Bankruptcy only applies to individuals, sole traders and partners in a business.
In more detail
Bankruptcy Trigger Points
There are usually a handful of trigger points that make a business realise it is in trouble. These are:
- Being unable to pay the employees on pay day.
- The bank calls in its loans or overdrafts.
- A bailiff calls and seizes goods.
- Receiving County Court Judgements.
- HM Revenue and Customs start bankruptcy proceedings.
There are others trigger points as well such as your accountant who says you need to take insolvency advice.
What Are My Options If My Business Is Bankrupt?
When your back is against the wall (with debts) the first decision to be made is whether or not the business could be viable in the future?
If it is viable, then there are a variety of options to avoid bankruptcy or liquidation. These are an Individual, Partnership or Company Voluntary Arrangement or a pre-pack administration.
If not viable then the usual solution is bankruptcy or liquidation. In both cases, it will be worth talking to a licensed insolvency practitioner first to make sure that you are choosing the right option for you and to understand any potential downsides – for example, losing your home, the effect on your credit rating or the implications of any guaranteed debts.
