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What is a Statement of Affairs in corporate insolvency proceedings?


What’s the purpose of the SOA and who prepares it?

A Statement of Affairs (SOA) is an important document you must prepare in the early stages of formal insolvency procedures such as a Company Voluntary Arrangement (CVA), Administration or Liquidation

It provides a snapshot of the financial position of a struggling company to give its creditors (parties it owes money to) a clear idea of how much money might be available so they can make an informed decision at an upcoming creditor vote. It can also be a valuable source of information for shareholders, the Insolvency Practitioner and potential buyers.

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What do you include in a Statement of Affairs?

The Statement of Affairs provides a detailed account of the company’s finances at the time of insolvency. That includes the company’s assets and liabilities, a list of all its creditors and the balances of its bank accounts. It may also include details of ongoing legal action and disputes or any other events that could impact the insolvency proceedings. 

A Statement of Affairs will typically include the following details:

  • Assets - Details of all company assets, including the tangible (property, equipment, stock and vehicles) and intangible (intellectual and goodwill), along with their estimated value.
  • Liabilities - Everything the company owes, from outstanding loans and payables to unpaid tax bills and other financial obligations.
  • Book debts - The money owed to the company by its customers.
  • Bank accounts - The balances of the company’s bank accounts at the time of insolvency.
  • Realisation of assets - A professional opinion on how much you can raise from the sale of company assets, and details of any pending transactions related to them. 
  • Creditor summary - Details of all the company’s creditors, including their names, addresses and the amount they’re owed.
  • Securities - Details of any fixed or floating charges on company assets and who holds them. 
  • Income and expenditure - Figures for a set period leading up to the insolvency to indicate recent performance and cash flow. 
  • Contingent liabilities - Liabilities that may occur depending on future events but are as yet uncertain, such as the cost of legal claims.
  • Balance sheet - An up-to-date balance sheet and any management accounts. 

From this information, creditors and other interested parties can get an accurate picture of the company’s finances, including how much money would be available if it was liquidated. They can then decide whether to accept the company’s proposals and how best to proceed. 

Who prepares the Statement of Affairs?

When a company enters an insolvency procedure voluntarily, the company directors or an appointed Insolvency Practitioner can prepare the Statement of Affairs. However, in most cases, it’s the Insolvency Practitioner. They will gather the relevant information with the help of the company directors and produce the SOA in line with legal requirements that specify the content, format and deadlines for submission. 

The Insolvency Practitioner must take steps to verify all the information, as any inaccuracy or omission can have serious consequences for the insolvency process. The company directors must also sign a Statement of Truth to accompany the SOA. 

Once they have prepared the Statement of Affairs, the Insolvency Practitioner will send it to all the creditors and shareholders of the company and register it at Companies House for public viewing.

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How is the Statement of Affairs used in insolvency proceedings?

The exact purpose of the SOA depends on the type of formal insolvency procedure the company is entering into.


If the company is entering Liquidation, the SOA will be presented at the creditors’ meeting. It will give the creditors an idea of how much they can expect to receive from the sale of the company’s assets. It’s often the case that creditors who do not have a charge over business assets receive only a small percentage of the money they are owed. 


In the case of Company Administration, the Statement of Affairs is an important part of the administrator’s proposals. It must be produced within 14 days of a company entering administration and sent to the creditors so they can make an informed decision when voting on the proposals.  

Company Voluntary Arrangement (CVA)

The SOA in a Company Voluntary Arrangement helps to give creditors a clear understanding of the company’s financial position so they can vote on whether to accept the CVA proposals. For example, if the SOA shows that the company has few realisable assets, the creditors may vote in favour of the CVA because they will receive a better return than if the company was liquidated.   

What are the risks associated with the Statement of Affairs?

Although company directors can prepare the Statement of Affairs when entering a voluntary insolvency procedure, its complexity means it’s recommended that you use a licensed Insolvency Practitioner.

Failing to prepare a Statement of Affairs is not an option. The Insolvency Practitioner (IP) will investigate your conduct in the period leading up to the company’s insolvency, and not providing an SOA will negatively impact their view. You could also receive a fine.  

As a company director, you must also sign a Statement of Truth that accompanies the SOA. If the IP subsequently finds that you have not acted honestly, you could face penalties such as being disqualified as a director or becoming personally liable for company debts.

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If you’re worried that your business is insolvent and are unsure of your next steps, or would like assistance in preparing the Statement of Affairs, our team of licensed Insolvency Practitioners can help. Contact our experts for a free, same-day consultation or arrange a no-obligation meeting at one of our 100+ offices throughout the UK.

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