What Is Company Insolvency?
Put simply, company insolvency or ‘corporate insolvency’ means that your company can’t afford to pay its debts.
There are two main types of company insolvency:
Cash Flow Insolvency is when your company may have solid assets which have value, but not enough liquid cash to pay debts that are owed.
Balance Sheet Insolvency is when the amount of money that your company owes exceeds the value of its assets.
A company can be placed into formal insolvency proceedings by its director, its shareholders, its creditors or the court.
Creditors can take action to recover debt that your company owes by getting a court judgement or issuing a statutory demand (an official request for payment). If creditors are unable to recover the debt, they can apply to have your company put into administration or liquidation (a winding up order).
This can be a stressful and worrying time, but it does not always need to mean the end of your company. It is important to act quickly and to get advice from a qualified insolvency practitioner. There are a range of procedures which can be carried out by a qualified insolvency practitioner that can rescue your company, protect it from compulsory liquidation and allow it to continue trading.
To find out more about company insolvency and for advice on how to deal with it, simply get in touch with us. We have years of experience in dealing with company insolvency. We can meet you at your premises in utmost confidentiality, guide you through your options and help you to take action.