Company Insolvency
There's a lot to consider and Directors must beware the pitfalls
Company Insolvency and its associated risks
Insolvency imposes strict legal duties on Directors and brings what can be significant personal liability risks you must be aware of.
Get your questions answered now and be prepared
Here’s the most effective way to get your specific questions answered and find out exactly where you stand.
Speak with one of our insolvency specialists now, our consultations (video call or phone call) are free and totally confidential.
Company Insolvency – The Smarter Way
Do not walk blindly into the Insolvency Process - Many Directors have done so to their regret
Properly managed, this can be a straightforward process, if not it can cost you in more ways than one.
Book your free consultation and find out what your options are.
Are you experiencing the signs of technical insolvency?
If so, you must take care, as insolvency changes the rules of operation and you can become personally liable for some or all of your company’s debts.
- Do you regularly miss paying HMRC on time or is your HMRC liability growing?
- Are your funding facilites (e.g. bank overdraft) always at their limits?
- Are you finding it difficult to secure additional funding?
- Are you having problems repaying your Bounce Back Loan?
- Are your suppliers always chasing for payment or are you receiving Court Demands?
- Are you having to plan ahead and chase debtors to meet the wages bill?
- Have you not been taking your full salary recently, or even any salary?
- Are cash flow problems taking up more and more of your time?
One of the tests for insolvency is the cash flow test which measures if a company can meet its liabilities as and when they fall due.
If you answer ‘YES’ to one or more of the previous questions, there’s a danger you must beware of.
Trading whilst insolvent can make you personally liable for some or all of your company’s debts.
You should take action now to find out where you stand and what your options are.
Our consultations are free and totally confidential.
Directors often take action late and make it difficult for themselves
It’s understandable and there are many reasons why, but it usually means the company has become insolvent and this can bring problems of personal liability for Directors
Insolvency removes the protection of limited liability for Directors and also imposes urgent timescales.
We have two efficient and effective options for Company Directors to take proactive action, depending on your individual circumstances:
- A free and confidential 45 minute consultation with one of our insolvency specialists to assess your situation and help you find out exactly where you stand.
- Our Fast Track Liquidation Service for those who know their company is already insolvent and want to proceed quickly.
Creditors Voluntary Liquidation is the process undertaken by Directors to formally close a Limited Company with Debts
IT IS DESIGNED TO MAXIMISE THE RETURN FOR CREDITORS AND WILL PENALISE DIRECTORS WHO HAVE NOT FOLLOWED DUE PROCESS WHETHER THEY ARE AWARE OF IT OR NOT.
Speak with one of our liquidation specialists and find out exactly where you stand.
What to do next? Check out our Smarter Liquidation Service
We are Accountants and Business Advisors with a new approach to Company Liquidation
IT PROVIDES ADDITIONAL PROTECTION FOR DIRECTORS, HELPS TO MINIMISE YOUR PERSONAL LIABILITY AND GUIDES YOU THROUGH THE ENTIRE LIQUIDATION PROCESS
Protecting your personal interests first and foremost
Whilst the insolvency practitioners main responsibility is to look after the interests of the company’s creditors, we are here to look after your personal interests.
Here’s some of what we do:
- We’ll help you avoid the risks of trading whilst insolvent
- We’ll show you how to minimise your personal liability with an overdrawn Directors Loan Account
- We’ll introduce you to a known and trusted insolvency practitioner
- We’ll show you how to pay for the liquidation costs without using your personal funds
- We’re with you all the way through the liquidation process
- We can help with fast track options to get you started up again including asset buy back and pre-pack administration services, start up funding and a range of strategic business services.
Voluntary liquidation is the legal process Directors need to follow when closing a company with debts
The process is designed to protect the interests of the company’s creditors
An insolvency practitioner is appointed to undertake the administration of the process
The insolvency practitioners main objective is to maximise the financial return for creditors
All control of the company and its affairs pass immediately to the insolvency practitioner
Crucial issues Directors must address before speaking to an insolvency practitioner
Forewarned is forearmed. Be prepared in advance of the liquidation process and find out how to protect your personal interests and minimise any financial liability you may face.
Is your company technically insolvent?
If the company continues to trade whilst insolvent, you can be held personally liable for some or all of your company's debts.
Overdrawn Directors Loan Account
You become personally liable for this. Find out how to minimise your personal liability before you speak to an insolvency practitioner.
Problems with your Bounce Back Loan
Whether it's a problem with repaying your loan or with your initial application, it's important to find out where you stand in advance.
