When it comes to insolvency advice for haulage and transportation businesses, it is essential to get ahead of the curve. Early action can mean the difference between success and bankruptcy, so haulage and transportation businesses should proactively prepare contingency plans that allow them to adjust when economic conditions become challenging.
As part of this preparation, they should ensure their bookkeeping is always up-to-date and comprehensive; monitor cashflow regularly; be prepared to take on additional debt if necessary but only after careful consideration; create realistic budget projections based on current financial trends; and review credit insurance policies that may protect against nonpayment by customers.
By following these steps and seeking sound advice from a qualified professional, haulage and transportation businesses can stay one step ahead of insolvency
Rescue, Recovery, and Closure Options for Haulage and Transport Companies
Despite the fact that the UK logistics sector supports 2 million jobs, generates over £75 billion in economic output, and is expanding at a never-before-seen rate, the industry’s liabilities—such as vehicle lease and hire purchase payments as well as repair, maintenance, and fuel expenses—continue to rise.
The cost of employment has gone up because to the persistent shortage of HGV drivers. Staff salaries in the business are sharply increasing as employees, encouraged by the demand for their skills, demand pay increases or leave one company for another that is paying more. Small-to-medium sized haulage companies have already expressed their struggles to cover labour expenditures, which is stressing them out and disrupting their operations.
Understanding haulage company liquidation and insolvency
If your firm is currently insolvent, you might be thinking about closing your haulage company and looking into liquidation options.
The director of the haulage company voluntarily closes the company as part of a formal insolvency process known as a Creditors’ Voluntary Liquidation (CVL). This option, which is handled by a certified insolvency practitioner, is suitable for haulage companies with no chance of recovery. A CVL entails realising assets to raise money to satisfy creditors’ debts; the remaining debt is then often written off, leading to the dissolution of the company.
Company administration may be an option for your insolvent or contingently insolvent haulage business if it has a lot of assets but little cash. Put your firm into administration as a possible alternative if you’re trying to salvage it due to the large worth of typical haulage company assets like vehicles and lorries. Identifying the best course of action for your company to enable an orderly exit or a restructuring exercise to improve business operations and get access to alternative financing.
How we helped Haulage businesses to recover
The family owned a 50% stake in their 1990s-founded transportation company. Their established haulage business offered a wide range of courier services, including same-day and next-day parcel delivery, to customers across the nation, including independent, fast fashion, home goods, and electrical appliance businesses. Instead of being unduly dependent on a small number of high-value clients, the company operated successfully for more than 30 years and had a diverse clientele.
A personal guarantee (PG) arrangement was in place for an invoice financing facility, a business loan of £21k also included PGs, payments of £6.5k to a fuel card provider, and £7k to mechanics in the months before to the coronavirus pandemic. In addition, the company possessed three curtain side vehicles and leased one articulated lorry. Four full-time drivers were employed by the company, which operated out of freehold property.
In order to give the company some breathing room while he decided what to do next, the directors used the Coronavirus Job Retention Scheme to furlough their employees. The directors then got in touch with us and expressed a wish to save the company because it still had valuable assets and active bids. Investigating refinancing options to give creditors reasonable guarantees and breathing room to finish current and upcoming high-value contracts.
Rescue my Haulage business
There may yet be a chance for your haulage firm to be saved if financial difficulties are being experienced as a result of growing costs and poor cash flow. Depending on the cause of your company’s issues, you might need to infuse some cash to close the income gap it is now experiencing. We have a team of in-house commercial finance experts with access to an affordable range of lending options, including invoice financing, asset financing, commercial real estate loans, and financing tailored to particular industries.
A Company Voluntary Arrangement (CVA) or Fast-Track CVA is an alternative restructuring plan for haulage companies. An official insolvency procedure called a “Company Voluntary Arrangement” enables you to restructure your debts with your creditors. Negotiating your payments into manageable instalments can provide your haulage firm the flexibility and breathing room it needs. Even though a CVA is a tempting alternative, not all haulage companies will be eligible for one, and it can only be entered into on the advice of a certified insolvency practitioner.
Similar in concept, a Fast-Track CVA speeds up the process to boost your company’s recovery in as short as six weeks. A CVA might give your haulage firm the flexibility it needs in these unheard-of times if it is unable to fulfil present obligations but yet has a real prospect of surviving after restructuring. In these time of economic unrest, a Fast-Track CVA can help your company get back on track and offer the required respite.
Put your haulage firm into company administration to shield it from legal action that could lead to the forced winding up of your company if you are experiencing severe creditor pressure and winding up petition threats. The administration of the company’s affairs will be taken over by a licenced insolvency practitioner operating in the capacity of the company administrator. The administrator of the company will take measures to prevent the situation of creditors from getting worse and will sell off corporate assets to pay creditors.
Making an orderly exit through a Creditors’ Voluntary Liquidation will allow your firm to wind down and be removed from the Companies House registry before any outstanding debts with creditors are resolved if your business has exhausted all potential rescue options. This option can be the best one for everyone if your company cannot be successfully preserved. Making the official decision to close your haulage company, followed by giving shareholders and creditors notice, will start the liquidation process.
Our certified insolvency practitioners will assess your haulage firm to see if a restructuring plan may save it or if corporate liquidation is the best course of action. Through a number of dependable market leaders, we can also give access to private equity financing or emergency capital.
Read more: What effects does insolvency have on an operators license?
Haulage Company Directors can claim for redundancy
If your haulage firm goes into company liquidation and has been in operation for more than two years, you can be eligible for director redundancy. You may be eligible to file a claim for statutory benefits including notice pay, holiday pay, and unpaid wages in addition to the redundancy compensation for haulage business directors, the average claim for which is £9,000. Exiting firm directors sometimes fail to file a claim for redundancy pay because they are unaware of their legal obligation to do so.
Before your haulage firm enters insolvency or within one year of doing so, directors may file a claim for redundancy pay. Many business owners who are going through liquidation are unaware of their right to redundancy pay, costing them thousands of dollars. You must have a minimum two-year employment contract, put in 16 hours per week for your haulage firm, and be paid through PAYE in order to be eligible for director redundancy.
Your licensed insolvency practitioner will recommend you to a regulated and impartial claims management company that specialises in director redundancy as part of the liquidation process. They will determine your director redundancy payment after determining your eligibility.
How can help your haulage company
Owners of haulage companies can get immediate company restructuring and recovery guidance from us through a free consultation anywhere in the nation.
Insolvency advice for haulage companies can be crucial in helping them navigate through difficult financial situations and avoid bankruptcy.
Seeking professional insolvency help from a qualified insolvency practitioner can provide the necessary guidance and support to manage debts, restructure finances, and potentially save the business.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.