The number of businesses falling into insolvency spirals year on year. As household names topple over the insolvency lawyers at Giambrone & Partners point out that frequently the opportunity to save a business from collapse is missed.
Nicky Fisher, President of R3, the UK's insolvency and restructuring trade body, when reviewing the latest government personal and corporate insolvency figures commented “Firms have been battling economic issues for three and a half years now…this reflects the tough trading climate and the level of director fatigue among the business community in England and Wales…”
A distressed business is in no position to dictate terms, the directors have to face the fact that they must pick the best of what may appear to them to be unappealing options (from their point of view) to do the best they can for their work force and investors. Often the step from high flying business to struggling business can be difficult to navigate but the objective is such circumstances should be to save at least some of the jobs and help to ensure that suppliers' and customers' losses are kept to a minimum. The guidance of an impartial insolvency lawyer can make the difference between salvaging all or at least part of the business and a credible reputation where possible.
As the Government's Business and Trade Committee scrutinise Wilko and the Wilkinson family, it becomes clear that their over-arching belief that outside forces were to blame for the firm's demise and not the failure to recognise the signs that the business was not functioning well and their complete failure to control the finances together with the high level of dividends paid may have contributed to the lack of funds available to support the business.
Offers were on the table that would have saved at least part of the business were rejected as there was to be no inclusion of the Wilkinson family in the restructured business. The suggestion by the parties to the various rescue attempts, such as HMV owner Doug Putman, a stellar turnaround guru, who stated that "everyone got a little bit greedy" which played a part in the failure of the rescue package.
Other damning comments were also made by Nadine Houghton, National Officer of the General, Municipal, Boilermakers' Allied Trade Union (GMB) include the suggestion that "failure of leadership and lack of accountability" on the part of the Wilkinson family also played a part. Whilst Wilko was able to pay the staff final salaries, it remains that 12,500 people lost their jobs. The Wilkinson family may find it hard to recover from the way the collapse of Wilko was managed if there is any intention of starting again, however sorry they are.
Olu Ajasa, a partner, commented “the current economic climate will push more businesses towards insolvency unless they act robustly at the first sign of financial difficulties. A “head-in-the-sand” attitude and pretend all is well will only end badly. A restructured company can always rise again, even a company that has become insolvent can marshal its core staff and begin again if there is sufficient goodwill amongst its suppliers and customers.” Olu pointed out “the reputation of a failing business can be saved if the principals act to limit the damage to staff, customers and suppliers as far as is possible. Regrettably, once steps are taken that creates a perception of incompetence, deceit or indifference towards the fate of others, it is almost impossible to overcome.”
Giambrone & Partners' insolvency lawyers have years of experience in assistin firms in financial difficulty to select the best possible options and they have had some notable successes in hauling some companies back from the brink of collapse but only iwhen the advice is sought in a timely manner. Once the difficulties are recognised all the options can be scrutinised and the best prospects can be taken up. As trusted advisors to many small businesses our lawyers have worked with companies to ensure that a difficult situation does not escalate out of control and bring about the best case scenario for the business and not allow it to slip into the worst case.
Olu Ajasa has extensive experience and expertise in all types of alternative dispute resolution for commercial issues, as well as commercial litigation. Olu advises on complex, high-value, domestic and multi-jurisdiction matters.
He reputation for assisting clients in complex cross-border commercial disputes, shareholder disputes, partnership disputes, contractual disputes, loan facility agreements, secured lending, both corporate and insolvency relating to individuals. Olu has expertise in resolving real estate disputes (commercial and residential) and landlord and tenant law (commercial and residential).
Olu also has considerable experience in corporate and personal insolvency matters, including preparing and responding to statutory demands, winding-up petitions, investigating company directors and also assists with all aspects of corporate insolvency litigation.
Olu is highly regarded by his clients for his resoluteness in satisfactorily concluding complex disputes swiftly and in line with their commercial objectives.
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