Reflecting upon 2020, one cannot deny that we have all faced interesting challenges and, as a licensed insolvency practitioner, much of my work has involved dealing with the failure of businesses in the hospitality, leisure and retail sectors, and one suspects that these will continue to experience difficulty in 2021.  In fairness, over the last ten years, quite a number of bars, restaurants, hotels and leisure outlets have passed through my hands which perhaps reflects the precarious nature of commercial life for these sectors.

The oil and gas industry has provided a large number of insolvency appointments and it is a fairly familiar exercise to deal with a one-man personal service company which has an overdrawn loan account and hence, difficult discussions ensue with a director about how much is to be repaid.  Typically, this involves the potential spectre of bankruptcy and having to refinance the family home in order to keep the liquidator at bay. Lots of delicate conversations required !

It is impossible to forecast the size, type and variety of business that will fail next and this tends to mean that a key skill of the licensed insolvency practitioner is to know which agency/department to contact in terms of helping to identify/protect/realise assets whilst communicating the bad news to a group of angry creditors.  Assets that I have sold include motor bikes, cars, all types of clothing, patents, intellectual property rights, livestock, oil tools, property, land, and perhaps the most unusually a collection of pornography.  As it happened, the pornography was linked to a well known adult movie company which also went bust (pardon the pun) and denied electronic access to the collection thereby stopping a sale.

A few years ago I was appointed liquidator of a pig farm. On the first day of my appointment a boar was delivered.  After a brief period of rest following the journey, the boar was led into the breeding arena whereby it immediately commenced work………..only to suffer a major heart attack during its first conquest.  Fortunately the supplier accepted my view that the goods were not fit for purpose and provided a full credit in exchange for a dead boar !

Having to deal with the sad task of dismissing employees is a frequent occurrence. In one such situation at a fish factory in Peterhead I spoke to about 40 people and explained why the company had been liquidated and hence their jobs were no longer required.  At the end of my address I asked if there were any questions, only to be advised by the foreman that everybody had been standing quietly because I wore a suit and tie, but nobody understood a word because they were all Russian.

On another occasion I had to address about 90 employees the day after they had been dismissed and explain their employment entitlements.  Unfortunately, the appointment had been arranged for 2.30 pm in a working man’s club in the centre of Aberdeen and, to my dismay, the podium was at the far end of the room.  Trying to explain why no cash would be paid for many weeks was an unpopular topic and resulted in me weaving past tables of angry and intoxicated former employees as I beat a hasty retreat, leaving a representative from the department of employment to close the meeting.

On the subject of redundancy, one of the forms asks if there have been any breaks in employment. This  is designed to deal with any individual who has left an employer for a year or so, but then returns.  In one case a former employee had written in the narrative box for employment breaks “10 am to 10.15 am daily for tea”.  Cue a mental note for me to advise all employees thereafter that a cup of tea does not constitute an employment break.

Life can be challenging. It is not that long ago that a person claimed to be a member of a secret sect and placed a curse on me. In another case,  I received a telephone call from a concerned director advising me not to travel to his business the day after I had closed it because a former employee, worse for consuming alcohol, was walking up and down outside the main gate with a knife in his hand.

I recall vividly the time when I sought to close a business one evening and found      myself accused of assault : which seemed bizarre because I was the only Meston Reid & Co representative and there were 2 directors and 12 employees.  Nevertheless, Grampian’s finest thought it appropriate to confine me to a cell for a few hours and helpfully advised the local newspaper.  Fortunately, all was well after a detailed investigation had been undertaken and I received a most fulsome written apology from the Chief Constable.

Of course, the vast majority of time tends to be spent at one’s desk looking at accounting records and dealing with statutory filing requirements, but it is always fun when there are some unusual circumstances that help produce a sense of colour and excitement to the daily routine.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.

The enactment of the Insolvency Act 1986 “the Act” introduced the concept of administration for a company, a process designed to save the entity, either in whole or in part, and thereby preserve both jobs and an economic activity.  Generally speaking, this was seen as the replacement for receivership, and preferable to liquidation which tends to be seen as the end of the line.

