Company Insolvency

Is your company facing financial difficulty? Then Irwin Insolvency’s experienced team of licensed insolvency practitioners is here to help. If your company can no longer pay its debts, then fast action and expert insolvency advice could turn your business around. Contact Irwin Insolvency today, and discover how we can assist with company insolvency.

What Is Company Insolvency?

Company insolvency – or corporate insolvency – occurs when a business can no longer pay its debts. Your company may be losing money, sales might be down and creditors chasing payments. If the business cannot pay its creditors when necessary, then it’s said to have entered into a state of insolvency.

A company becomes insolvent purely based on its inability to pay debts as and when they arise. Company insolvency does not need any legal or court-ordered recognition to have occurred, as it’s seen as a state of being. However, legal procedures exist that can allow an insolvent company to manage and reorganise its debts in order to become solvent again.

The Insolvency Acts 1986 and 2000 provide the current legal framework for company insolvencies. The United Kingdom’s Insolvency Acts allow for a range of different procedures, such as a company voluntary arrangements or creditors’ voluntary liquidation, that provide ways for business directors to deal with company insolvency. The Insolvency Acts stipulate that these insolvency procedures can only be carried out by a licensed insolvency practitioner.

Irwin Insolvency Can Assist with Company Insolvencies

In the event of a company or partnership getting into financial difficulties, Irwin & Company has the ability to blend considerable commercial expertise with more than a touch of realism. We understand that a sustainable solution can only be achieved when the interests of the various parties involved in an insolvency procedure have been reconciled.

Irwin Insolvency undertakes appointments across a wide spectrum of corporate insolvency issues, enjoying an enviable reputation at the smaller to medium end of the recovery market. Our objective is to provide positive and cost-effective solutions to business problems and a professional service to all our clients.

Our experienced team of practitioners has a number of company insolvency tools at their disposal, providing our practice with the ability to assist businesses in financial distress. Company insolvency procedures that we may recommend and oversee include:

• Company voluntary arrangements (CVA)
• Creditors’ voluntary liquidation (CVL)
• Administrative receivership
• Company administration
• Compulsory liquidation

Company Voluntary Arrangements

A company voluntary arrangement (CVA) is an agreement between a business and its creditors. If your company is in debt, then a CVA allows those debts to be reorganised, often allowing payments to be delayed or reduced.

It’s commonly recommended as the first course of action for company insolvency, as it buys time for the business to be turned around while halting creditors from taking any further action to pursue their debts. A CVA is overseen by a licensed insolvency practitioner who makes proposals to the directors and creditors in order to produce a legally binding agreement.

A CVA allows company directors to retain control over their business, so long as they follow the terms of the agreement. It lasts for a set period of time, after which it can be renegotiated or further insolvency proceedings can be taken as necessary. A successful CVA can help a company escape insolvency and become profitable again.

Creditors’ Voluntary Liquidation

A creditors’ voluntary liquidation (CVL) is a procedure that can be implemented when company directors realise they cannot pay their debts as and when they arise. A CVL is commonly referred to as a ‘voluntary winding-up‘, and is only ever used as a last resort when other company insolvency procedures have failed.

A CVL results in the total liquidation of the company. An insolvency practitioner is appointed to oversee the liquidation, a process that sees company assets sold off and the business closed down. The funds raised from liquidation are then distributed amongst creditors to pay off the company’s debts.

Administrative Receivership

This procedure involves the appointment of a licensed insolvency practitioner as administrative receiver by a bank or other secured lending institution holding a floating charge debenture.

The administrative receiver is generally appointed by a secured creditor or debenture holder when the business is deemed to be in default under the terms of the debenture. The administrative receiver takes control over the debtor’s assets, for the benefit of the creditor.

Administration

Administration is a constructive way of preserving a company’s business or achieving a better return for creditors than liquidation. A licensed insolvency practitioner is appointed as administrator on the petition of the company, the directors, or one or more creditors.

The appointed administrator takes over control of the company’s operations, with the ultimate aim being to save the business from liquidation. The administrator may reorganise the business, streamline the company, or sell off assets in order to continue trading.

Compulsory Liquidation

Often referred to as a ‘winding-up by the court’, compulsory liquidation is the ultimate sanction against a business that defaults on basic obligations to creditors. If a company continually fails to pay its debts, then creditors are within their rights to use compulsory liquidation as a means of securing the money owed to them.

Compulsory liquidation is ordered by the court, typically following the petition of a creditor, the businesses or a shareholder. Compulsory liquidation results in the complete closure and liquidation of the company, with assets sold off in order to pay creditors.

Report on Directors

With the exception of company voluntary arrangements, there is an obligation on the part of the insolvency practitioner to report to the Department for Business, Energy & Industrial Strategy (BEIS) on the conduct of anyone who has been a director or shadow director within the preceding two years. This may lead to disqualification proceedings being brought against one or more of the directors by the BEIS.

Irwin & Company has the ability to blend considerable commercial expertise with more than a touch of realism. We understand that a sustainable solution can only be achieved when the interests of the various parties involved in an insolvency procedure have been reconciled.

We offer advice to directors and more general business advice, as well as our insolvency solutions, which include business recovery, business turnaround, company reconstructions, individual voluntary arrangements, company administrations, company liquidations and solvency planning. Contact our team today for more information.

Learn more about Company Insolvency:

What Happens When You Claim Insolvency

What is an Insolvency Proceeding?

Top 10 Causes of Insolvency in the UK

Can a Company Survive Insolvency?

Will I Be Banned from Running a Company if I Declare Insolvency?

When I Can Start Trading Again After Insolvency?

Bankruptcy and Insolvency: What’s the Difference?