Company Restructuring
How to Save Your Company from Insolvency
Transform operational challenges into recovery opportunities. Expert guidance on restructuring your business to avoid insolvency and build sustainable foundations for growth.
K2 Business Partners are company rescuers, not insolvency practitioners. Our mission is to save businesses through operational transformation, not to close them.
Why Company Rescue Through Restructuring Matters
Save Your Business
Avoid insolvency through operational transformation
Transform Performance
Fix root causes and rebuild profitability
Protect Jobs
Preserve employment through successful rescue
Build Future
Create sustainable platform for long-term success
Critical insight: Company restructuring focuses on transforming your business operations, structure, and management to address root causes of distress. Unlike insolvency procedures that wind down companies, restructuring saves businesses by changing how they operate to achieve sustainable viability.
Company Rescue vs Liquidation: The Critical Choice
When facing financial difficulty, directors face a fundamental choice: rescue the business through restructuring or close it through liquidation. This decision determines whether your company survives or ceases to exist.
Company Rescue Through Restructuring
Objective: Save and transform the business through operational change
Business Survives
Company continues trading as a going concern
Jobs Protected
Employment preserved through transformation
Value Retained
Brand, relationships, and assets remain intact
Director Control
Management typically retains operational control
Future Growth
Creates foundation for sustainable recovery
Company Liquidation
Objective: Wind down and close the company permanently
Business Ceases
Company stops trading and is dissolved
Jobs Lost
All employees made redundant
Value Destroyed
Brand, goodwill, and going concern value lost
Director Investigation
Potential personal liability and conduct scrutiny
No Recovery
Company cannot be revived once liquidated
When Company Rescue Makes Sense
Restructuring is appropriate when your business has a viable core but faces operational, structural, or legacy debt challenges. If fundamentals are sound but execution or circumstances have created distress, company rescue preserves value that liquidation would destroy forever.
Addressing Director Concerns in Financial Distress
Directors facing financial difficulties often worry about personal liability, conduct investigations, and the "scary" aspects of insolvency. Understanding these concerns is the first step to managing them properly.
Director Duties in Distress
When your company faces insolvency, your duties as a director fundamentally change
Duty Shift to Creditors
When insolvency threatens, duties shift from shareholders to creditors - you must consider creditor interests paramount
Wrongful Trading Risk
Continuing to trade when insolvency is unavoidable can result in personal liability for company debts
Conduct Investigation
In liquidation, insolvency practitioners investigate director conduct for the previous 3 years
Preference & Transaction Risk
Payments to certain creditors or transactions at undervalue may be challenged and reversed
The Protection of Early Action
Acting early to restructure and rescue your company is the best protection. It demonstrates you've prioritized creditor interests, sought professional advice, and taken reasonable steps to avoid wrongful trading. Company rescue through restructuring protects directors far better than liquidation ever will.
Overdrawn Director Loan Accounts
A common and often misunderstood concern for company directors
What is a Director's Loan Account?
A DLA tracks money flowing between you personally and your company - when you owe the company money, it's "overdrawn"
The Insolvency Problem
Overdrawn DLAs become repayable debts if the company enters insolvency - liquidators will pursue recovery from you personally
Lender Trigger Point
Banks and lenders often require overdrawn DLAs to be cleared or subordinated before providing rescue finance
Managing DLAs in Restructuring
Successful restructuring often requires DLA resolution - repayment, subordination, or conversion to equity or director loans
The Rescue Advantage
Company rescue through restructuring allows you to address overdrawn DLAs constructively as part of the turnaround plan. You can negotiate subordination, convert to proper director loans, or repay gradually as the business recovers - all far better outcomes than liquidation forcing immediate full repayment you likely cannot afford.
Why Company Rescue Protects Directors
The "scary" aspects of insolvency - director investigations, personal liability, wrongful trading claims - are dramatically reduced when you act early to rescue your company. Demonstrating that you sought professional advice, considered creditor interests, and took positive action to save the business provides strong protection against personal consequences.
Restructuring and company rescue isn't just about saving your business - it's about protecting yourself personally by doing the right thing at the right time.
What is Company Restructuring?
Company restructuring involves fundamental changes to your business's financial, operational, legal, or management structures to improve efficiency, profitability, and viability - transforming a struggling business into a sustainable one.
Types of Restructuring
Operational Restructuring
Streamlining processes, reducing costs, improving efficiency
Organizational Restructuring
Changing management structure, roles, and responsibilities
Legal Restructuring
Modifying corporate structure and legal entities
Debt Restructuring
Addressing legacy liabilities through formal procedures
Portfolio Restructuring
Divesting non-core activities to focus on strengths
When Company Rescue is Needed
Declining Performance
Falling revenues, shrinking margins, mounting losses
Cash Flow Crisis
Inability to meet obligations, maxed facilities
Debt Burden
Unsustainable legacy liabilities hindering operations
Market Changes
Structural shifts making current model obsolete
Management Issues
Leadership gaps, capability deficits, poor decisions
Formal Restructuring Options for UK Companies
Several formal procedures exist to restructure and rescue struggling businesses, each with distinct characteristics, advantages, and appropriate use cases.
