Insolvency

INSOLVENCY

Insolvency is a complicated area of law. Most people simply think of it as covering bankruptcy or liquidation which is generally true. However, with the plethora of recent changes in the law, it covers so many other areas of debt that it has become a generic term for “debt management”.

We are able to advise on all aspects of insolvency. If you are in debt yourself, we can discuss with you the different options available to you from informal arrangements with your creditors, to IVAs or ultimately, to petitioning for your own bankruptcy.

If your business is in financial difficulty, we can discuss options available to you whether you are a sole trader, acting in a partnership or as a limited company.

At the same time, if you are owed money, we can advise you of the options available to you if your debtor is facing insolvency or recovering monies due to you within insolvency proceedings. This advice is not simply restricted to trading debts but, if for example, your employer becomes insolvent owing you money (eg. salary and wages).

In addition, we also advise and act for Insolvency Practitioners, the Official Receiver, Liquidators, Trustees in Bankruptcy and Administrators in all aspects of enforcement. We can also advise on Directors Disqualification.

All in all, debt and insolvency proceedings can be intimidating but with proper advice, it does not need to be menacing. We have a professional team who can help and advise; we also work alongside other specialist teams including Insolvency Practitioners, Accountants and Financial Advisers, all of whom can be of assistance.

FREQUENTLY ASKED QUESTIONS

What is the difference between BANKRUPTCY and LIQUIDATION?

Quite simply, the difference is whether you are an individual (in which case you are made Bankrupt) or whether the debtor is a limited company (in which case, the company goes into Liquidation).

The process is largely similar: provided over £750 is due and owing to third parties, then either the Creditor or Debtor can petition for bankruptcy or liquidation as the case may be.

Is there an alternative to BANKRUPTCY?

Yes, although generally, it will depend on individual circumstances. Provided you take early action before your Creditors start to take action, then you do have options.

Firstly, you can contact all your Creditors and make payment proposals to them, explaining your circumstances and asking them to accept your suggestions. They do not have to accept your proposals but, provided you are candid with them about your situation and provide a suitable timetable, they may be prepared to accept your proposals which may include a compromise on the amount owed.

The advantage of this route is that you have more control over your assets, payment schedule and retain good relations with your Creditors. The only real problem with such an “Informal Arrangement” though is that it is not legally binding.

If you do want more certainty, then consider an INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) [see below]

What is an IVA?

An IVA – or Individual Voluntary Arrangement – is a formal arrangement between you and your Creditors to pay all or part of your debt and which is overseen and supervised by an Insolvency Practitioner.

If the majority of your Creditors (75% in value) agree to the proposal, it is binding upon them. The advantages of an IVA are that it allows you to avoid the pitfalls of bankruptcy, gives you some control over your assets (for example, you may not lose your home) and, importantly, helps you trade yourself out of debt.

Recent changes will have far reaching effects for businesses, banks and members of the public alike.

We advise Insolvency Practitioners, lenders, businesses and members of the public on all aspects of insolvency. We also work alongside other specialist teams including corporate, commercial property, employment and IP/IT.