In order to preserve economic activity, a way had to be found to allow the sale of an existing business and history has shown that such a transaction is often to a connected party e.g. the directors of the failed entity.  What is now known as a pre-pack administration quickly gained popularity because it allowed the administrator to transfer a business activity immediately upon appointment and thereby save jobs, preserve a supply chain, and respect the rescue culture.

However disquiet began to arise when creditors thought that assets were being sold too cheaply, particularly to connected parties. Accordingly, the various insolvency regulatory bodies created Statement of Insolvency Practice 16 “SIP 16”.

Protocols were introduced in order to provide assurance that a pre-pack sale was appropriate and at fair value.  Research by the government suggests that administrators were not using the pre-pack pool (a group of experienced and independent individuals who could provide comment upon the fair value of the transaction before it occurred), that the marketing procedures required by SIP 16 were not being followed as comprehensively as the government anticipated, or that the purchaser failed to provide a viability report to show that there was sufficient funding in place for the new entity to operate for at least twelve months following a business transfer.  A viability report is seen as important because, for example, it demonstrates that the purchaser is not simply asset stripping on the basis that a subsequent sale has been organised at a higher price, with the profit thereon being retained by the directors.

In order to address some of the issues, the government published a review of its industry reform review last month (www.gov.uk/government/publications/pre-pack-sales-in-administration).

The draft regulations propose, for example, to stop an administrator from selling any of the company’s property to a person connected with that company within the first eight weeks of his appointment without obtaining either prior approval from creditors or an independent written report.  The connected party purchaser is required to obtain the written opinion. Further, the administrator will be obliged to consider such opinion before acting and be satisfied that the provider of the opinion is demonstrably independent of the purchaser.

This approach may well be designed to stop a pre-pack sale to a connected party when administration occurs, but one obvious problem facing an administrator will be how to finance ongoing trading for a period of at least eight weeks whilst a buyer is found. Will the connected party purchaser be content to fund the administrator in the hope that a pre-pack sale proceeds as intended, whilst accepting the risk that another party may emerge and pay a higher price? Depending upon the type of industry and financial support available, will the challenge of ongoing trading prove insurmountable?

Often, the benefit of a pre-pack sale is the ability to obtain a higher value than might be obtained if the business is marketed widely for a period of weeks e.g. a premium is paid in order to ring-fence the business rather than allow parts of it to dissipate.  When competitors realise that a company is in administration and available for sale, it is possible that they will try to “take” the business by approaching known customers directly and place pressure on suppliers to cease deliveries and thereby thwart a sale to a connected party.

It is difficult to envisage that, particularly for larger entities, a wholly independent buyer will be in a position to organise a realistic offer within eight weeks.  Further, experience suggests that when the business is of fairly modest size, competitors are less minded to purchase the entity from an administrator but be thankful that it has failed and hope that it merely removes someone from the market.

In general terms, there is nothing wrong with transparency of action. After all, the administrator did not cause the insolvency, but one wonders why he should risk liability and asset impairment because he is required to continue a trading activity for a period of at least eight weeks when the business has already hit the financial rocks.

Time will tell if the proposals find their way to the statute book without amendment and, if they do, whether another change to the insolvency landscape will impact positively upon the rescue culture.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.

Whilst entrepreneurial flair and inventiveness will always mean that people will wish to create  new businesses, the current perceived wisdom appears to be that the one somewhat unavoidable effect of Covid-19 is that there will be more business closures than new ones opening over the next few months.

Many businesses will simply fade away, particularly those of a modest size, but when a business has assets of value, a formal insolvency procedure is often required in order to deal with the situation. When that happens, the insolvency practitioner “IP” has a duty to enquire about the company’s assets and report to creditors.

Feedback from creditors will often refer to the most recent balance sheet filed at companies house and ask what has happened to the assets shown therein. Of course, a company has 9 months from the year end date to file annual statutory accounts and the reality is that many companies are late in doing so, particularly if there are financial problems to address and attention is focused elsewhere. Even if the accounts are filed in a timely manner, they are unlikely to represent financial reality at date of liquidation e.g.

