How a director can maximise the outcome with the Bank
If your company is possibly insolvent, one of the key players you need to consider is the bank. The bank will usually have more power than an ordinary unsecured creditor because it will probably have a charge or mortgage over the business assets and commonly it will have your personal guarantee and a charge over your home.
Banks have a common approach to customers in difficulty. As a director, you won’t be familiar with the likely reaction of your Bank. For a start, if a Bank suspects a customer is insolvent, it is common to change the account manager to a manager from the “Credit” area. That manager’s focus is on ensuring the bank recovers its loan in full rather than on “keeping the customer happy”.
Will the Bank spot the problem?
The bank will be aware of the signs detailed in our Warning Signs page but they will also have a variety of other warning signs that may arise within the bank as a result of their monitoring systems. The main warning signs a bank will see are the following:
- Overdraft constantly at its limits;
- Returned cheques – if you have written cheques when insufficient funds are available this is a clear sign of a company in distress;
- Financial accounts not provided at the required time;
- Constant requests for new facilities;
- Audited accounts delayed;
- An inability to provide forecasts when requested.
What should you do? – Control the process
It is always better for a director to control the restructuring process rather than be dictated to by the bank or the bank’s adviser. If you’ve noticed the above warning signs we strongly suggest you contact us.