Last Updated on: | Url: http://abacrombie.co.uk  | Print Page  | About us  |

Insolvency advice for limited companies

A limited company is insolvent when its liabilities exceed its assets or when it cannot meet its liabilities as they fall due. It is a criminal offence to trade whilst insolvent.

Directors and shadow directors of limited companies can, in certain circumstances, also become personally liable for debts incurred by the company if it trades whilst insolvent.

Creditors are becoming increasingly aware of the risks to directors of trading whilst insolvent and many legal firms offer services designed to threaten directors personally. In the main, this is bluff, but if you are threatened, take advice before you reply.

Penalties for trading whilst insolvent can include:

Disqualification from acting as a director

Fines

Accountants

Personal liability for company debts

Imprisonment

All of the above

If you believe your business may be insolvent, it is important to act immediately to protect your creditors and yourself. Acting responsibly as soon as you become aware of the position is your best protection

You may have been advised to consult an Insolvency Practitioner. This is someone who is an Officer of the Court, whose responsibility is exclusively to your creditors.

All Receivers are Insolvency Practitioners, who are appointed directly by a creditor holding a debenture to take over your business to collect money from your assets on their behalf.

Administrators are also Insolvency Practitioners who can be appointed by your creditors, or who can be appointed by the directors. Again, their sole purpose is to take over your business to collect money from your assets for the creditors.

There are ways to deal with your debts in a responsible and legal manner, whilst at the same time protecting your own interests. But an Insolvency Practitioner has no obligation or incentive to tell you what these are. We act only for you, the debtor, and can advise you which of the alternatives satisfies best your own interests, and help you through the entire process.

These alternatives can include:

Voluntary Liquidation

Administration Orders

Company Voluntary Arrangements

Managed Buy-back

Informal arrangements