There are three tests you can run to see if your company is solvent or insolvent.

1. Cash Flow Test – A company should be able to pay it’s debt as they fall due. If this is not possible your company may be insolvent.

2. Balance Sheet Test – If your companies liabilities (Creditors, Loans, Debts) exceed your company assets this means your company is likely to be insolvent.

3. Legal actions against your company – A major warning sign that your company is insolvent is receiving any letters threatening with legal actions against your company, from creditors. Such legal documents may be: Winding Up Petitions an CCJ – County Court Judgement.

A company can be easily placed into liquidation. The first step is to have a discussion with a Licensed Insolvency Practitioner and determine a course of action. If Liquidation is the best route, the process can be started immediately. The steps for placing a company in liquidation are the following: 

1. Prepare the statement of affairs (SOA) – a document presenting the clear situation of your company, the level of debt, all the creditors, the assets level of the company and the history of your company. 

2. Board meeting – Directors of the Company meet and decide to place the company in liquidation

3. Members Meeting – The Shareholders also decide that the company should be placed into liquidation

4. Creditors meeting – the creditors meet and agree that the company should be placed in liquidation

For more details regarding company liquidation click here.

In a creditors voluntary liquidation the cost to place the company into liquidation may be paid from assets if sufficient.

Liquidators fees post appointment can only be drawn from asset recoveries.

Directors’ duties cease at the date of liquidation, although the director’s full ongoing co-operation and assistance is required by the Liquidator. The company’s directors must:

• Give the Liquidator information about the company’s affairs
• Provide details of its assets and liabilities
• Preserve and hand over the company’s assets to the Liquidator; and
• Preserve and hand over the company’s books, records, bank statements, insurance policies and other papers relating to its assets and liabilities.

The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State for Business, Enterprise and Regulatory Reform, a report on the conduct of all directors who were in office in the last 3 years of the company’s trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a director.

Examples of the most commonly reported conduct are:

• Continuing the company’s trading when the company was insolvent;

• Failing to keep proper accounting records;

• Failing to prepare and file accounts or make returns to Companies House; and

• Failing to send in returns or pay to the Crown any tax that is due.

The benefit of a limited company provides the director with protection against company debts.

However please contact one of our insolvency practitioners if you have signed a Personal Guarantee over a debt of the company.

Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time.

There are few instances where the Directors are liable such as wrongful trading.

Each insolvency case is different and the only way to know for sure is to speak directly with a Licensed Insolvency Practitioner.

Get in touch with one of our team members now.

Yes, it is possible for a director to set up a new company although there may be some restrictions put in place by HM Revenue & Customs

We will provide the relevant documentation to place the Company into liquidation on an online platform for you to review and sign the documents.

Independent valuation agents will usually be instructed pre appointment to value, market and sell the Company’s assets. Should the Director wish to make an offer for the Company’s assets, it will be considered and accepted dependent on any other offers received. The Agents will try to sell the assets for the most advantageous offer. In many cases, it is the Directors who are interested in acquiring the Company’s assets.

Any correspondence in respect of the Company should be sent to the Liquidators and their team to be reviewed and dealt with. They will contact all relevant parties to inform them the Company is now in liquidation, to complete a proof of debt (if not done already) and to ask to update their records with the Company’s new details.

As a director you have certain fiduciary duties. As such, you need to make sure you follow the law and not prioritise or prefer your own interests over the Company’s creditors. Dissipating the Company’s assets in order to settle the your own debt might result in the Joint Liquidators asking for the assets to be returned to the Company or repayments to be made towards the liquidation for a fair treatment of the body of creditors.

Usually, the Company’s change of address will be done on appointment by the Liquidators and their team.  Should you receive any correspondence for the Company, please forward it to the Liquidators to be reviewed and dealt with.

As a director you have certain fiduciary duties. As such, you need to make sure you follow the law and not prioritise or prefer your own interests over the Company’s creditors. Dissipating the Company’s assets in order to settle the your own debt might result in the Joint Liquidators asking for the assets to be returned to the Company or repayments to be made towards the liquidation for a fair treatment of the body of creditors.

In the pre appointment stage, we will request the Company’s directors and management for a list of all current creditors, including any potential unpaid salaries or arrears owed to employees. Please contact the Insolvency Practitioners and their team to assist you with your claim. Usually, your claim will be reviewed and submitted to the Redundancy Payments Office. For more details on redundancy, please see Factsheet: what to do when you’ve been made redundant – GOV.UK (www.gov.uk)