Insolvency advice: A guide for limited company directors

When should I seek insolvency advice and where can I get it from?

If you’re worried that your company can no longer pay its debts and is technically insolvent, you should seek professional insolvency advice immediately.

Most companies experience periods when income falls and cash flow is short. However, if you’re struggling to pay your bills, are facing increasing pressure from creditors and there’s nothing on the horizon to resolve things, your business could be insolvent. There are two main tests for company insolvency: the balance sheet test and the cash flow test.

Why do I need insolvency advice? 

Taking professional insolvency advice at the earliest signs of insolvency is of paramount importance. Not only does this swift action increase the options open to you and your company, it also ensures you are adhering to your responsibilities as the director of an insolvent company by placing the interests of your creditors above those of yourself and your fellow shareholders.

Taking professional insolvency advice at an early stage can help you avoid accusations of misconduct and wrongful trading that can lead to personal liability issues. The most important thing to can do to mitigate these risks is to seek professional insolvency advice as soon as you think your company might be insolvent.  

An insolvency practitioner will discuss your situation with you and help you put a strategy in place to bring about a recovery. The best option may be a formal insolvency process to repay what you owe over time or to liquidate the company if it’s no longer viable. They will also advise you on the steps you can take to protect yourself from adverse consequences on a personal level.

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Pauline Whitehead

 

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Tom Procter Business Debt Expert

Where can I get company insolvency advice?

If you’re worried that your company is insolvent, there are several different places you can go for honest and reputable advice.