Insolvency is when a company or an individual entity is unable to manage their debt payments with their current cash flow and being unable to pay for debt when payments are due. This is an extremely difficult road to go down, but is completely necessary in a lot of cases. It is to declare yourself unable to attain the assets required to cover you or the businesses financial requirements. There are many different factors to consider. As a result, every case is bespoke.
Insolvency is often confused with bankruptcy. Although not the same and the two should not be confused – both concepts are not actually that dissimilar.
Insolvency can result from many factors, causing your expenses to be higher than that of your income. It is an assessment of your financial condition, while bankruptcy is passed by legal finding. It is a declaration of significant financial hardship as a means of seeking debt and tax liability relief.
Furthermore – insolvency proceedings can occur when legal action is then taken against the insolvent organization or individual. As mentioned above – It is not a lawful procedure, therefore it is important to understand you are not required to contribute.
Bankruptcy is usually reserved for individuals, rather than companies in the United Kingdom. UK bankruptcy law follows different principles. Insolvency Advice for cash tight businesses is the relatively new mode of consultancy that caters to all manners of businesses and individuals that are having deep problems. Insolvency does not always mean that a company should be stopped, closed down and disbanded. Everything depends on whether continuing of trade enables the company to come out the other side of insolvency and continue to improve its position for creditors.
Insolvency practitioners not only present a thorough working understanding of insolvency law – they must also understand accountancy, tax legislation, company / employment law and litigation matters. These consultants use all of these skills to advise in the complex world of insolvency. This understanding is essential to tailor each case, as information and resources can sometimes be thin on the ground. To pass any Insolvency exam, you must demonstrate a firm understanding of the above and furthermore, that you are capable of acting in a professional manner.
Insolvency experts assess finances and decide if your company is insolvent or if there is some way of rescuing it.
If insolvency is indeed the case, they can advise on the best course of action for you and can take care of everything needed to close or sell your company. More Insolvency Advice is available below.