Insolvency solutions are a set of processes that can help individuals, businesses and companies get back on their feet and clear their debts. These can be formal (also known as statutory) insolvency solutions such as bankruptcy, Individual Voluntary Arrangements and Debt Relief Orders or informal debt solution options like debt management plans and debt repayment agreements.
One of the key objectives of insolvency law is to create a collective procedure that will be seen as fair by participants. This is achieved by ensuring that creditors share the costs and risks of insolvency and by limiting the discretion of judges or designated officials to intervene in the contractual relations between the debtor and creditor in insolvency proceedings.
It’s important to recognise that you could become insolvent, and take action quickly. MABS advisers will work with you to understand your situation, review what you owe and what is affordable and agree an insolvency solution that suits you. During these arrangements, the people you owe money to (your creditors) can’t take any further action against you to get what they’re owed and you may not have to repay all of the debt you owe, depending on your circumstances. New debts you incur after entering one of these arrangements won’t be included in the agreement, but can be dealt with separately.
This is one of many reasons why it’s so important to be proactive and seek advice as soon as you’re concerned about your finances, whether that’s a call to MABS or to another debt organisation. The sooner you take action, the less the impact on your financial future will be.
A good insolvency solution will include a clear and simple process, be transparent about the outcomes that can be expected and ensure that debts are repaid fairly, quickly and at a reasonable cost to all parties involved. It will also have safeguards to protect the reputation of the debtor and prevent unfair treatment of any creditors.
If you’re in business, you can protect yourself against customer insolvency by taking steps to improve cash flow and increase working capital through debt refinancing or equity financing. It’s also a good idea to invest in trade credit insurance which will cover your business in the event of a customer becoming insolvent.
If your company is struggling, Deloitte Legal can help suggest options to help recovery and provide assistance with judicial insolvency proceedings. We work closely with colleagues who have specialised skills in corporate finance, tax or labour law from around the world to bring insight and guidance based on multiple points of view. This is crucial when considering what might be the best solution for your business. It’s also essential to understand that insolvency doesn’t necessarily mean the end of your business, but the beginning of a fresh start.