How can you avoid financial problems caused by a client’s insolvency? We give some practical advice.
Factfile
When a customer becomes insolvent there is often little available to meet the claims of unsecured creditors
Avoiding or managing failure is in the best interests of both creditors and debtors
Companies facing an uncertain future should ensure that management information is up-to-date, clear and accurate, to give the earliest possible warning of trouble ahead
If a customer owes money, be prepared to listen to proposals and work through problems when a sensible plan is put forward
Debtor firms should start talking with creditors at the earliest signs of trouble
Keep discussions as confidential as possible to avoid potential marketplace problems
If a rescue plan is agreed, keep everyone informed of progress and reconvene meetings if things are not going according to plan
Source
Electrical and Mechanical Contractor
Postscript
Robin Tutty is a partner in Nicholson Graham & Jones and chairman of the law firm’s business recovery group.
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