Is your company insolvent?
Assessing company insolvency and what to do about it
The insolvency test
The first step is to apply the insolvency tests to assess if your company is insolvent.
Your new legal responsibility
If your company is insolvent you need to be aware of your new legal responsibilities as a Director.
Protecting your personal interests
You must have a clear strategy in place on how to protect your personal interests.
The quickest and easiest way to assess if your company is insolvent is to book your free consultation (video call or phone call) with one of our insolvency specialists.
We are Accountants and Business Advisors with a new approach to Company Insolvency
IT PROVIDES ADDITIONAL PROTECTION FOR DIRECTORS, HELPS TO MINIMISE YOUR PERSONAL LIABILITY AND GUIDES YOU THROUGH THE ENTIRE INSOLVENCY PROCESS
When a Director asks us if their company is insolvent, unfortunately, it usually is
And that’s because Directors know their own business, and whilst insolvency is difficult to face up to, they know what they’re going through.
The tell tale signs of insolvency:
- Not able to pay PAYE or VAT on time, or a growing HMRC debt
- Problems repaying your Bounce Back Loan or CBILS
- Suppliers always chasing you for payment
- Overdraft always at its limit
- Difficulties in obtaining new finance
- Spending ever more time managing cash flow
If these are persistent problems then your company is probably insolvent and you need to take action.
Insolvency changes the normal rules of operation
YOUR RESPONSIBILITIES AS A DIRECTOR CHANGE, LIMITED LIABILITY NO LONGER APPLIES AND YOU CAN BE HELD PERSONALLY LAIBLE FOR YOUR COMPANY’S DEBTS
"The point at which a company becomes insolvent is critically important, as this can be the point from which a Company Director can be held personally liable for some or all of the company's debts."
There are two basic tests for company insolvency, the balance sheet test and the cash flow test.
The Balance Sheet Test
The balance sheet test considers the value of a company’s liabilities in relation to it assets. If its liabilities are greater than its assets then the company can be said to be balance sheet insolvent.
The Cash Flow Test
The cash flow test assesses if the company can meet its outgoings in full as and when they fall due. Once a company struggles to pay its debts, overheads, and other trading outgoings, it is classed as cash flow insolvent.
If either or both of these scenarios exist then the company is deemed to be insolvent, and the company Directors become legally obliged to take remedial action.
Be prepared for the Insolvency Process in advance. Too many Directors aren't, and subsequently regret it
Click the link below for more information on insolvency, including our Smarter Insolvency Service.
If your company is insolvent or you think it may be, there's a new set of rules you need to consider
Here’s the hit list (not exhaustive)
Apply your time to resolving the situation immediately
Get yourself prepared for what's ahead, before appointing an insolvency practitioner
Resist the urge to inject any personal funds into the business
Be very aware of possible court action from creditors (especially HMRC)
Put a clear strategy in place to minimise your personal liability
Get the facts on the risks you face as a Director
Clearly identify the factors that will adversely impact you
Be aware in advance of your obligations during insolvency
If you're looking to get back in business, let us show you the best options available
We specialise in the options available to Directors facing company insolvency
Here’s what we do:
Recovery and Restructure
- If your company is viable and you want to take it forward, we have the expertise to help you achieve your goals.
- You’ll find our discussions supportive but frank and to the point, as we assess the viability of your business and the options available to you.
- Our strategic review will assess the practicalities of changing the current financial, operational, and if required, legal structure of your business to improve profitability, and cash flow.
- We provide these services to suit your preferences, as a one off project, or an ongoing consultancy service or through a Non-exec Director appointment.
Pre Pack Administration
- We put Directors in the driving seat by enabling a Pre Pack buy back of your insolvent company (or individual assets) without the existing debt burden.
- We’ll assess your strategic plan, financial projections and funding requirements and can assist with these if you don’t have them in place.
- Agreeing the right purchase price is obviously one of the most important parts of the process. We’ll help you avoid the mistakes many Directors make and show you how to negotiate and buy at the best possible price.
- We’ll introduce you to an insolvency practitioner with the right experience and positive approach to Pre Packs.
Company Liquidation
- We take the time to prepare you for what’s ahead to minimise any personal liability you may face.
- We’re here to look after your personal interests first and foremost, and will see you through the liquidation process from start to finish.
- We undertake the initial consultations and essential information gathering, conduct the financial assessment of your business and help you complete the Statutory Statement of Affairs.
- We introduce you to a known and trusted insolvency practitioner to administer the completion of the liquidation process
Business Restart Services
- For Business Owners and Directors looking to start up again, we offer a range of business restart services all priced to suit your new circumstances.
- Our business restart services are designed to fast track your new operation and help boost sales. These include:
- Multi-channel Digital Marketing Services guaranteed to generate traffic
- Websites and landing pages proven to convert traffic
- Automated customer communication systems
- Web hosting and online security options
- A full suite of back office services to include payroll, accountancy services and sales ledger management
Our insolvency services provide safeguards, experienced guidance and opportunity for Directors, all tailored to your specific requirements.