When a company faces financial distress, directors often feel overwhelmed by the number of “rescue” options available. Choosing the wrong one can waste time, increase costs, and reduce the chances of saving the business. Choosing the right one can stabilise operations, preserve jobs, and protect the company’s long-term viability.

To help directors navigate these choices, Molly Monks of Parker Walsh who advises distressed businesses across the UKbreaks down the three most common rescue routes: Company Voluntary Arrangements (CVAs), Administration, and Informal Standstill Agreements.

1. Company Voluntary Arrangement (CVA)

A CVA is a formal agreement between the company and its creditors to repay debts over a set period usually 3–5 years while continuing to trade.

When a CVA Is Appropriate

• The business is fundamentally viable but burdened by historic debt

• There is predictable cash-flow to support monthly payments

• Directors want to remain in control of the company

• Creditors are likely to accept reduced and/or delayed repayment

Key Features

• Legally binding once approved by 75% of voting creditors

• Directors remain in day-to-day control

• Company continues trading normally

• Interest and legal actions are paused

Costs

Generally lower than administration; paid over time as part of the monthly contributions.

Creditor Buy-In

If suppliers, landlords, or HMRC are hostile, approval may be difficult.

Pros

• Lower cost

• Maintains continuity

• Protects brand and customer confidence

• Debt can be written off at the end

Cons

• Requires strong future cash-flow

• Public filing may affect credit rating

• Not suitable for companies needing immediate legal protection

2. Administration

Administration provides immediate legal protection through a moratorium while an insolvency practitioner attempts to rescue the business or achieve a better return for creditors than liquidation.

When Administration Is Appropriate

• The company is under urgent threat (winding-up petition, creditor action)

• Cash-flow is severely compromised

• Business restructuring or sale is required

• Directors need breathing space while exploring options

Key Features

• Licensed insolvency practitioner takes control

• Moratorium halts creditor enforcement

• May involve trading, restructuring, or selling the business

• Often used as a precursor to CVA or sale of assets (“pre-pack”)

Costs

Higher than CVA due to intensive management and legal complexity.

Creditor Buy-In

Not required to begin administration, but cooperation improves outcomes.

Pros

• Immediate protection from creditors

• Buys time to restructure

• Can preserve jobs and core operations

• Suitable for distressed but potentially rescuable businesses

Cons

• Expensive

3. Informal Standstill Agreement

This is a non-statutory agreement between the company and key creditors to pause payments or legal action for a short period.

When a Standstill Is Appropriate

• Cash-flow issues are temporary and short term

• Creditors already have strong relationships with the business

• Directors need short-term breathing space to refinance or stabilise

• A formal process may be disproportionate

Key Features

• No court involvement

• Flexible terms

• Allows the company to continue trading during negotiations

Costs

Very low compared to formal insolvency procedures.

Creditor Buy-In

Creditors must agree. One uncooperative creditor can derail the arrangement.

Pros

• Low cost

• Useful as a precursor to CVA or refinancing

Cons

• No legal protection - creditors can withdraw at will

• Unenforceable if relations deteriorate

• Not suitable for severe insolvency

• Risky to directors

How to Choose the Right Option

According to Molly Monks of Parker Walsh, the best rescue option depends on five factors:

1. Urgency

If the company is facing legal threats, administration may be the only option offering immediate protection.

2. Cash-Flow Stability

If future trading is predictable, a CVA can be the most cost-effective long-term solution.

3. Creditor Relationships

If creditors are cooperative, an informal standstill might provide temporary relief at minimal cost.

4. Business Viability

Rescue options only work if the core business is fundamentally sound.

5. Director Objectives

Control, speed, cost, and confidentiality all influence the most suitable path.

How Parker Walsh Supports Directors in Distress

The team at Parker Walsh, including specialists like Molly Monks, helps directors by:

• Conducting a rapid financial assessment

• Identifying the most appropriate rescue route

• Negotiating with creditors, landlords, and HMRC

• Protecting director interests while maximising business survival

• Implementing CVAs, administrations, or standstill agreements

Their advisory role ensures directors make informed, defensible decisions at the earliest opportunity when outcomes are best.

Conclusion

Each rescue option, CVA, administration, or an informal standstill, offers different advantages depending on the company’s situation. What matters most is acting early and taking advice before creditor pressure escalates.

As Molly Monks of Parker Walsh emphasises:

“Most businesses have more rescue options than directors realise until they wait too long. Early engagement gives us the tools to save the company.”