Insolvency
What are the dangers of insolvency?
- Your company may still owe money to creditors. You still have to pay this back, even if your company is insolvent
- You, as a director, can be sued if you continued to trade after the company went insolvent, and lose your personal assets
What is insolvency?
When your company is unable to fulfil its obligations to its creditors – pay its debts to them
This can be due to a lack of cash being available by the time that payment is due, or when the assets of your company, when future and uncertain liabilities are considered, are less than all the assets of the company in value
What can be done?
Liquidation
- All the assets of your company are sold off and used to settle your debts with creditors for the company
Administration
- A Qualified Insolvency Practitioner takes over running the company, managing its trading and aims to organise the company in such a way that it can pay off the creditors
- The creditors’ receipt of money is temporarily delayed whilst the company is restructures
- The practitioner may try to sell the company
Company Voluntary Agreements
- When both the company and shareholders have a significant interest in keeping the company afloat, the creditors may agree to reduce their demands to the company, or delay the demands, allowing the company to survive for longer and attempt to get back on its feet. Similar to these are Schemes of Arrangement, where a court orders similar actions
Why should I contact Sterling Law?
We have experienced insolvency lawyers on both sides of the dispute. If you are a creditor, we can help you recover your funds and make an agreement with the company. If you are a company member, we can help negotiate the best possible path for your company out of insolvency, and give you the ability to pay your creditors back fairly while not completely ending your company. Insolvency law is one of the most complex aspects of corporate and commercial law – so if you have any questions, contact us for free over the phone or through our website.
