Facing insolvency can be a daunting prospect, so we’ve created general insolvency FAQs to help you gain a better understanding of the process. At Kirks, we are experts at guiding people through the insolvency process whether you’re a company director, an individual, you work for a club, a charity, or a school.
If you or your company are facing financial difficulties and you cannot pay your debts on time or your liabilities are greater than your assets, then you (or your company) are deemed to be insolvent.
There are a number of insolvency procedures that can help from administration, liquidation, or company voluntary arrangements for businesses; and for individuals, there’s bankruptcy or individual voluntary arrangements.
When a company or an individual is insolvent, an insolvency practitioner is the person appointed to help them through the most appropriate insolvency process. Our general insolvency FAQs go into more details, but here is a brief explanation of the insolvency processes:
- Liquidation is a legal process whereby a liquidator is appointed to wind up the affairs of a limited company. The assets and property of a company are turned into cash and redistributed to creditors and, in the case of a solvent liquidation, shareholders.
- Business administration is an insolvency procedure designed to protect a company from its creditors whilst it is restructured, so the company can continue to trade or to be sold.
- Pre-pack administration refers to the sale of a business immediately after the company is placed into administration. In this case, a deal has been lined up ahead of the company entering administration.
- A Voluntary Arrangement is a legal procedure which enables a company, partnership or individual to reach a binding agreement with its creditors about how its debt is to be repaid.
- Bankruptcy is where you cannot pay your debts and the amount you owe is more than the value of your assets. If you go bankrupt, most of your creditors won’t be able to contact you about your debts or take you to court.
- Our general insolvency FAQs may answer some of your queries, but please contact Kirks today if you’d like friendly and professional advice on how to manage your future finances.