We trust that the following information proves useful to many of you. Obviously, each client’s circumstances is likely to be different in some way so more specific advice would be tailored to their individual situation.
Quite simply, if your company’s liabilities are greater than its assets or it is not in a financial position to pay its debts on time such as creditors and financial commitments then it is insolvent.
It can make it difficult to run the business effectively.
For instance, as a result of being insolvent, a company leaves itself open to someone that it owes money to such as HM Revenue and Customs (HMRC) or one of its trade creditors issuing a winding-up petition to request that the court liquidates the company. If the court approves the petition, the company will go into compulsory liquidation and it will cease to trade resulting in the directors/shareholders no longer receiving an income from the business.
If you have provided a personal guarantee in respect of any of the company’s debts you could be held liable. Potentially, you could have to sell the family home to meet your liability.
Once you know that the company is insolvent, as a director of the company, it is important that you act in the best interests of your creditors. Failure to do so could result in you being disqualified to act as a director of a limited company for between 2 to 15 years.
Because there are so many options, it is not possible to answer this question here in any great detail. Suffice it to say that the licensed practitioner we put you in touch with has many years experience in dealing with every set of circumstances imaginable. He or she will be able to guide and advice you to ensure that the most suitable course of action is taken to deal with your insolvent company.
In various sections on our website we talk about the likes of Company Liquidation, Pre-pack Administration, Company Voluntary Arrangement (CVA), Creditors’ Voluntary Liquidation (CVL) and Members’ Voluntary Liquidation (MVL).
The above are some of the terms/processes used in connection with insolvency and are covered under the Insolvency Act 1986.
Again, the insolvency practitioner that we put you in contact with can discuss all the ones that are relevant to your situation.
You will have all the options explained to you and be recommended the most suitable solution that is tailor-made for your insolvent company. You will be guided through the process whether that results in your company being saved or going into liquidation.
If you require impartial, free insolvency advice do get in touch with us as a priority.
0121 769 2833
