Business Recovery Factsheet - Flipbook - Page 5
Practical Steps for Directors
For companies in financial distress, the following steps should be borne in mind by its directors, in order to
minimise the potential losses to the company’s creditors and reduce the risk of personal liability on the part of
An urgent business review should be conducted to prioritise cash flow, for example by reviewing staff
levels and reducing expenditure.
the company’s creditors should be treated equally and no creditor should be preferred over another.
however, in a critical situation and where cash-flow dictates, payments to creditors which are necessary
to ensure the continuation of the company’s business may have to be prioritised. Professional advice
should be sought from an insolvency practitioner before putting in place measures of this nature.
proper records should be kept. The company’s books and records should be kept up to date, and there
should be regular financial and operational reporting to the board, and timely escalation of issues.
the directors should meet regularly and stay informed (e.g. with updated management and cash flow
information) and the meetings should be fully and properly minuted.