What is insolvency?
Insolvency refers to when either an individual or business are no longer capable of meeting their financial obligations on time, leaving their debts outstanding and their estate in receivership. When an individual becomes insolvent and requires bankruptcy trustee representation; on the other hand, for corporate insolvencies an insolvency practitioner will be appointed to handle liquidation, administration or receivership processes of that corporation. Kangs Solicitors is an established and insolvency solicitors manchester law firm with offices in London, Birmingham and Manchester. It specialises in civil law matters related to commercial litigation, insolvency proceedings, civil fraud claims recovery and asset recovery as well as civil rehabilitation freezing orders for property cryptocurrency disputes and Intellectual property disputes.
When To Seek Insolvency Advice?
Many small entrepreneurs can face dire consequences if they continue operating despite knowing they are insolvent, or wait until a winding-up petition has been filed against their business before making the necessary adjustments.
As soon as cashflow problems arise, professional advice should be sought immediately. Also important is monitoring whether short- and medium-term liabilities have exceeded assets; this may indicate insolvency. If unsure, our guide to tests for insolvency might provide assistance.
An additional reason to seek advice early is legal protection later. For directors, proving awareness of potential bankruptcy and professional advice seeking could provide protection. Even with proper guidance being sought by seeking advice as a director and continuing trading while creditors’ rights aren’t prioritized is likely to increase risks further for yourself and the business as a whole.
Every insolvency practitioner is legally obliged to conduct an investigation of director’s conduct; however, when an official Receiver is designated this role as part of a mandatory liquidation proceeding this could become even more worrying for directors.
Where to get Insolvency Advice for your Business?
If your company is insolvent, consult an accredited and licensed Insolvency Practitioner as soon as possible. Appointing one during voluntary liquidation typically defends creditors; however, an Insolvency Professional may also offer guidance in an advisory capacity to you personally.
If your business is facing insolvency, the most reliable sources for advice will usually include:
- Your accountant
- An Insolvency Practitioner
- Business Restructuring specialists
- Business debt charities
Insolvency Advice for Directors
If an Insolvency Practitioner has been appointed, he/she is not legally bound to advise the directors of their company; nevertheless, any director who feels threatened by personal guarantees or investigations into their conduct can seek independent advice from accountants, solicitors or any other professionals of their choosing – be that from an independent Insolvency Practitioner, accountant, solicitor or any other.
In instances of voluntary liquidations where directors select an Insolvency Practitioner themselves, that Insolvency Practitioner often offers informal guidance when not convinced there will be any negative impact on creditors or conflicts between interests.
No matter who or what you consult with, we suggest documenting the process to protect yourself in the future and taking advice from experienced specialists.
What to Expect from an Insolvency Advisor?
As state licensed insolvency specialists, we specialize in analyzing your financial situation and offering tailored advice on the most effective methods to alleviate debt burden. To begin our assessment, we collect information on earnings as well as assets and debts before outlining possible solutions such as time-to-pay plans, voluntary company arrangements or voluntary liquidations as possible solutions to help alleviate your burden of debt.
We provide careful guidance regarding the possible implications of each decision to help you make informed choices regarding what’s best for you. Should you hire us, we will handle negotiations with creditors as well as offer ongoing assistance during the insolvency process.
What is an insolvency practitioner?
Insolvency practitioners are licensed professionals authorized to take actions regarding companies that are in financial difficulty. Most insolvency practitioners are accountants or specialists working within accounting firms who specialize in insolvency. Their role involves:
- Selling assets;
- Collecting payments that are due;
- Negotiating creditor’s claims; and
- Distributing any money collected after paying costs.
