HomeFWJ TakeawayCompany rescueBusiness recovery and rescueWhat does business rescue mean?

The aim of business rescue is to rescue a company that may be struggling financially. Company rescue can take a number of different forms, and this very much depends on the business in question.

Viability of the company

There are many different methods of business rescue and company rescue. However, an important aspect of business recovery and business turnaround is that there should be a viable underlying business for company rescue, albeit that it may have some current problems.

Developing a business rescue strategy

Business rescue differs from formal insolvency proceedings in that by developing a business recovery strategy, possibly looking at company restructuring, and/or a company voluntary arrangement with creditors, and making use of other business turnaround tools, a successful business turnaround and company rescue can take place to prevent a company from falling into a formal insolvency process.

It is most beneficial to devise a business recovery strategy for a business turnaround as early as possible, because the longer a company in financial difficulties is left, the harder it is to effect a business restructuring and company rescue, even with a good business recovery strategy. Creditors may not be on board, and the company may be pushed into a formal insolvency process such as winding up, administration order, or receivership.

Methods of business recovery and restructuring

When considering what does business rescue mean, we can look at any number of business restructuring mechanisms or company rescue strategies, either on a formal or an informal basis. For example, one of the business restructuring tools used could be that the company enters into a company voluntary arrangement with its creditors. Whilst this is not a formal insolvency process, it is a formal process supervised by a business rescue expert.

Other methods of business rescue might be:

  • an equity injection by way of new share issue;
  • sale of some non-core assets;
  • merger with a competitor; or
  • reaching an informal agreement with creditors or a formal agreement, by way of a standstill agreement which prevents creditors from bringing proceedings against the company while it is in a business turnaround situation.

Contact the company rescue experts at Francis Wilks & Jones if you would like to discuss any aspect of a company rescue and we can talk you through the various options available to you.

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