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.