What is an insolvent company?
If the company cannot pay its bills when they are due and/or its liabilities are more than its assets, the company is insolvent. Insolvency can occur when there is a poor cash flow, or due to other factors such as loss of turnover from the pandemic or an increase in expenses, e.g. a rise in energy costs.
What should you do if your company is insolvent?
The director should consider getting professional advice from a Licenced Insolvency Practitioner. You can contact Molly Monks at Parker Walsh at info@parkerwalsh.co.uk or 0161 546 8143.
What could happen when a company is insolvent?
The company may default under its banking facilities. There is a higher risk of a formal insolvency procedure being taken against the company by a creditor, such as a winding-up petition being issued against the company by a creditor who has served a statutory demand of payment. Once a winding up petition has been presented, any disposal of assets will not be valid.
There could also be a risk of personal claims against the director and a risk of being disqualified as a director.
Can I keep my company trading if it is insolvent?
Yes, but the Director should take advice from a Licenced Insolvency Practitioner, such as Molly Monks at Parker Walsh, as this can be a very precarious time. There are many options for the company, such as entering into an informal agreement with creditors, or entering into a company voluntary agreement (a legally binding agreement with creditors) or administration / liquidation (a formal of insolvency procedure)
Get in touch!
At Parker Walsh, we appreciate that there will be a huge amount of pressure on the director and his/her family. It can be a very stressful and uncertain time. We encourage any director whose company may be insolvent to contact Parker Walsh on info@parkerwalsh.co.uk or 0161 546 8143.
Take our free and confidential quiz today to find out if your company could be considered "insolvent". Simply complete the form and we'll send you your results.
