When you’re experiencing financial difficulties in your small business, it can be difficult, as a company director, to know where to turn. Company Debt offers 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, these worst fears can be avoided in many cases.
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 professional advice. You should also closely monitor 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. If you are a director, it’s generally helpful 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 a 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 insolvent, you should speak to a fully licensed and regulated Insolvency Practitioner as soon as possible. If you appoint the Insolvency Practitioner (usually in 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 later and generally act on the recommendations from experienced specialists.
What to Expect from an Insolvency Advisor
As licensed insolvency practitioners, we prioritize assessing your financial situation and providing them with tailored guidance on your options for dealing with debts.
We begin by gathering information on your income, assets, and debts to determine the extent of the financial difficulties.
We then explain the specific solutions available to you, such as a time-to-pay plan, a company voluntary arrangement or voluntary liquidation.
We provide careful advice on the potential consequences of each option, so you can make an informed decision about the best course of action. If you choose to appoint us, we will take over negotiations with creditors and provide ongoing support throughout the insolvency process.
As a director, you should seek insolvency advice if your company is experiencing financial difficulties and is struggling to pay its debts. It is important to act promptly, as delaying may make the situation worse and increase the risks of personal liability.
When a company becomes insolvent, the directors’ legal duties shift from pursuing the interests of shareholders to the interests of creditors. As a director, you have a duty to act in the best interests of the company and its creditors, and to avoid any actions that could worsen the company’s financial position.
Several options are available to companies facing financial difficulties, including restructuring, refinancing, and insolvency procedures such as administration or liquidation. Company Debt’s insolvency practitioners can help you understand the pros and cons of each option and guide you through the process.
When a company is insolvent, the directors can be held personally liable for the company’s debts in certain circumstances, such as if they continued to trade when they knew or should have known that the company was insolvent. Company Debt’s insolvency practitioners can help you understand your potential liability and take steps to mitigate it.
You can find a reputable insolvency advisor by researching, seeking your accountant’s recommendations, and checking for professional qualifications and accreditations. Company Debt’s insolvency practitioners are experienced, knowledgeable, and transparent about our fees and services. The first consultation is confidential and completely free.