Insolvency

Yes. We offer a free no obligation meeting to discuss you or your client’s circumstances and how we can help you. Call 0208 444 3400 or fill out our contact us form to find out more.

Our website provides a basic outline of the process of placing a company into Liquidation. However, for more in-depth information, please call us for a free confidential initial advice on what the best option is for you. Our number is 0208 444 3400.

You are insolvent when you cannot pay debts as they fall due, or when your total assets are worth less than your total liabilities. The first is often referred to as ‘cashflow insolvency’ and the latter is often referred to as ‘balance sheet insolvency’. Even if a business is profitable, it does not necessary preclude the possibility of it being insolvent.

A company can be insolvent because of a shortage of cash even while profitable, for instance when customers fail to settle their debts to the company, or when the company over-invests in marketing or equipment at the wrong time.

These factors may mean that the company is unable to repay debts as they fall due, even though the business is otherwise healthy. It is imperative to seek proper advice from an insolvency professional at the first sign of warning that the business may be insolvent.

Continuing to trade in the hope that things will eventually level out, is an all too common but highly detrimental mistake that directors make, and could result in being accused of wrongful trading, running the risk of financial ruin as they become personally liable for the debts of their business.

Once a company is insolvent, or insolvency becomes probable, the duty you owe as a director changes in emphasis: you must have regard to the interests of creditors as a whole, and you must not make their position worse. If the point is reached where there is no reasonable prospect of avoiding insolvent liquidation or administration, the test in section 214 of the Insolvency Act 1986 becomes the one that matters, and the defence to it is that you took every step to minimise the potential loss to creditors.

There is no separate legal duty to appoint an insolvency practitioner, and not consulting one is not an offence. In practice, though, taking advice early is one of the clearest ways to show you took the position seriously, and it is regularly treated as relevant when conduct is examined afterwards. It also widens what is still open to you, because the options narrow as the cash does. If it appears that cash-flow problems will be manageable in the long term and it is just for the time being that you are unable to repay creditors, you may be able to arrange additional financing like taking out a loan, chasing debtors, or selling assets which are non-essential to the business. It is also possible in some cases to come to a compromise agreement with creditors by revising terms of payment.

Creditors will normally be more inclined to agree this when they are aware that the alternative may be an insolvency procedure in which they receive less or nothing at all. You should investigate all alternatives which are available and take appropriate steps before creditors take legal action against you.

A winding-up petition is an application made by a creditor to the high-court for the compulsory liquidation of a company. It is the most serious action that can be taken against a company by creditors.

The petition costs a non-negligible sum of money to file and hence implies a serious motive on the part of the creditor to have the company liquidated in order for them to recover their debt. It can be issued by any creditor whom is owed a sum superior to £750.

As soon as a winding-up petition is received, it is imperative that the directors seek immediate advice from a licensed Insolvency Practitioner. The easiest option is to give us a call on 0208 444 3400 or request a call back via our contact us form. Our initial consultations are free and could prevent you from having legal action taken against you.

A statutory demand is a formal written demand for payment. The debt threshold depends on who the debtor is. Against a company, a creditor can use a statutory demand where the debt exceeds £750, and it is usually a step towards a winding-up petition. Against an individual, the debt must be at least £5,000, and the demand is usually a step towards a bankruptcy petition. Either way the demand gives the debtor 21 days to respond.

The debtor can pay the creditor in full, or pay enough to bring the debt below the relevant threshold, at which point that route is closed to the creditor. An individual served with a statutory demand can also apply to court to have it set aside. A company cannot: a company that disputes the debt must normally seek an injunction to restrain presentation of a petition. If the company or individual wishes to repay the creditor but cannot afford to do so and to protect themselves from further legal action, an advisable course of action may be to arrive at some kind of arrangement through a CVA in the case of a company or an IVA in the case of an individual.

For more information give us a call on 0208 444 3400 or request a call-back via our contact us form and we will give you straight-forward advice and offer a free consultation.

There may not be a lot of funds available but this is further reason to seek proper advice. The guidance of an insolvency practitioner may prevent creditors taking legal action against you and you falling into further financial difficulty hence the costs of paying for professional advice are comparatively small.

Remember that we offer an initial consultation free of charge.

The answer is to give us a call on 0208 444 3400 or request a call back via our contact us form. That way we can make a quick assessment of your personal or company circumstances.

Otherwise our services section explains the different options that are available and the processes that you as a director, sole trader or individual will typically undergo. You will also find other relevant information in our resources section.

Since the implementation of the Insolvency Act 1986, anyone undertaking the duties of liquidator, administrative receiver, administrator, supervisor or trustee must be a qualified insolvency practitioner.

Members’ Voluntary Liquidation: This happens when the company is solvent. The shareholders place put the company into liquidation, and the assets within the company are distributed to shareholders.

Creditors’ Voluntary Liquidation: This happens when a company is insolvent. It entails a process whereby company shareholders decide to put the company into liquidation, but assets are insufficient to cover debts of the company.

Compulsory Liquidation : This is what happens when the court issues a ‘winding-up order’.