Insolvency occurs when your company can no longer pay its debts when they’re due. Some of the common causes of insolvency can include a large unforeseen expense, loss of business or a drop in sales/income.
If your business is facing insolvency, it’s important to take action to prevent this before it happens. The longer you avoid repaying your debts the more restricted your situation will become. If this does happen it is vital that the directors take the appropriate steps or they could find themselves personally liable for some of the debts of the Company
Our insolvency law solicitors can assist with a range of insolvency matters to help you regain control of your finances and ensure the best possible outcome for your business.
At Preston Redman, we regularly work with clients from Bournemouth, Poole, across Dorset and beyond. Our team will be happy to advise you over the phone, via email and through video conferencing, as well as in person for your convenience.
To speak to one of our highly experienced corporate insolvency solicitors, please contact our Bournemouth office on 01202 292 424 or fill in our online enquiry form for a quick response.
How our insolvency solicitors can help you
Our business insolvency solicitors can aid with matters such as:
- Statutory demands
- Company Voluntary Arrangements (CVAs)
- Corporate restructuring
- Refinancing
- Winding-up proceedings
- Administration
- Liquidation
- Claims against directors
Statutory demands
A statutory demand is a written notice issued by a creditor. It notifies you that unless you settle your debt or reach a mutually agreeable arrangement with the creditor, they may initiate legal proceedings to declare you bankrupt.
If you fail to repay the debt in its entirety or establish an alternative arrangement within 21 days from the date of the demand being delivered, the creditor can apply to make you bankrupt.
Company Voluntary Arrangements (CVAs)
A Company Voluntary Arrangement is a formal agreement between an insolvent limited company and its creditors to pay back any owed debts over an agreed period of time - usually between 3 to 5 years.
You can only get a CVA through an insolvency expert, who will charge you for creating the arrangement.
The insolvency practitioner will create a proposal for a payment amount and time frame to pay off the debts.
The practitioner will then send this to the creditors who will vote on the proposal. The CVA is approved if 75% (by debt value) of the creditors who vote agree.
You will then need to make the scheduled payments to the creditors until the debt is paid off.
Corporate restructuring
Corporate restructuring is where an insolvent company addresses and changes any liabilities within the business.
Corporate restructuring is typically arranged through a contractual agreement between the company and its creditors.
Areas of the business that may be restructured include the company's hierarchy, internal structure, or operations procedures. Anything that is contributing to the company's insolvency could be rearranged.
Refinancing
Debt refinancing is the restructuring of a business's financial obligations to ensure it has enough funds for creditor repayments.
As well as ensuring the business's debts are paid, refinancing can help alleviate financial strain and promote efficient trade. This practice is also known as capital release.
Winding-up proceedings
Winding up proceedings is the legal process of closing down and liquidating a company. This can occur voluntarily, initiated by the company's shareholders or directors, or involuntarily through a court order due to the law of insolvency.
Administration
Administration is another legal process designed to rescue a financially distressed company.
When a company is in financial trouble and is unable to pay its debts, the directors, secured creditors, or the court can appoint an administrator.
The administrator takes control of the company to assess its financial situation, explore options for recovery, and, if possible, create a plan to save the business.
Liquidation
Liquidation is a legal process involving the orderly winding up and closure of a company that has become insolvent.
If a company enters liquidation a licensed insolvency practitioner is appointed to oversee the process, sell assets, and distribute funds to creditors according to a legal hierarchy.
Liquidation marks the end of the company's existence, and its name is typically struck off the Companies Register once the process is complete.
Claims against directors
Claims against directors during insolvency can arise if it is believed that directors have breached their legal duties or engaged in wrongful or fraudulent activities that contributed to the company's insolvency.
Claims against directors are typically pursued by the appointed insolvency practitioner, acting on behalf of the creditors. The outcome of such claims can result in personal liability for the directors, including financial contributions or disqualification from acting as a director in the future.
Common questions about insolvency
What is insolvency?
Insolvency is a financial state in which a company is unable to meet its financial obligations, specifically the inability to pay debts as they become due.
When a business becomes insolvent, there are several options for paying back debts or closing the company down, such as restructuring, administration, or liquidation.
What happens if a company goes into insolvency?
If a company goes into insolvency, it triggers a series of legal processes designed to address the financial difficulties and distribute the company's assets among creditors.
The specific course of action depends on the circumstances of the insolvency and the potential for the company's recovery.
How long do you stay on the insolvency register?
The Individual Insolvency Register is a record that can be accessed online detailing all the individuals who are insolvent in England and Wales.
Once debts have been repaid, you are “discharged” from the insolvency register. After this, your details will remain on the register for an additional three months.
How to declare insolvency?
If you're unable to settle your debts, you have the option to seek bankruptcy by submitting an application.
An 'adjudicator' from the Insolvency Service will review your application and determine whether bankruptcy is warranted based on your financial circumstances.
Our insolvency solicitors’ fees
Fixed fee services
We offer some insolvency services on a fixed fee basis so that you will know in advance how much the process will cost.
Hourly rates for insolvency solicitors
For other work, we charge an hourly rate. We will ensure you have insolvency solicitors with the right level of expertise for your case and wherever possible we will let you have an estimate of the initial costs at the outset.
For bigger cases, we will aim to keep costs down by making sure less complex tasks are carried out by a more junior fee earner under the supervision of an experienced solicitor. We will provide you with regular cost updates throughout your case.
Get in touch with our insolvency solicitors in Bournemouth
To speak to one of our highly experienced solicitors for advice on insolvency, please contact Tim Flower at our Bournemouth office on 01202 292 424 or fill in our online enquiry form for a quick response.