Your conduct with HMRC Debt
HMRC have increasing powers regarding company debt and it's possible to be held personally liable for some of this debt.
The extent of preference payments
Preference payments cover a variety of situations which can result in personal liability for Directors. Find out where you stand with this.
The cost of the liquidation process
The liquidation process has to be paid for. Find out how to pay for it so that it doesn't come from your personal funds.
Our consultations (video call or phone call) are free and totally confidential, book your call now to find out exactly where you stand.
We are Accountants and Business Advisors with a new approach to Company Liquidation
IT PROVIDES ADDITIONAL PROTECTION FOR DIRECTORS, HELPS TO MINIMISE YOUR PERSONAL LIABILITY AND GUIDES YOU THROUGH THE ENTIRE LIQUIDATION PROCESS
An end to end, Company Liquidation Service you won’t see anywhere else
And it‘s focussed entirely on protecting your personal interests
Here’s what our service covers:
It starts with a free consultation to discuss your company’s financial situation and answer all your questions.
We assess if your company is insolvent. Trading after the point of insolvency is when you can become personally liable for your company’s debts.
Discussing what your options are and exactly where you stand so you can make the decision that suits you best.
Establishing time frames and the importance of taking action quickly so as not to make the situation any worse.
Assistance with urgent situations you may be facing, such as demands for payment, decrees or winding up petitions.
Identifying the risks that may have a negative impact on you personally and establishing a plan to minimise these.
Guidance on how to avoid the risks of wrongful trading and the significant personal liability that goes with it.
The crucial importance of a personal survival strategy to get you through the liquidation process as safely as possible.
Why you need to be extra careful with HMRC debt to avoid claims of wrongful trading and your personal liability for the debt.
How to minimise your personal liability on the full balance of an overdrawn Directors Loan Account.
Problems you have with repaying Bounce Back Loans or the details on your original application and how to address them.
What to check regarding Personal Guarantees you may have given for company borrowings and what can be done.
Identifying any preference payments you may have made and how to minimise your personal liability for these.
The mistakes to avoid when discussing the situation with staff and how to inform them of events and what they’re entitled to.
How to deal with creditors and avoid the conflict that can easily arise during stressful times.
Understanding the bigger picture with your bank, particularly if there are borrowings or overdrafts involved.
The qualification criteria for Directors Redundancy Pay and how to best present your claim.
Clarity and advance notification of what’s in front of you before, during and after the liquidation process.
We’ll introduce you to a known and trusted insolvency practitioner from the panel of practitioners we deal with on a regular basis.
How to buy back key assets such as plant, stock, IT systems and customer databases, or even buy back the entire company (Pre-pack Administration).
How to manage investigations into your conduct as a Director to provide for a more positive outcome.
What to do if you are referred to the Insolvency Service for a Director Disqualification Investigation.
How to handle financial recovery action from the Insolvency Service (by way of a Director Disqualification Compensation Order claim).
How to get through the liquidation process as quickly as possible and with the minimum of difficulty.
If you’re looking to get back in business we have a range of business restart services to help you hit the ground running.
For now we are offering our Liquidation Service for FREE. Don’t miss out. Book your consultation now, you’ll be glad you did.
Why is this service free you’ll be wondering, well there’s a simple answer:
The bottom line is, the more Directors we speak to the more business we do. A proportion take up our Recovery and Restructure Services and a significant proportion of the Directors who take up our Liquidation Service, take up our Business Restart Services.
This is another reason why we are so focused on seeing Directors though the liquidation process as safely and quickly as possible, we want to see you back in business, and open for business.
Our objective is to develop long term relationships, and it’s very much to everyone’s benefit.
Here's what you really need to know about the Liquidation Process
The purpose of the Liquidation Process
The purpose of the Liquidation Process is to collect as much money as possible (some of which may come from the company’s Directors), to pay the company’s creditors and to formally close the company.
Investigation of your conduct as a Director
The other key aspect is to undertake an investigation into the conduct of the company’s Directors in terms of financial transactions (going back up to three years) and how the business has been managed.
Appointment of an insolvency practitioner
Company liquidation is formally undertaken by the appointment of an insolvency practitioner, and once appointed, they take full charge and the Directors lose all control of the company.
Here’s what you really need to consider before the Liquidation Process
You need a clear strategy before the Liquidation Process
Be clear what has to be done on aspects such as Compulsory Liquidation, the dangers of Wrongful Trading and how to minimise your personal liability with an overdrawn Directors Loan Account.
