Is pressure from creditors becoming too much to handle and are company debts piling up? If your business is in financial distress you need a solution for your business as soon as possible to minimise the possibility of liquidation. Whilst it could be tempting to negotiate with your creditors independently, Nick Brierley of The Insolvency Experts explains why you may want to seek the advice of a professional insolvency practitioner (IP) as soon as you recognise that your company is in financial distress. If your company debt is small and owed to a single party, it could well be advantageous to seek an informal arrangement. Bear in mind though that there are risks and disadvantages associated with any kind of informal procedure as they are often not legally binding. Negotiating with your creditors yourself will also probably not yield as positive a result as having a formal proposal drawn up and submitted on your behalf by a professional IP who is accustomed to doing this on a day to day basis. An informal agreement is not documented in writing and involves no binding contract, therefore, the creditor is not legally obliged to uphold their end of the bargain. In fact, they can back out at any time and indeed petition for your company to be liquidated even after agreeing to the arrangement which you previously proposed. Thus, informal arrangements can leave your company completely unprotected. A formal arrangement is safer and more effective. It gives you the leverage required to protect the company from legal action should the creditor decide to petition the Court. Once the agreement is made, provided you keep to the terms there will be no further issue between you and the creditor. Our team at The Insolvency Experts are experienced in communicating and negotiating financial terms on behalf of business owners and directors with their creditors, and they have the credentials needed to show that they’re capable of devising a feasible solution that is beneficial to both the company and their creditors. Formally drafted proposals tend to result in successful arrangements more often than informal proposals. Rather than pursuing an informal arrangement with creditors through independent negotiations, another option to consider is a company voluntary arrangement (CVA). This gives you breathing space whilst your IP formulates and proposes a viable repayment plan. The company continues to trade under the control of the existing management, but will be required to meet its future creditor obligations on time. A CVA can protect your company from creditor pressures and legal actions for as long as you’re able to comply with the terms of the agreement meaning you’ll no longer have to worry about the possibility of liquidation or any other insolvency procedure being taken against your company. If your business is in financial distress and you are considering negotiating an informal arrangement with your creditors, contact The Insolvency Experts for confidential expert advice and to explore your options. Our ultimate goal here at Insolvency Experts is to find a means to help your company survive financial distress so as soon as you recognise there might be a problem contact us on 0300 303 8284 or via our enquiries page.