The quick answer
If your business is insolvent you might want to look at the alternatives than just accepting bankruptcy or liquidation.
A better option may be a Company or Individual Voluntary Arrangement or by making early contact to negotiate with key creditors.
In more detail
Bankruptcy usually refers to a sole trader or partner in a business who is made bankrupt. Sometimes it is used as a generic term to describe business failure.
It is worth seeking good professional advice from a Licensed Insolvency Practitioner like us before going bankrupt to see if there are any other options. Your accountant or solicitor can usually recommend one if you do not want to try us.
Bankruptcy can happen in two ways; the first is someone making you bankrupt and the statistics say that the person most likely to do that is HM Revenue and Customs. The second is where you pay the Court fees (about £750) and make yourself bankrupt.
Sometimes bankruptcy is the best option. For example, where it is clear that the business is not viable it is a useful way to draw a line under the old business and legally stop bailiffs entering your home to remove assets. It also means that after 12 months your bankruptcy ends and the pre-bankruptcy debts are written off.
One of the main reasons to avoid bankruptcy is that if you have equity in your home it may be sold to pay your debts. This applies even if it is jointly owned with your spouse or you have young children. Again, it is important to get advice early on as you may be surprised what can be achieved.