Administration
Court-supervised process granting legal protection while restructuring to rescue the business or achieve better creditor outcomes than immediate liquidation.
How Administration Works
- • Licensed insolvency practitioner appointed as administrator
- • Moratorium prevents creditor enforcement action
- • Business continues trading under protection
- • Administrator develops and implements rescue strategy
- • Can lead to CVA, sale, or improved liquidation outcome
When Administration is Appropriate
- • Creditor pressure threatening immediate collapse
- • Need for breathing space to implement changes
- • Viable core business requiring protection
- • Time needed to find buyer or restructure operations
- • Better outcomes possible than immediate liquidation
Company Voluntary Arrangement (CVA)
Formal agreement with creditors to repay debts over time while continuing to trade, providing breathing space and potential debt reduction to save the business.
How CVAs Work
- • Proposal drafted by directors with IP supervision
- • Requires 75% creditor approval by value
- • Typically runs 3-5 years with monthly payments
- • Can write off portion of debts if sustainable
- • Directors retain control while meeting obligations
When CVAs are Suitable
- • Profitable business with legacy debt burden
- • Need to compromise unsecured creditors
- • Avoid stigma of administration or liquidation
- • Maintain existing contracts and relationships
- • Cannot compromise HMRC preferential claims
Pre-pack Administration
Sale of business and assets negotiated before formal appointment of administrator, completing immediately upon administration to preserve value and rescue the viable business.
How Pre-packs Work
- • Sale agreed with buyer before administration
- • Administrator appointed and completes sale immediately
- • Business continues without interruption
- • Old company liquidated, viable business preserved
- • TUPE protects employee rights in transfer
When Pre-packs are Appropriate
- • Speed critical to preserve business value
- • Buyer identified (often management via newco)
- • Minimize disruption to customers and staff
- • Separate viable business from legacy liabilities
- • Traditional administration would destroy value
Pre-pack Considerations
Pre-packs can be controversial when directors buy their own business, requiring careful handling to demonstrate independence, fair valuation, and creditor benefit. Transparency and proper process are essential to avoid challenges.
Part 26A Restructuring Plan
Court-sanctioned compromise with creditors that can bind dissenting creditors, particularly effective for compromising HMRC preferential claims and rescuing viable businesses.
How Part 26A Plans Work
- • Court-supervised compromise with creditor classes
- • Can use cross-class cram down on dissenters
- • Requires 75% approval within each class
- • Can compromise HMRC preferential claims (unlike CVA)
- • Needs to show better outcome than alternative
When Part 26A is Suitable
- • Viable business with substantial HMRC arrears
- • Need to compromise preferential creditors
- • Dissenting creditor classes need binding
- • CVA inadequate due to HMRC position
- • Can demonstrate superior alternative outcome
SME Restructuring Plan Success
K2 Business Partners delivered the first successful Part 26A Restructuring Plan for an SME, demonstrating this sophisticated tool is viable and cost-effective for smaller businesses, not just large corporates. This groundbreaking achievement saved a viable business from liquidation.
The Company Rescue Process
Successful company rescue requires a systematic approach to identify root causes, develop solutions, and implement fundamental changes that create sustainable viability and avoid insolvency.
Assessment & Diagnosis
- • Review current financial position
- • Identify root causes of distress
- • Assess operational efficiency
- • Evaluate management capability
- • Determine viability potential
Strategy Development
- • Define rescue objectives
- • Develop turnaround strategy
- • Identify quick wins and priorities
- • Select appropriate formal procedures
- • Create detailed implementation plan
Stakeholder Engagement
- • Communicate with creditors
- • Secure bank support
- • Engage employees transparently
- • Brief key customers and suppliers
- • Manage shareholder expectations
Implementation
- • Execute operational changes
- • Implement cost reduction measures
- • Rebuild cash management systems
- • Transform organizational structure
- • Monitor progress and adjust
Critical Restructuring Areas
Financial Restructuring
- • Weekly cash management implementation
- • Enhanced financial controls and reporting
- • Working capital optimization
- • Creditor negotiation and compromise
- • Cost structure rationalization
Management Restructuring
- • Leadership team assessment and changes
- • Capability gaps identification
- • Decision-making process improvement
- • Performance culture introduction
- • Accountability frameworks establishment
Operational Restructuring
- • Process streamlining and efficiency gains
- • Non-performing activity closure
- • Organizational structure simplification
- • Systems and technology improvement
- • Supplier and contract rationalization
Strategic Repositioning
- • Business model reassessment
- • Market positioning refinement
- • Portfolio optimization and focus
- • Customer concentration reduction
- • Margin improvement initiatives
K2's Hands-On Company Rescue Approach
Unlike traditional advisers who diagnose problems and leave, K2 provides hands-on implementation support that delivers real operational transformation and lasting results. We're company rescuers, not liquidators.
