When a business starts to struggle with finance, insolvency might feel like the only option—but it doesn’t have to be. There are several proactive funding and restructuring options that can help turn things around before formal insolvency proceedings become necessary. At Aurora Recovery, we support UK businesses in financial distress, helping them explore all available routes to stability.
Why Consider Alternatives Before Insolvency?
Formal insolvency (such as liquidation or administration) can lead to:
- Loss of control for directors
- Damage to business reputation
- Potential personal consequences for directors
- Limited or no return for shareholders
By acting early and exploring strategic financing or restructuring solutions, businesses have a far greater chance of surviving and thriving.
1. Business Restructuring Options
A. Informal Arrangements With Creditors
One of the first steps is engaging with key creditors—such as suppliers or landlords—to negotiate:
- Extended payment terms
- Reduced payment settlements
- Temporary payment freezes
This can ease immediate cash flow pressure and buy valuable time.
B. Time to Pay Arrangements (TTP) with HMRC
If HMRC debts are mounting, a Time to Pay Arrangement can offer relief. This allows you to spread payments over several months—provided you act early and maintain transparent communication.
C. Company Voluntary Arrangement (CVA)
A CVA is a legally binding agreement between a company and its unsecured creditors to repay a proportion of debts over time. It lets you continue trading under the control of existing directors, which means:
- No loss of ownership
- Potential to rescue the business
- Less reputational damage
A licensed insolvency practitioner will help set this up and negotiate terms.
2. Financing Options for Struggling Businesses
A. Asset-Based Lending
If your company has valuable assets (machinery, vehicles, property), you may be able to release working capital via:
- Asset refinance
- Sale and leaseback arrangements
This can be faster and more accessible than traditional loans.
B. Invoice Financing
Invoice factoring or discounting allows businesses to borrow against unpaid invoices, improving cash flow without waiting for client payment cycles.
C. Business Loans and Grants
You may still qualify for emergency loans or government-backed schemes. These funds can stabilise operations during recovery planning.
⚠️ Caution: Avoid borrowing more to plug long-term losses unless you’ve taken professional advice and have a clear recovery strategy in place.
3. Internal Restructuring Measures
A. Cost-Cutting & Operational Efficiency
Review operational costs and identify areas for savings—renegotiating contracts, reducing discretionary spending, or even downsizing office space if needed.
B. Strategic Workforce Adjustments
In some cases, redundancies or temporary wage reductions may be necessary. If handled fairly and legally, these decisions can help preserve the future of the business and remaining staff.
C. Leadership or Ownership Changes
Bringing in new leadership or investors with a turnaround background can inject fresh direction and funding.
4. When to Seek Professional Help
The earlier you seek advice, the broader your options. At Aurora Recovery, we help directors:
- Understand their responsibilities
- Explore funding and restructuring alternatives
- Avoid legal pitfalls
- Implement sustainable turnaround strategies
Let’s Talk – Your Business Could Have Options
You don’t have to navigate this alone. Whether your company is battling cash flow, creditor pressure, or tax arrears, there may be more suitable options than insolvency. If insolvency turns out to be best route for you, we can guide you through that process too.
📞 Call us: 01134 800 397
📧 Email us: hello@aurorarecovery.co.uk
🌐 Visit: https://aurorarecovery.co.uk
Contact us now to see how we can help you: https://aurorarecovery.co.uk/contact/
Read more about business recovery options on the government’s website, here: https://www.gov.uk/guidance/turning-your-company-around
