Debt Recovery FAQs
Looking for some answers? Check out our helpful FAQ’s section.
Debt Recovery FAQ’s
What are the options for an insolvent company?
If the underlying business of the company is sound, it may be possible to rescue the company and save the business by restructuring or refinancing. This can sometimes be done without a formal insolvency process, or through an administration order or company voluntary arrangement (CVA) or scheme of arrangement. Advice from a qualified insolvency practitioner is essential. If the company or business cannot be rescued, the options include administration, administrative receivership or liquidation. Again, advice should always be taken from a qualified insolvency practitioner as to the best option in the circumstances.
What is insolvency?
A business is insolvent if it is unable to pay its debts as they fall due (i.e. on a “cash flow” basis) or if the value of its liabilities is greater than the value of its assets (i.e. on a “balance sheet” basis). It is important to note that solvency is different to profitability and a business can be insolvent even though profitable and vice versa.
What should I do if my business is in financial difficulty?
The most important thing to do is to face up to it. Acting promptly by seeking professional advice from a lawyer, accountant or insolvency practitioner will give you the best chance of protecting the business, its employees and creditors and will reduce your risk of personal liability and/or directors’ disqualification proceedings.