Our goal is always to save your business, not close it.
Comprehensive Company Rescue Services
Options Review & Viability Assessment
Independent analysis of your situation and realistic rescue options
Turnaround Strategy Development
Practical rescue plans addressing root causes
Stakeholder Negotiation
Expert creditor, bank, and HMRC engagement
Formal Process Management
CVA, Administration, and Restructuring Plan support
Hands-On Implementation
Operational turnaround delivery, not just advice
Performance Improvement
Embedding sustainable changes for long-term success
Why K2 for Company Rescue
The K2 Difference:
We don't just analyze and recommend - we roll up our sleeves and implement the changes needed. Our hands-on approach delivers real transformation that sticks, not expensive reports that gather dust.
Most importantly: We're company rescuers, not insolvency practitioners. Our mission is to save businesses, not close them.
Critical Success Factors for Company Rescue
Based on decades of experience saving companies from insolvency, these factors determine whether restructuring delivers lasting recovery or temporary relief before ultimate failure.
Act Early
Earlier intervention provides more options and better outcomes. Waiting until crisis point dramatically reduces chances of successfully saving your company.
Address Root Causes
Sustainable recovery requires fixing underlying problems, not just symptoms. Debt restructuring alone rarely works without operational change.
Move Decisively
Speed matters in turnaround situations. Decisive action on costs, structure, and underperformance is essential for success.
Engage Stakeholders
Transparent communication with creditors, banks, employees, and customers maintains support through difficult changes.
Preserve Cash
Rigorous cash management prevents depletion during restructuring. Running out of cash ends all rescue options instantly.
Get Expert Help
Experienced turnaround specialists bring objectivity, expertise, and credibility with stakeholders that stressed management lacks.
Company Rescue & Restructuring FAQs
Common questions about saving struggling businesses from insolvency
What's the difference between restructuring and refinancing?
Restructuring changes how your business operates - its structure, processes, costs, and management. Refinancing changes how it's funded - replacing or restructuring debt and finance facilities. Most successful company rescues require both: operational restructuring to fix root causes, and financial restructuring to provide breathing space and appropriate funding.
How long does company restructuring take?
Timescales vary significantly. Emergency stabilization happens in weeks, formal procedures like CVAs take 3-6 months to implement (then run 3-5 years), while complete operational transformation typically requires 12-24 months. Early intervention allows more time; waiting until crisis forces rushed decisions with fewer options.
Can I restructure without formal insolvency procedures?
Yes, many successful company rescues are informal - changing operations, reducing costs, improving management, and negotiating consensually with creditors. However, formal procedures (Administration, CVA, Restructuring Plans) provide legal protection, bind dissenting creditors, and give breathing space when creditor pressure threatens immediate collapse.
Will restructuring affect my director position?
It depends on the approach. With informal restructuring or CVAs, directors typically retain control. In Administration, an insolvency practitioner assumes control temporarily, though management often continues in operational roles. Pre-packs often see management buy the business through a newco. Your future depends on demonstrating capability to deliver change and protect creditor interests.
What happens to employees during restructuring?
Employee outcomes depend on the specific situation. Restructuring often requires redundancies to right-size the business, but the goal is preserving as many jobs as possible through successful turnaround rather than losing all jobs in liquidation. TUPE regulations protect employees in business sales. Transparent communication and fair treatment are essential throughout the process.
How much does professional restructuring support cost?
Costs vary based on business complexity and required services. Initial options reviews typically cost £5,000-£15,000. Full turnaround support ranges from £20,000-£100,000+ depending on engagement length and scope. Formal procedures add insolvency practitioner fees. While significant, professional support dramatically improves success rates, making it a worthwhile investment versus business failure and liquidation.
Are K2 Business Partners insolvency practitioners?
No. K2 Business Partners are company rescuers, not insolvency practitioners. Our mission is to save businesses through operational transformation and turnaround management. While we work alongside insolvency practitioners when formal procedures are needed, our focus is always on rescue, recovery, and avoiding liquidation - not closing companies down.
Start Your Company Rescue Journey Today
Don't wait until options run out. Get expert assessment of your situation and practical guidance on how to save your business from insolvency.
We're company rescuers - our goal is to save your business, not close it.
Hands-on company rescue • 30+ years experience • Proven restructuring track record • Not insolvency practitioners