1. Goodwill : whether purchased or created internally, the fact that the business has ceased due to insolvency usually suggests that there is little value left that someone else will pay for.
2. IPR and patents : if these are up to date and suitably protected they may still not carry any value if there are counter-claims about ownership and/or a view that they do not provide the basis of creating value if bought by a third party.
3. Plant and equipment : shown in the accounts at purchase cost less depreciation to date, but such carrying value rarely represents what the assets are worth in a forced sale. In any event, assets may have been sold in a recent period and the cash spent. Further, the balance sheet could show a large value for equipment but this is matched by a finance obligation in the balance sheet which means that there is no net value available upon liquidation.
4. Book debts : if still on the books many months after being created, recoverability ( in full or on part ) is questionable.
5. Overdrawn director’s loan account : if the director is a “man of straw” and has spent the money, the potential for recovery is decidedly slim.

These are just brief examples of why one cannot simply look at a set of accounts and draw immediate conclusions, and even when an asset has been identified, the value that might be recovered is often questionable.

The Insolvency Act 1986 “the act” gives the IP power to uplift the company’s accounting records, even if held by a third party. Indeed, the act makes it a criminal offence for a director to destroy/falsify/remove accounting records. In an ideal world, the IP would have early access to the company’s cash book, fixed asset summary and book debt listing so that they can be reviewed in order to direct enquiries about what can be realised. This will usually require assets to be valued independently in order to make sure that taking steps to sell something, or purse a book debt, will produce a net recovery to the estate.

Clearly, the IP will visit the company’s business location(s) and prepare an inventory of what is there, and ask the director/employees what assets may be located elsewhere. It is not unheard of for a director to seek to conceal assets e.g. a car or truck, in the hope that the IP will remain blissfully unaware of its existence. Thus, detailed enquiries are often required and steps taken to recover assets.

It is easy to talk about reviewing accounting records and asking a director for information, but what happens if there is limited cooperation ? The IP may need to consult with the company’s external accountant, ask creditors what they know of the business activity, obtain copy bank statements for review, or look at the company’s website/social media posts. Depending upon how quickly information can be obtained when cooperation is limited, the IP’s task of realising assets is unavoidably delayed. Frustration will often be expressed by creditors about the apparent lack of action, but without evidence of assets, the process can be slow.

Also, the IP may find that a company has created an unfair preference in favour of certain creditors e.g. settled some liabilities and ignored others, or made a gratuitous alienation e.g. transferred an asset to a third party at undervalue. In such circumstances, the IP will wish to piece together the transaction(s) and determine what can be done to repatriate asset value to the estate. Again, the process will invariably take time and creditors will require to be advised accordingly.

The conclusion is that one cannot take a simplistic view of assets e.g. from looking at an old balance sheet or working on the basis of what a company “appears” to own. Sometimes the sad fact is that there are no assets of consequence available to creditors, and there never were. In such circumstances, it is left to the IP to impart the bad news to creditors : not a pleasant task but one that has to be done.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.

August 2020

Although there has been a recent stutter with regard to pubs and restaurants, many businesses are taking steps to resume trading activities.  It is the natural commercial instinct of business people to seek a resumption of whatever part of commercial life is their favoured choice.

Regrettably, the same level/type of business as existed 6 months ago may not be around. Further, the  welcome short-term support mechanisms that we have seen such as furlough payments, council grants and bounce-back loans could prove to be insufficient to continue in business as before.  Creditors are beginning to press again.

Although the government has introduced legislation which makes it difficult to liquidate a company in the short term, coupled with the options of the debt moratorium and reconstruction sections of the Corporate Insolvency and Governance Act 2020 which received Royal assent on 26 June 2020, many in business are unsure how to proceed if they wish to preserve all, or part, of the business activity that they hope will earn them a living.

If there is anything to preserve, one must have a viable underlying business which may represent some, or all, of the activity undertaken before lockdown. Such business must be capable of generating a profit and cash surplus because no amount of support will save a business that is dead in the water.

Whilst the new legislation is helpful in terms of the options introduced and breathing space offered whilst a director decides the most appropriate way forward, it is useful to remember that the traditional insolvency procedures of either administration or liquidation also allow a director to restructure the business and pave the way for a continuing economic entity to prosper.

Many directors comment that they wish to retain the existing name/brand because they have spent many years creating it.  Such view is perfectly understandable and, as long as the correct steps are taken, retaining the name/brand is possible.

