More charities are pessimistic about their financial situations post pandemic. The Third Sector Covid-19 Impact Survey found over half (56%) expected their income would fall over the next two years, compared to 16% in 2019.

Although a charity may have a different structure to a business, they can still become insolvent. In fact many may actually experience or be close to this on occasion, but are then buoyed up again by donations. Equally, if directors and trustees act improperly, they can face investigation for wrongful trading or fraud, if they have failed to protect creditors’ interests knowing the charity was insolvent.

Here at Company Debt, we have significant experience in both closing and restructuring charities and non profit businesses. Get in touch for a free, no obligation discussion about your situation with one of our licensed insolvency practitioners.

Charity & Non-Profit Sector Pressure Points

insolvency charity

Insolvency Options for Charities

Rescue solutions for insolvent charities include restructuring, merging with another charity, or a structured repayment plan with creditors (company voluntary arrangement).

Alternatively the non-profit could be closed via liquidation, or dissolution.

A key concern for directors of charitable instutions at the point of insolvency is that of maximising creditors interests. Just as with limited companies, directors who’ve been found to have prioritised other interests over creditors could find themselves charged with wrongful trading, transactions at undervalue, fraud or breach of trust.

While specific leeway was given to charities under the The Corporate Insolvency and Governance Act 2020 , these have now come to an end.

Directors and trustees of charities should seek appropriate expert advice as early as possible during a potential insolvency.

insolvency charity

Knowledge – Insight – Solutions

We are fully licensed and accredited insolvency practitioners based in north London, and with decades of combined partner experience in helping directors find positive solutions to business challenges.

Our goal is first to understand your situation as fully as we can, and then to explain the range of options available to you.

We focus on practical advice, without jargon. We practice total transparency around costs and fee structures. Our wish is to support you as fully as possible so that you can emerge from this situation in the best possible situation.

As a first step, simply book in a call with one of our team to learn more about our approach, and to take advantage of a fee consultation that carries no obligation.

Book My Consultation

If you need an experienced insolvency practitioner or business rescue specialist, seek advice now.

  • Your free consultation will be led by one of our experienced London insolvency practitioners
  • You can speak via phone, online meeting or in person so that we can listen carefully to the facts about your situation
  • The team will provide a preliminary view of the likely best outcome, proposed strategy, and the likely cost
  • We specialise in helping limited company directors needing immediate professional debt advice


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