Limited Company | Insolvent

My limited Company has debt problems. What can I do?

A quick check to see if your company is insolvent try one of the following

1) Can you meet your demands when they fall due? For example, when the VAT return is payable can you pay it or, can you pay your trading accounts when they fall due. If the answer is NO then your Company is insolvent.

2) Do your assets exceed your liabilities? Look at everything the company own’s and all the money the company is owed then subtract the assets from the liabilities. If the assets are less than the liabilities then the company is insolvent

3) My assets are greater than my liabilities but I cannot pay the accounts when they fall due. This is a difficult position to be in unless you can turn some assets into cash. Commonly known as asset rich cash poor. The company is insolvent using method one and you should seek advice before taking any asset restructuring.

Well you have several options, depending on the problems themselves.

(i) Creditors Voluntary Liquidation (CVL)

As a company Director, you have duties and responsibilities to run the company in an approved manner. If you do not comply with these duties and responsibilities, you could be held personally liable for the debts of the company.

If your business is insolvent and does not have enough money to pay all of its debts, sometimes the only appropriate course of action is for you to go into liquidation. A Creditors Voluntary Liquidation is the most common way for directors and shareholders to deal voluntarily with their company’s insolvency.

So how do I take control of the situation?

So if you are assessing the options, if you are looking to go insolvent for example, one of the easiest ways is for you to contact us and have a chat regarding your company’s’ current financial situation and evaluate whether going insolvent would be the best option for you. This is informal and does not commit you to anything. A chat with one of our experienced staff can help put things in perspective and alleviate some of your worries and concerns. Remember that you will speak to a firm of Licensed Insolvency Practitioners not unqualified advisors.

If you do not wish to speak to someone initially, please read on.

Firstly, don’t be confused by terminology, a Creditors Voluntary Liquidation is a Director led insolvency process handled by ourselves as Insolvency Practitioners and not a Court Liquidation handled by the Government Official Receivers office.

A Creditors Voluntary Liquidation is appropriate for you when:

. Your Company is insolvent

. Your Company does not appear to be viable even if restructured

. You and your co-directors don’t feel they have the determination or funding needed to rescue the company

What is the process?

You and the Board agree to convene meetings of shareholders and creditors in order to resolve to place the company into liquidation. This will be done under our guidance. It is normal for the company to then cease trading, with the company’s employees being dismissed. Once appointed by members and then creditors, the Liquidator effectively becomes the company, and you are no longer a Director.

The Liquidator has three main duties:

i. To realise the company’s assets (i.e. to sell them or get the value out of them)

ii. To agree the claims of the company’s creditors

iii. To investigate the company’s affairs and the directors conduct