Of course, if a new business is to rise from the ashes, a detailed trading forecast is required, both profit and loss account and cash flow. If the opportunity is created to trade again, careful and objective thought is required because there is little point in buying a business from the administrator/liquidator if the plan is simply to carry on as before. If it didn’t work last time, why will it work this time ? Thus, we may well see a business seeking to diversify and change its main focus in order to adapt to the marketplace. The director will wish to consider what additional risks any changes create and how these can be addressed : flexibility is likely to be a key factor.

In terms of financing a new business, the plan will require to address how to value the assets (building, vehicles, plant and equipment, debtors, stock etc.) and then how to purchase them because the administrator/liquidator will expect to receive the cash immediately rather than offer easy payment terms. Also, virtually every business requires working capital in order to pay operating costs before cash is generated from sales.

Many directors have found that when the old entity is “dumped”, suppliers are somewhat reluctant to deal with the new entity unless there is some assurance of being paid within normal terms, or even in advance of deliveries until a track record has been established.  Similarly, customers may perceive that they find it more unsettling and risky to deal with the new company and will actively consider the offerings from competitors who may appear more stable.

When organising a transfer of business activity to a new company, employment legislation is a crucial aspect to consider because unless a proper plan is in place, normally implemented by the legal advisor involved with the process, more employment liabilities than were envisaged may transfer to the new company and become a burden that was not anticipated.

Careful thought is required before a company is subject to a formal insolvency procedure in terms of some of the benefits that may be available.  Given the likely challenges facing the local market in the next few months, one can see serious consideration being given to some sort of restructuring framework which allows the directors to continue with a reduced/modified business in order to emerge with a more viable, long-term business.

The Meston Reid & Co insolvency team are already fielding calls and attending meetings as directors begin to realise that life will never be quite the same again.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.

For the last few years an individual has been able to apply for a debt moratorium which lasts for six weeks and gives breathing space to decide how one’s financial affairs should be dealt with e.g. sell assets, agree a repayment plan, sign a trust deed, present a sequestration application etc.  The advent of Covid-19 has hastened the introduction of a UK government idea that has been around for a considerable period of time and replicates the moratorium idea for the corporate market. It is known as the Corporate Insolvency and Governance Act 2020 and came into force on 26 June 2020.

The company moratorium process requires the limited liability company (LLPs are not part of this new idea meantime) to present an application to court seeking a 20 day moratorium.  The application requires the directors to create a proposal that rescues the company as a going concern (albeit perhaps in a slightly diluted format than currently exists) whilst allowing the directors to remain in control. The process requires a licensed insolvency practitioner “IP” to be appointed as a monitor and assess the eligibility for a successful moratorium in the application, and review progress regularly. Thus, the company must make it obvious that a monitor is involved e.g. by adding a suitable narrative to invoices, letters, website etc.

Once in place, a third party cannot repossess goods, enforce a security, bring a lease to an end or commence insolvency proceedings.  This breathing space can be extended by a further 20 days by subsequent application to court. If a 40 day period does not look like it will be sufficient but the general plan appears to be working, creditors can be asked to consent to an extension. The period of extension will relate to the specific circumstances that apply, but the longer the extension request, the more unlikely it will be approved unless unusual conditions apply.

If the IP finds that the directors are not following his advice he can apply to court asking for the directors to do so, or he can resign and bring the process to an early conclusion.

It could be argued that an IP may not be keen to incur the reputational damage that might arise if a company spirals out of control because a plan is not working and he cannot influence immediate change. Indeed, if creditors have supported a plan as a result of the IP’s involvement on the basis that such IP was confident that it would succeed, why allow directors to continue to control the levers of power.

Looking at the proposed documentation and issues, the initial costs of a court petition together with the ongoing monitoring process are likely to be fairly substantial. Small companies may find that a moratorium process is simply too expensive to use when they are already financially stretched.

The government’s Insolvency Service have produced detailed notes, flowcharts etc. which seek to regulate the process and also point to a fairly high time/cost commitment for participants.

Many readers will have heard of a company voluntary arrangement “CVA”. These have become fairly popular in the last few years, mainly with tenants of large commercial buildings, and a key difference is that the IP is in charge of the CVA process from the outset.

