Frequently Asked Questions

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Warning signs of insolvency can include:

• Struggling to pay suppliers or HMRC on time
   
• Relying on short-term loans or director funds to stay afloat
   
• Falling sales or profit margins
   
• Pressure from creditors or receipt of statutory demands
  If you’re experiencing any of these, it’s important to seek advice early.

The best step is to speak with a licensed professional as soon as possible. They’ll review your company’s position and explain the available options — from restructuring and repayment plans to voluntary liquidation if necessary.

 Directors must be very cautious. Continuing to trade while insolvent could lead to wrongful trading, which may make you personally liable for company debts. Always seek professional advice before making decisions. 

Depending on your company’s circumstances, options may include:

• Company Voluntary Arrangement (CVA): A formal agreement to repay debts over time.
   
• Administration: Protects the business from creditors while a rescue or sale is considered.
   
• Creditors’ Voluntary Liquidation (CVL): The company is closed in an orderly way by directors.
   
• Dissolution: For small, inactive companies with no remaining debts or assets.before making decisions. 

In most cases, once the company is liquidated, its debts are written off — unless you’ve personally guaranteed them. Any secured creditors (like banks) may recover funds from company assets first. 

 Usually not. Limited company status means directors aren’t personally responsible for business debts — unless there’s evidence of personal guarantees, wrongful trading, or misconduct. 

 Employees will be made redundant, but they may be able to claim unpaid wages, holiday pay, notice pay, and redundancy pay from the Government’s Redundancy Payments Service (RPS). 

 Yes, if you’ve been working for the company under a contract of employment and taking a regular salary through PAYE, you may be eligible for a director redundancy claim. 

Company insolvency doesn’t automatically affect your personal credit rating. You can usually act as a director again in the future — unless you’re disqualified for misconduct.

 Once a company enters liquidation, the bank account is usually frozen. The appointed liquidator will manage any remaining funds and distribute them to creditors in order of priority.