We can provide options for companies in financial trouble. If the company cannot pay its debts, it is trading whilst ‘insolvent’.
There are serious penalties for allowing your company to trade whilst insolvent.
Liquidation and voluntary administration are options for companies that are insolvent.
There are serious consequences and penalties for insolvent trading, including the risk of being sued, compensation proceedings and criminal charges. If your company is insolvent, you must get professional help and advice immediately.
If you’re a director of a company, you have legal obligations to deal with company debts, shareholders and creditors in an appropriate way. Depending on whether you decide to put the company into liquidation or administration, your responsibilities, powers and control will also change.
You should consider the benefits of putting the company into liquidation or voluntary administration, rather than a creditor putting the company into liquidation through court proceedings.
The advantages of putting the company into liquidation and voluntary administration as appropriate include:
- Resolving the company’s direction quickly.
- Possibly saving the company’s business.
- If the business can’t be saved, winding up the company’s affairs so that it results in better return for creditors (including employees and shareholders).
- Involve an outside person (a liquidator or administrator), who is independent and suitably qualified, to take control.
- Taking control of matters before a creditor starts legal proceedings for company liquidation.
- Avoiding legal penalties and consequences for failing to deal with company insolvency appropriately.
- Possibly saving your company’s and your own reputation as a company director.
Get professional advice about your legal obligations as a company director.