Appointing the right insolvency practitioner is important
This is a really important part of the process which we can help with. We will introduce you to a known and trusted insolvency practitioner from the panel of practitioners we deal with on a regular basis.
Specialist expertise, always on hand when you need it most
Experienced guidance from our specialist team is highly valuable. This includes assistance with aspects such as your new legal responsibilities and how to manage investigations into your conduct as a Director.
IMPORTANT
Our Smarter Liquidation Service is available to all small to medium sized limited companies.
We know smaller companies and sole Directors can find the liquidation process particularly challenging, we’re here to help.
If you’re worried about liquidation fees, then speak to us, as there are a range of options to consider.
THE RISKS AND PITFALLS OF COMPANY LIQUIDATION
Forced liquidation from a disgruntled creditor or HMRC is always best avoided, as you will come under increased scrutiny and investigation.
If you continue to trade whilst insolvent or whilst there is a reasonable expectation the company will become insolvent, then you can be held personally liable for some or all of the company’s debts.
At the point of liquidation you become personally liable for the amount of an overdrawn Directors Loan Account. Find out how to minimise your personal liability in advance of the insolvency process.
These can be payments that give preference to a particular creditor, a lender whose loan is personally guaranteed, or a connected party, all of which you can be held personally liable for.
The liquidator can and will look at events prior to liquidation for items such as assets sold at less than fair value or illegal dividends. They will also look at payments for personal items, justification for which should be prepared in advance or you will be required to repay these personally.
When the liquidator is appointed, Directors immediately lose their authority and control of the company and the liquidator takes full control.
The liquidator’s main responsibility now is acting in the best interests of the company’s creditors and not yours.
This can sometimes be an area of contention leading to disagreement and ill feeling, which invariably works to the detriment of the Director.
An example of how this can arise is the obligation on Directors to keep, maintain or deliver up books and records to the liquidator. Failure to do so is a civil and criminal law offence, punishable in a criminal sense by a fine and/or imprisonment.
A key aspect of the liquidators responsibilities is to undertake an investigation into the Director’s conduct in relation to how they have managed the company.
Find out how best to approach this and how to manage the situation for a more positive outcome.
This is a compensation order (by way of a Director Disqualification Compensation Order claim), made against a company Director , where the conduct for which a Director has been disqualified had caused loss to one or more creditors of the insolvent company.
Smarter Liquidation - a safer way for Directors to navigate the Liquidation Process
Protecting your personal interests first and foremost
Our primary purpose is to:
- Protect your personal interests, from the very outset
- See you through the liquidation process as quickly and painlessly as possible
- Facilitate you starting up in business again (if that’s what you’re looking to do)
This is where we differ from the role of the insolvency practitioner.
Their main role in the liquidation process is to protect the interests of the company’s creditors and undertake an investigation of Directors’ conduct.
Our role is to look after your best interests before, during and after the liquidation process.
Here’s the overview of our service
1
First of all we help you assess whether your company is insolvent or not
It's important to be clear if your company is insolvent or may become so, as your legal responsibilities as a Director change significantly.
2
We identify the risks and pitfalls that may impact you personally
This includes aspects such as compulsory liquidation, issues with HMRC debt, and trading whilst insolvent, for which you can be held personally liable.
3
We prepare you in advance, so you are ready for what's in front of you
This would include an assessment of your Directors Loan Account and associated negotiations before the insolvency practitioner is appointed to minimise your personal liability.
4
When you're ready, we introduce you to a trusted insolvency practitioner
We have a panel of insolvency practitioners we deal with on a regular basis and who you may find are more understanding of your individual circumstances.
5
Guidance and assistance through the entire liquidation process
Our objective is to see you through the liquidation process safely with as little difficulty as possible, enabling you to start up again quickly, if that's your choice.
6
Life after liquidation and the best options for starting up again
We can facilitate a restart with a pre-pack administration, asset buy back options, commercial funding, and our extensive range of strategic business start-up services.
If you have persistent cash flow problems and you’re struggling to sort them, this is a valuable conversation you need to have. Find out exactly where you stand and what your options are.
Choose what best describes your circumstances
“We’re not insolvent but we need help”
Speak to one of our company recovery and restructuring experts now to assess your business circumstances and options.
“We may be insolvent and need advice”
Take action now to find out where you stand, ensure you follow due process and understand how to best protect your personal interests.
“We’re insolvent and want to close quickly”
We know that some Directors are ready to liquidate and want to move quickly, so we’ve created a Fast Track Online Insolvency Process.
