When you’re experiencing financial difficulties in your small business, it can be difficult, as a company director, to know where to turn. At Company Debt, we offer, experienced, affordable insolvency advice for stressed small and medium sized business directors across the UK.
Often the biggest fear about company insolvency is the potential for some kind of personal liability or being investigated as to your conduct as part of a compulsory liquidation. If business owners take good advice as soon as the threat of insolvency starts mounting, in many cases, these worst fears can be avoided.
We have a team of business rescue advisors who can help you find out if there is a chance of restructuring or negotiating with creditors. We also have fully qualified Insolvency Practitioners to deal with any necessary formal company closure. The initial insolvency advice is always free.
When To Seek Insolvency Advice?
The worst outcome for many small business owners is to continue trading when insolvent and/or to wait until a winding up petition has been issued against your company.
Generally, the earlier you obtain advice the better. Cashflow issues are a good early warning sign that you might want to get some professional advice and you should also keep a close eye on whether short to medium term liabilities clearly outweigh your company’s assets. This is another sign of possible insolvency. In a situation where you aren’t sure if your business is insolvent or not, our guide to the various insolvency tests may help.
Another good reason to get advice early is that it may provide some legal protection later. It’s generally helpful, if you are a director, to demonstrate you were aware of potential insolvency and sought professional guidance. However, even if you have obtained advice, if your business is insolvent and you continue trading or do not put creditors interests first, you will create further risks to yourself as director.
All Insolvency Practitioners are duty bound to investigate director conduct but if the Official Receiver is appointed to the role as part of a compulsory liquidation, this can be even more worrying for directors.
Where to get Insolvency Advice for your Business
If your business is definitely insolvent you should speak as soon as possible to a fully licensed and regulated Insolvency Practitioner. If you appoint the Insolvency Practitioner (usual in a voluntary liquidation), his or her role is primarily to protect creditors but he or she can often also provide some advice to you in a personal capacity.
If you are worried that your business is insolvent, the best sources of advice are generally :-
- Your accountant
- An Insolvency Practitioner
- Business Restructuring specialists
- Business debt charities such as Business Debt Line, Money Advice Trust or The Debt Advice Foundation.
Insolvency Advice for Directors
When an Insolvency Practitioner is appointed he or she has no legal duties to the company’s directors. However, there is no reason why a director cannot obtain advice themselves, if worried about potential risks from personal guarantees or investigation of their conduct, either from an independent Insolvency Practitioner, accountant, solicitor or anyone of their choosing.
In some cases, especially where the directors appoint the Insolvency Practitioner on a voluntary liquidation, the appointed Insolvency Practitioner will often provide a director with some advice, informally, where the IP does not believe there is any potential negative impact on creditor interests and no obvious conflict of interest.
Whoever you decide to seek advice from, we recommend that you record the process to protect yourself at a later date, and that you generally act on the recommendations from the experienced specialists.