Leaving the directors in control of a business which has already caused distress amongst stakeholder groups is fraught with danger and whilst one might see a moratorium process occurring before either a CVA or administration process is put in place, a standalone moratorium which could last for many months is perhaps unlikely.  If it is the case that rescuing a business as a going concern is required as  the likely outcome, many companies facing insurmountable financial challenges may decide that liquidation is more straightforward  i.e. stop, sell the assets and move on.

In the unprecedented circumstances that we have all faced since March 2020, and are likely to face in the months ahead, a pragmatic and supportive approach by all stakeholder groups may trump a formal moratorium process.  For example, if one can demonstrate without releasing too much confidential information that there are reasonable prospects of survival and hence, repayment of debt, most creditors will exercise patience. A supplier would far rather have an ongoing customer rather than lose the connection.

The contention is that the current insolvency regime is sufficient to deal with a turnaround process. A company moratorium might not be seen in the light that the government appears to wish i.e. rescuing a business as a going concern. It may simply be an indicator of the final stages of a company’s corporate existence.

Time will tell if this new process captures the corporate imagination.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.

June 2019

Whilst the work of many licensed insolvency practitioners tends to focus upon insolvent situations, the provisions of the Insolvency Act 1986 mean that where company assets exceed £25,000, a formal solvent liquidation process is required if shareholders wish to close a company and withdraw the assets, normally cash, whilst benefitting from the capital gains tax regime. Without a formal liquidation process, monies paid from a company to shareholders are by way of dividend which are taxed at income tax rates : the highest one being 45% ( 46% if you are taxed in Scotland ). Thus, if one can benefit from the maximum capital gains tax rate of 20%, or even the Entrepreneurs’ Rate of 10% should special circumstances apply, the benefits of liquidation are clear.

There have been a large number of solvent liquidations of personal service companies “PSC” in the last four or five years e.g. when individuals working in the oil and gas industry have left the area and no longer have a reason to maintain a limited liability company, or there is no particular benefit in having a company because a staff position has been obtained. The proliferation of PSCs in the North East has resulted in many PSC shareholders receiving a substantial tax benefit when the monies are withdrawn from the company at closure.

The rules for obtaining capital gains tax relief tightened on 6 April 2019 because it was deemed somewhat unfair that a person could invoice through a PSC for several years, build up a large amount of cash in a tax-friendly company environment, and then liquidate the company with a 10% tax charge on the monies withdrawn. This has been seen as far more tax advantageous compared with earning the same amount, say £130,000 annually, and paying a higher rate of income tax. HMRC have sought to make it harder to act in this manner by, for example, changing the period of share ownership and disallowing capital gains tax treatment if the individual returns to the same industry in certain circumstances : designed to ensure that income tax applies rather than capital gains tax.

The tax landscape is changing again on 6 April 2020 because HMRC propose that PSCs operating in the private sector ( not just oil and gas ) are treated in the same way as those PSCs who have been operating in the public sector since April 2017 i.e. income tax and national insurance deducted at source from every payment to a PSC if the receiver of the service considers that the basis of engagement is broadly similar to that of an employee. This topic is commonly referred to as IR35 and HMRC are already issuing letters to PSCs in the oil and gas sector suggesting that if the service provision is similar to that of an employee, the large oil service companies who engage PSCs in the North East might start deducting PAYE and NIC from the monthly invoice next April. The current HMRC consultation period expired at the end of May and further pronouncements are expected shortly.

Anecdotal comment suggests that the large oil and gas companies might operate a consistent interpretation of the tax treatment of a PSC e.g. if one considers issues such as control, right of substitution and mutuality of obligation, one must ask who really decides what work is undertaken, when, and under whose control. One might expect the large companies to be conservative in their outlook because, if they have any concern that they may become liable for payroll deductions following an HMRC audit, yet have paid a PSC gross, their finance departments will not be a happy place when HMRC deliver a huge PAYE and NIC demand covering all PSCs.

This may force many PSCs to consider that there is a significant tax disadvantage to operating through a limited liability company i.e. a levelling of the tax playing field could mean that there is little purpose in operating a PSC in the oil and gas industry.

