The economy in the North East is showing positive signs of recovery but business owners still need to minimise uncontrolled business risks and protect themselves for the future.
Manage your risks
There are specific ways that risks can be managed for a legal entity company that has two or more businesses operating within it. It is not unusual to have a number of businesses operating within one limited company, as a result of previous acquisitions. However, continuing to trade as one limited company might not be the best way forward.
If one business within a company has issues which pose a threat, this could be a good reason to restructure.
What are the issues?
Potential issues could include the threat of commercial litigation if a company owner fears a breach of contract claim could be made against them. There could also be product liability issues looming or a work force in one part of the company that has the potential to bring more employment claims, creating risk to the company as a whole.
Whatever the circumstances, the ‘risky’ business has the potential to impact on the ‘good’ one –threatening the company as a whole.
Separate good from risky
We can help healthy companies to separate their ‘good businesses’ from the risky element using a Section 110 Reorganisation, which is part of the Insolvency Act 1986. The Act’s name suggests the legislation is only relevant to businesses whose short term trading is no longer viable, but that is not the case.
Section 110 allows healthy companies to split their businesses to protect themselves. The legislation can also be used to split a company where business owners want to go their separate ways – rather like a commercial divorce, splitting the company assets.
At Muckle LLP we take a holistic approach to supporting businesses and will always collaborate with accountancy practices to ensure our clients also receive the most applicable tax advice and support for HMRC clearance.
Any company owners or intermediaries working with SMEs who are aware of issues that have the potential to create unacceptable risks, should explore this option as a means of removing the risk and enabling companies to thrive.
For more information, help or advice on this issue please contact Andrew Cawkwell on 0191 211 7957.