There are several situations where you might need an insolvency practitioner, generally, they will be when your company is or is in danger of becoming insolvent.
How do you know if your Company is Insolvent?
An insolvent company can be defined in two ways: either it’s one that has more liabilities than assets on its balance sheet, or it is unable to meet its liabilities as and when they become due. The second definition is more widely used but if your company falls into either of these, it is likely to be in financial difficulty.
If you are struggling to ensure that the company can meet its financial obligations and are in a position where it has already amassed a number of unpaid creditors or is about to be in that position, it is likely that the company is insolvent.
Your company is likely to be insolvent if:
- You’re putting more money into it than you are taking out or paying out in benefits;
- You are having trouble securing new credit lines for the company;
- Creditors are refusing to extend existing credit lines for the company due to late payment or non-payment of existing liabilities;
- The company is borrowing more to pay off existing liabilities;
- You are having trouble paying the company’s creditors (including, but not limited to HMRC); or
- The company has been threatened with legal action or seizure of its assets.
All of these are situations where a licensed insolvency practitioner may be able to help you.
What happens to Insolvent Companies?
The implications of insolvency can be wide and varied. At the most severe end of the scale, it can lead to creditors forcing your company into compulsory liquidation that will end in the dissolution of your company. Certain creditors (such as HMRC) can seize the company’s assets for sale at an auction as a way to recoup their unpaid debts.
On a less severe, but potentially no less stressful situation, you might find yourself fielding endless calls and threatening letters from the company’s creditors demanding to be paid.
How can we help?
While insolvency practitioners (such as AABRS) mainly deal with insolvent companies, insolvency doesn’t necessarily have to spell the end of your company.
We can assess the financial situation of your company and help you to decide on an appropriate course of action for the company to pursue. These options might agree a creditors’ voluntary arrangement with the company’s creditors – which can be powerful tools when helping restore an insolvent company to solvency again.
If it does look like the company will need to be liquidated, we can help you to ensure this is done in the most cost-efficient manner possible and without the court-led process that applies if a creditor forces the company into liquidation.
If you think that your company is insolvent, the best thing you can do is seek advice as soon as possible to stop the situation from worsening. We offer a no-obligation initial consultation – simply call Sue Collins on 0208 444 2000 or contact us using the contact form for help.