A Statement of Affairs (SOA) is a critically important document within the insolvency process that provides an overview of the company’s assets and liabilities. It must be verified by a statement of truth

In this guide, we will explain in more detail what a statement of affairs is, when it is required, what information it should contain, and how to prepare one.

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What is a Statement of Affairs (SOA)?

A statement of affairs is a financial document that provides a detailed snapshot of a business’s financial situation. It typically includes a list of assets, liabilities, and other relevant financial information.

In UK law, it is most commonly used to provide a concise summary of the corporate situation during insolvency events.

It allows the Insolvency Practitioner to assess everything the company may own and details of fixed or floating charges.

Once completed, the Statement of Affairs has to be filed at the Companies House by the Insolvency Practitioner. It’s intended first and foremost as a source of information for company creditors and shareholders, although potential buyers of the insolvency company will also find it useful.

What information is included in a statement of affairs?

The SOA is a crucial step in insolvency procedures, so completing it correctly is necessary, and all the information must be accurate and true. You will need to provide full details, precise dates and amounts requested.

  1. Balance sheet and management accounts.
  2. Company asset valuations: This can include tangible assets such as property and equipment, as well as intangible assets such as intellectual property and goodwill.
  3. List of employees, trade creditors, and suppliers: A complete list of employees, including their addresses, salaries, and start dates, should be included. Additionally, a list of trade creditors and suppliers, along with the amounts owed to them, should be included.
  4. VAT and PAYE position: including any amounts owed or unpaid.
  5. Amounts owed to the bank: Details of any amounts owed to the bank, including any director or shareholder loans, should be included in the statement of affairs.
  6. Details of any existing debts: The statement of affairs should include a list of any other existing debts owed by the company.

Statement of Affairs Template

Which Insolvency Events Require a Statement of Affairs?

The SOA document is used in the following insolvency events:

If the company enters into Administration, the Administrator will require the Directors to produce a Statement of Affairs to be contained within the Administrators’ Proposals

In a CVA, the SOA will also form a section of the Proposals to creditors.

Statement of Affairs in Liquidation

In case of voluntary liquidation, the company’s financial position will be outlined at a creditors/shareholders’ meeting.

In the eventuality that the company is facing compulsory liquidation process, the Official Receiver, liquidator or the appointed Insolvency Practitioner will be in charge of preparing the Statement of Affairs at the beginning of the Winding Up.

Investigations into Directors’ Conduct

One of the key functions of the statement of affairs is to provide a clear audit trail so that insolvency practitioners can assess whether assets have been sold in the period preceding liquidation.

Where this is found to be the case, it can lead to a director’s disqualification in some instances.

Due to the nature of these complex documents, it’s always preferential to have a licenced insolvency practitioner such as ourselves put them together for you. Correct valuation of all assets by accredited third parties must be diligently investigated during any liquidation process.

What Happens if you Refuse to Produce an SOA?

In the case of failure to submit the SOA without a reasonable excuse, the nominated person is liable to a one-off fine of £5,000 and/or a daily default fine set by the court (£500).

Filing

As soon as the SOA has been completed and signed, it must be filed at Companies House by the Insolvency Practitioner for it to become a public record.

What is the difference between a Balance Sheet and a Statement of Affairs?

A balance sheet is part of a financial statement; therefore, it must be 100% accurate, contain no estimated figures, and it has to show the company’s exact financial position.

Whilst the Statement of Affairs offers information on assets and liabilities, it doesn’t need to be correct to the penny but needs to show the best-estimated figures on the information available at the time.