HMRC have created a website www.gov.uk/guidance/ir35-find-out-if-it-applies that asks various questions in order to help determine whether or not a PSC might be treated as an employee and hence, subject to tax deductions at source. The website has been prepared by HMRC and perhaps unsurprisingly, tends to favour treating a standard PSC as an employee. It will not be surprising to see numerous challenges to the HMRC assessment process in the months ahead.

What seems clear is that the general direction of travel is against a PSC that receives the vast proportion, if not all, of income from one source on a regular basis. A natural development of this could well be that many PSCs will decide that it is not cost effective to maintain a limited liability company and seek to pursue a solvent liquidation closure for the company before any further change in the tax rules that make it even more difficult to enjoy the benefit of Entrepreneurs’ Relief.

The insolvency team in Meston Reid & Co have handled a large number of solvent liquidations in the last year or so and this is unlikely to abate in the near future.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen. They do not purport to represent those of the firm in general.

November 2019

Whether self employed, working for a company or currently unemployed, there are many reasons why you might find it necessary to seek advice regarding your personal financial affairs e.g. divorce, economic recession, financial mismanagement, unexpected drop in a source of income, or loss of an asset.

In reality, the vast majority of people want to pay what they owe to their creditors and, whilst a perfectly laudable and natural intention, if there is simply not enough cash available to deal with the situation, consideration may have to be given to regularising matters by means of sequestration (the Scottish term for bankruptcy), a trust deed or using the Debt Arrangement Scheme “DAS”.

There are a variety of methods, formal and informal, for dealing with debts when they become unmanageable and proper advice is required. Typically, the advice process will begin with either a meeting or telephone conversation with an Approved Money Advisor who will seek to allay the initial anxiety, listen carefully, not be judgemental, and then explain the various options so that an informed decision can be taken. At a time such as this, it is often useful for the person receiving the advice to be accompanied by someone who can “clear the mist of a clouded mind” by helping to read and understand correspondence, take notes or simply provide emotional support : rather like visiting a doctor when bad news is anticipated.

A key reason for explaining the options is that each case is different and, for example, someone owning a house is likely to focus upon what might happen to such house, whereas someone in rented accommodation may well be more interested in the effect on other assets, particularly if he/she runs a business.

Experience suggests that the house is often the most important consideration. In this regard, the advisor will want to know an approximate value and the level of secured indebtedness (there may be one or two lenders), together with the title position. If there is equity in the house and the person wishes to remain in the house, a plan will be required about how best to retain it. Guidance from the accountant in bankruptcy (the State office that oversees formal personal financial solutions in Scotland) is to deal with the house as early as possible because the purpose of the exercise is not to become involved in property speculation but to provide a financial return to creditors.

If a DAS is the appropriate option, the good news is that one’s principal dwelling is exempt from attack, but the downside is likely to mean a longer period of regular contributions from income compared to either sequestration or a trust deed. The important point to note about a DAS is that all debts require to be settled in full (the DAS system will freeze interest and ongoing penalties). Clearly, the potential to settle all creditors over a period of up to, say, ten years, depends upon the contribution level from income i.e. an unemployed person will not be suited to a DAS.

Thus, as one might expect, a full assessment of income and expenditure is undertaken in order to determine what is left at the end of the month and, in this regard, the Common Financial Tool “CFT” is used across Scotland in order to be fair and reasonable to all Scots. The CFT has numerous expenditure categories because the State recognises that we all have different lifestyles.

If you elect to present a sequestration application to the State, an award is not granted until you agree the level of contribution which, by law, will be for a minimum period of four years. This contrasts slightly with signing a trust deed because that process tends to permit a more variable contribution level/period. As has been noted earlier in this article, each case must be taken on its merits and proper advice taken in order that the full impact of a decision is known/understood.

The process is complex and quite a lot of documentation is provided to each person receiving advice in order that it can be demonstrated that the full range of options has been tabled.

As ever in situations of personal financial difficulty, individual or business-related, it is rarely too early to seek expert advice which will be provided on a confidential basis. Most Accredited Money Advisors, including Meston Reid & Co, provide the first consultation free of charge. For most people who are feeling worried and stressed about their financial affairs and are not sure who to turn to in their hour of need, there is little to lose from an initial chat.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen. They do not purport to represent those of the firm in general.