Unlocking Hidden Gold: How Positive Liquidations Could Be Your Next Game-Changer in Insolvency
Ever get the feeling that insolvency is that unwelcome guest who just won’t leave the party? Well, in today’s Irish business landscape, insolvency isn’t the rare, shameful secret it once was — it’s turning into a regular, if unwanted, visitor. Partner John Russell from Baker Tilly Ireland rings the alarm on how soaring costs, tighter credit, and unpredictable consumer habits are pushing many SMEs dangerously close to the brink — often without them even noticing. The real kicker? The hesitation to face these troubles head-on usually narrows your options and stacks up personal risks. So, how do you spot the subtle whispers of trouble before they turn into full-blown screams? Let’s dive into those early warning signs and what you can do to take control — because ignoring them is like ignoring a ticking time bomb . . . not the smartest move if you ask me. LEARN MORE
In today’s economic climate, insolvency is no longer a rare or shameful event — it is, unfortunately, becoming an all-too-common reality for many Irish businesses, writes Baker Tilly Ireland partner John Russell.
Between soaring operational costs, tighter credit conditions, and shifting consumer trends, many SMEs in Ireland are teetering on the edge of viability without even realising it.
What we see time and again is a hesitancy to confront the situation early, which often results in fewer options and greater personal risk.
So, what should you be watching for?
The Early Warning Signs
Insolvency rarely strikes without warning; it creeps in gradually, often starting with subtle signs like a dip in sales, the loss of key customers, or a noticeable rise in customer complaints.
Business owners may find themselves struggling to meet increasing demand due to limited capital, all while facing mounting operational costs from energy bills, rent, materials, insurance, and rising wages.
As financial pressure builds, more serious red flags emerge: persistent cash-flow problems, falling behind on tax payments, legal threats from suppliers, stock that simply isn’t moving, and high staff turnover that impacts morale and productivity.
Perhaps the most telling sign of all is when the business can no longer afford to pay its owner.
This a clear signal that urgent action is needed.
What Can You Do?
When facing financial difficulty, the worst response is denial.
Burying your head in the sand will only limit your options.
There are several actions you should take if you fear you might be facing financial difficulties.
- Ensure your financial data is up to date. Without accurate figures, you cannot make informed decisions. Next, complete a detailed cash-flow forecast to understand exactly what’s coming in and going out.
- Explore your options. These may include liquidation, the SCARP process (a low-cost restructuring option designed specifically for SMEs), examinership, or a scheme of arrangement for businesses that are fundamentally viable but need time to recover.
- Access available supports. Don’t overlook the financial assistance provided by LEO, SBCI, Enterprise Ireland, and Microfinance Ireland, or the advice and networking resources available through ISME, the SFA, and your local Chamber of Commerce.
- Avoid using personal funds without advice. Many business owners try to save their company by injecting their own money, often losing that too. Always seek independent professional advice before making such a high-stakes decision.
When to Call for Professional Help
If in doubt, it’s important to start with the right questions and a dedicated Insolvency and Debt Advisory team can provide you with the correct answers to steer your business towards the best possible outcome.
Experts can support with restructuring and insolvency services, including business restructuring, bank debt advice & negotiation, creditor negotiation & restructuring, members voluntary liquidation and creditors liquidation.
You should immediately seek help if:
- You can’t pay your staff or suppliers
- You’re technically insolvent, unable to pay debts as they fall due
- You’re unsure whether your business is viable without considering debt
- You’ve stopped taking a wage
- Exceeding terms with suppliers and creditors, particularly when suppliers begin threatening legal action
If you’re ticking any of these boxes, the time to act is now.
The earlier you seek help, the more options you’ll have.
Final Thoughts
While insolvency outcomes are negative by their nature, positive liquidations can be a real strategy.
This is where business owners, through a member’s voluntary liquidation, cash in their chips, retire, and use the tax-efficient structures of corporate ownership to their advantage.
In some cases, winding down is the smartest and most profitable option for shareholders.
If your business is fundamentally sound, restructuring mechanisms like SCARP can provide the runway to turn things around without the stigma and cost of court-based processes.
Economic and changing market conditions may often affect businesses and individuals in different ways, presenting unsettling challenges which can lead to decreased earnings and disruptions to cash flow.
Therefore, it is important to get the right advice as early as possible so the situation can achieve the best outcome possible.
The key takeaway is that insolvency is a financial condition, not a moral failing. It can happen to anyone.
But delay is costly emotionally, financially, and reputationally.
If you’re feeling overwhelmed or unsure, talk to someone who can help you navigate the road ahead.
You might be surprised by the options available but only if you act before it’s too late.
John Russell is a partner at Baker Tilly, specialising in Insolvency & Restructuring and Forensic Accounting
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