Business Debt Consolidation Options

Directors with multiple business debts often find it difficult to manage repayments, interest, and creditor demands. Consolidating debts can simplify finances, reduce monthly payments and, in some cases, improve long-term outcomes.

There are several options available depending on the size of the business, the company’s financial position, and whether the director has any personal liability for the debts. Understanding these options can help directors take action before problems escalate.

If you are considering consolidating your business debt, it is important to get professional advice early. Contact BRI for confidential guidance on the best approach for your business.

What Is Business Debt Consolidation?

Business debt consolidation is the process of combining multiple debts into a single repayment plan or arrangement.

The goal is often to:

• Simplify payments by having one monthly sum instead of several
• Reduce interest or fees
• Improve cash flow and financial planning

Debt consolidation can take several forms, from formal legal agreements to refinancing or renegotiating loans with lenders. Some options are part of formal insolvency procedures, while others are suitable for companies that are still solvent.

If you are unsure which consolidation method suits your business, speak to BRI. Early advice can prevent small financial issues from becoming serious problems.

Business Debt Consolidation Options 

There are several debt consolidation options available to directors, depending on the circumstances of the company and any personal liability.

Company Voluntary Arrangement (CVA)

A CVA is a formal legal agreement between a company and its creditors to pay back debts over an agreed period, often several years.

Key points:

• Suitable for companies that are still trading but struggling with debts
• Can help avoid liquidation and maintain business operations
• Provides a structured, legally binding repayment plan
• Creditors usually agree to reduced payments or extended terms

If you think a CVA may be suitable for your company, BRI can help assess eligibility, explain the process, and guide you through the application.

Individual Voluntary Arrangement (IVA) For Sole Trader Businesses

An IVA is a personal debt solution that can be used by owners of sole trader businesses where there is no protection from a limited company entity.

Key points:

• Creates a structured repayment plan for personal obligations
• Offers legal protection from creditor action while the IVA is in place
• Monthly payments are agreed with creditors and are manageable

If personal liability is a concern, speaking to BRI about an IVA can help you understand the benefits and ensure it is the right solution for your circumstances.

Partnership Voluntary Arrangement (PVA)

A PVA is another formal arrangement for paying back creditors over time. It can be used for partnerships in just the same way that a CVA or IVA may might be used for companies and individuals.

Key points:

• Offers a flexible framework to negotiate repayment terms
• Helps protect partners from immediate creditor pressure for partnership debts
• It doesn’t include personal debts unrelated to partnerships but IVAs can be setup simultaneously if required
• Provides a formal structure similar to CVAs and IVAs

BRI can advise on whether a PVA is suitable and guide you through the proposal process to ensure it meets legal and creditor requirements.

Court Approved Restructuring Plan

A Court Approved Restructuring Plan is a formal, court-sanctioned process designed to help companies restructure their debts and continue trading, even if some creditor groups do not agree to the terms. It is often used for more complex or high-value restructurings where a traditional CVA is not possible.

Key points:

• Allows a company to propose a binding restructuring of its debts and obligations to creditors and shareholders
• Can be approved by the court even if certain creditor classes vote against the plan (via “cross-class cram down”)
• Aims to enable viable businesses to continue trading while addressing unsustainable debt burdens
• Provides greater flexibility than CVAs or IVAs, particularly for larger or more complex capital structures
• Can include compromises on secured, unsecured, and even shareholder interests, depending on the structure of the plan

BRI can advise on whether a Court Approved Restructuring Plan is appropriate for your situation and support you through the drafting, negotiation, and court approval process to ensure compliance with legal and procedural requirements.

Administration

Administration is a formal insolvency procedure designed to protect a company from creditor action while a licensed insolvency practitioner takes control to rescue the business, achieve a better outcome for creditors than liquidation, or realise assets in an orderly way.

Key points:

• Places the company under the control of an appointed administrator who takes over management from directors
• Provides a statutory moratorium, preventing creditor enforcement action while the company is in administration
• Primary objective is to rescue the company as a going concern where possible
• If rescue is not viable, the administrator will seek to achieve a better return for creditors than an immediate liquidation, often through a sale of the business or assets
• Can lead to restructuring, sale of the business as a going concern, or orderly winding down of operations
• Offers breathing space to assess options and stabilise the company’s financial position

BRI can advise on whether Administration is the right course of action and guide you through the process, including appointment of administrators and development of a strategy to achieve the best possible outcome for stakeholders.

Refinancing And Other Non-Insolvency Options

Refinancing is a non-formal solution that does not involve insolvency procedures. It can be suitable when the company is still solvent but needs a more manageable way to service debts.

Options may include:

• Consolidating multiple business loans into a single loan
• Negotiating better interest rates or terms with lenders
• Remortgaging or refinancing company assets
• Agreeing extended repayment periods

If your company is still trading and solvent, BRI can help discuss refinancing and other non-insolvency solutions to improve cash flow and reduce monthly repayments.

How To Decide Which Business Debt Consolidation Option Is Right for You

Choosing the best consolidation option depends on several factors:

• The legal entity in which you trade (company, partnership or sole trader)
• The size and type of debts
• The company’s cash flow and ability to repay
• Whether the director has personal liability for any debts
• Relationships with creditors and willingness to negotiate
• The long-term plans for the business

A step-by-step approach to choose the right option for your business may include:

• Reviewing all outstanding debts and liabilities
• Assessing whether the company is solvent or insolvent
• Considering formal options (CVA, PVA, IVA, Court Approved Restructuring Plan or Administration) versus refinancing
• Seeking professional advice to develop a tailored plan

BRI can provide a full review of your situation and help you decide which option is most appropriate, ensuring the plan is sustainable and legally compliant.

Next Steps for Directors Considering Business Debt Consolidation

If your business is struggling with multiple debts, early action is key. Consolidation can simplify finances, improve cash flow, and reduce stress for directors.

Speaking to a professional adviser ensures that you:

• Understand all available options
• Take steps that protect both the company and personal finances
• Avoid mistakes that could increase liability or creditor pressure

BRI provides confidential advice for directors considering business debt consolidation. Contact us today to discuss your situation and plan the most effective solution for your business.