Published / Last Updated on 13/08/2014
How do I know if my business is insolvent?
Potential indicators to insolvency might include:
- Creditor pressure, threats of legal action / writs / county court summons etc.
- Arrears of government debts
- Consistent abuse of banking facility limits
- Extended debtor profile
- Abuse of customer credit limits
- Delays on deliveries and satisfying customer orders
Non action could lead to:
- For individuals and partnerships - bankruptcy or voluntary arrangements.
- For companies - liquidation, receivership, personal actions against the directors, enforcement of personal guarantees.
The underlying steps to take if there is sufficient doubt on the solvency of a business are:
- Seek advice from professional advisers or an accountant
- Involve an insolvency practitioner or business recovery adviser
Above all else, businesses should not continue to trade without the advice of the above. Continuing to trade could exaggerate the insolvency position and worsen the consequences for individuals concerned.
Taking appropriate and timely advice in these situations is critical for all businesses.