If you business is struggling, you will likely be aware that insolvency is a particular threshold that directors need to be aware of.
Once insolvent, a oompany director’s responsibilities shift towards creditors and away from shareholders. That means any action you take must reflect an awareness of that primary responsibility or your risk accusations of wrongful trading.
This article will help you understand how to assess whether your company is insolvent or not.
Warning Signs of Insolvency
Typical warn signs that your nearing the point of insolvency are as follows:
- You’ve reached borrowing limits from banks
- Creditors are chasing you for payments
- You can’t afford to pay staff wages
- HMRC tax arrears
- Directors have sense of continualy fire-fighting
What makes a Company Insolvent?
A company is insolvent when:
- It cannot pay its debts
- Corporate liabilities outweigh assets on a balance sheet
How do I Check if my Company is Insolvent?
To check if your company is insolvent, we’ve created a simple and intuitive insolvency test calculator.
It takes less than two minutes and will give you a clear indication of whether your company is insolvent.