. In this way,you keep the entire range of optionsopen. The longer you delay, the fewerrecovery options remain open toyour company.

YOU cannot cover your debts asand when they fall due.

Net assets are less than netliabilities.

You cannot pay staff wages.You cannot meet the next rent

q u a r te r.There is a serious shortage of

working capital.You have lost a significant

customer contract.You have suffered as a result of

significant bad debts.

WARNING SIGNS

Turnarounds requireearly advice being

taken which provides enoughtime to make changes

PARTNER Andrew Cawkwell leads Watson Burton’scorporate recovery and insolvency group.

Andrew has been singled out as a national leader in hisfield by legal directory Chambers, which praised the teamas tenacious and extremely impressive.

The group is made up of specialist solicitors and legaladvisers to insolvency practitioners. The lawyers havein-depth expertise in handling many non-contentiousinsolvency projects including high-profile turnarounds,liquidations (insolvent), administrations, CompanyVoluntary Arrangements, administrative receiverships andLaw of Property Act receiverships.

The team also has a highly-regarded personalbankruptcy practice in the North East and can offer adviceto individuals with equity in their matrimonial property

they are trying to protect. The group has been recognisedfor its breadth of experience in both contentious andnon-contentious work.

Andrew Cawkwell is credited with a holistic awarenessof both contentious and non-contentious insolvency lawby Chambers legal directory.

It has completed many non-contentious transactions inthe last few years, saving many thousands of jobs. It alsofocuses on the solvent reconstruction of businesses thatcan achieve significant tax advantages.

Ring for a free hour-long consultation with a specialistlawyer. Andrew Cawkwell, head of corporate recovery andinsolvency, Watson Burton LLP. Tel: (0191) 244-4338 or (0191)244-4205. Email: andrew.cawkwell@watsonburton.com,visit www.watsonburton.com

High praise for ‘leader’ AndrewLEADER Andrew Cawkwell is credited with a holistic awareness of contentious and non-contentious insolvency law.