Acting early can help companies get through financial distress
Publication of A Practical Guide to Insolvency by Deloitte
Financial distress and insolvency reached record levels in recent years, but companies can survive if they take action early, according to Deloitte who are authors of ‘A Practical Guide to Insolvency’ which was published by Chartered Accountants Ireland.
The total insolvency figures almost quadrupled as a result of the downturn. From just 379 in 2007, the average since 2010 has been above 1,500 each year. The number reported in the six months to June 2014 was 650.
|Year||CVLs||Court Liquidations||Receiverships||Examinerships||Overall total|
*Numbers to June 2014 courtesy of www.insolvencyjournal.ie.
“We have insolvency procedures in place to preserve businesses that are entangled with debt problems; however we fail to make enough use of those rescue procedures as we typically choose to fight our own battles rather than seeking outside assistance in a timely fashion. This means that many businesses that could survive are failing because they do not seek support in time. This delay in seeking assistance will actually make things dramatically worse, as the rescue options available diminish as the debts pile up and creditor support is ultimately eroded to zero,” author of the book David van Dessel, Partner, Corporate Finance, Deloitte said.
“Managing a company in financial distress can be a real challenge. But those who approach it in an upfront and hardnosed manner often have the best chance of surviving the crises and moving onto prosperity,” he concluded.
There are some practical tips to help SMEs to overcome corporate insolvency, according to Van Dessel, including:
Top tips for SMEs:
- Act early
- Quantify the problem
- Make an honest assessment of your ability to repay all creditors
- Seek professional advice/assistance
- Chart the right journey for the recovery of your business
A Practical Guide to Insolvency, 2nd Edition, by Deloitte and published by Chartered Accountants Ireland, is now available to purchase on the Chartered Accountants Ireland website at https://www.charteredaccountants.ie/en/General/Shop/Books/A-Practical-Guide-to-Insolvency-2nd-Edition/.
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The information contained in this press release is correct at the time of going to press.
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