The earlier you get advice the better your options
Get the information you need, our initial consultations (video call or phone call) are absolutely free and totally confidential
Company Insolvency - forewarned is forearmed - be prepared in advance
The three liquidation options
Liquidation is the formal process for closing down a limited company with debts and it’s important to understand that it is designed to protect the interests of creditors, not Directors.
There are three basic liquidation options depending on whether your company is insolvent or not.
- Compulsory Liquidation (normally initiated by a disgruntled creditor, HMRC or your bank to force the closure of an insolvent business). This is normally best avoided as it means you will come under greater scrutiny and more robust investigation.
- Creditors Voluntary Liquidation, which despite its name is a process initiated by company Directors to formally close an insolvent business.
- Members Voluntary Liquidation, applies only to solvent businesses and can be a tax efficient way for company owners to extract funds from a business and have it formally closed.
Can it be dissolved at Companies House?
It’s a question we are often asked by Directors looking to close their company: Can I dissolve my company or have it struck off at companies house when it has outstanding debts.
Companies House has very strict rules on the criteria for dissolving or striking off a limited company. The company must be solvent, debt free, and there’s a well defined process to be followed:
- You must announce your plans to all creditors, other interested parties (such as staff, shareholders and pension fund trustees), as well as HMRC
- You must make sure your employees are treated according to the rules and paid their full redundancy pay and final salaries
- You must deal appropriately with your business assets and accounts
Creditors will normally object to a dissolution or strike off notification and HMRC do so routinely.
You must follow due process
Closing a limited company with debts to HMRC or indeed debts to any other third party requires a formal liquidation process unless all the outstanding debts can be paid off in advance.
Directors should be aware that The Insolvency Service has been granted new powers to tackle unfit directors who dissolve companies to avoid paying company liabilities.
In addition to this, HMRC will often pursue a dissolved company if they feel they have tried to evade responsibility, at any point up to 20 years after the event.
Penalties for not following due process include:
- Disqualification as a director for a period up to 15 years
- Personal liability for company debts
- Potentially unlimited financial penalties
- A custodial sentence of up to seven years
Why you need to take action and what you must avoid to protect your personal interests
Compulsory Liquidation from HMRC and the risks of Wrongful Trading, which can make you personally liable for some or all of your company’s debts
speak to us first and before you speak to an insolvency practitioner
Our approach is wholly different to insolvency practitioners, our primary objective is to protect your personal interests.
Directors should be aware that insolvency practitioners have very specific responsibilities during the liquidation process
- One of their main responsibilities is the protection of creditors and their rights. They work on behalf of creditors and not the company’s Directors.
- They will undertake a formal investigation of your conduct as a Director to determine if your actions contributed to the company’s failure or adversely affected creditors interests.
We’re here to help you navigate through the process as safely and quickly as possible
Discuss your circumstances with experienced accountants and specialist corporate advisors in confidence and for free.
We prepare you in advance for the liquidation process, what to expect, and how to minimise any potential liability you may face.
We can refer you to a known insolvency practitioner who you may find is more understanding of your particular circumstances.
Here’s the expertise that’s available to you when you contact us
Experienced Accountants
Our accountants have extensive industry and commerce experience, business analysis expertise and fully understand the personal implications of the liquidation process.
Company Recovery Experts
Experienced company recovery experts who will appraise the viability of your business and if assessed to be sound, will assist in the planning of the financial and operational restructuring required.
Specialist HMRC Debt Negotiators
Experienced advisors regarding all aspects of HMRC debt, who understand how the negotiation process works, and who can engage and negotiate with HMRC on your behalf.
Licensed Insolvency Practitioners
Avoid the risks of compulsory insolvency (from a disgruntled creditor, your bank or HMRC) and appoint an Insolvency Practitioner who may better understand your particular circumstances.
We also provide specialist legal advice and representation relating to any part of the liquidation process including any possible Insolvency Service investigations into Directors’ conduct.
Our consultations (video call or phone call) are free and totally confidential
You may be due Directors Redundancy Pay
DIRECTORS MUST MEET CERTAIN CRITERIA TO QUALIFY FOR REDUNDANCY PAYMENTS. WE HELP YOU CLAIM THIS FOR FREE, ALL PART OF OUR SERVICE. GET THE FACTS HERE
The 12 crucial facts every Director must know about company insolvency
Get the facts, be aware of the risks and take the right advice to help you make the right decisions.
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