Restructuring & Insolvency FAQs

Director & Owner FAQs

When should a Director stop company trading?

When the Director convenes the relevant shareholder meetings to place the company into a creditors voluntary liquidation (CVA), or on the presentation of a winding up petition. In general though, trading should cease when there is no prospect that the company can pay its debts as and when they fall due.
Can a Director start a new company after liquidation?

It is possible for a Director to start a new company after liquidation and be its Director again. As long as the Director is not:
- Disqualified from taking part in the management of a limited company

- An undischarged bankrupt

- Subject to a debt relief order

- Subject to a bankruptcy or debt relief restriction
When can a Director re-use a company name after insolvent liquidation?

Full government reuse of company name guidance.
Is a Director liable for Company Debts?

A limited company is treated as a separate legal entity; a legal ‘person’ in its own right. Thus, the company is separate from the individuals who own and manage it. Any debt, losses or legal claims associated with the company are the responsibility of the company – not the directors or owners. However, if a director has signed a personal guarantee over a debt of the company this may come into play during insolvency.

Company Liquidation FAQS

What is a company liquidation?

- A legal process; company liquidation (or 'liquidation') results in company closure.

- A company liquidation can be voluntary or compulsory.

- A 'liquidator' will be appointed to 'wind up' the affairs of the company.
How can you liquidate a company when it has no money or assets to cover the cost?

Using a director’s redundancy claim to fund a Liquidation

If you are an employee then you may be entitled to a government redundancy pay out or wages arrears. You can use some of this money to pay for the liquidation if the company is insolvent.

Call us (0121 201 1720) to find out if you are entitled to a redundancy payment. We can assist you in getting your claim processed and we can carry out the liquidation.
How to stop a winding up petition? (compulsory liquidation)

5 Ways To Stop A Winding Up Petition

HMRC Debt FAQs

Can't pay Corporation Tax, VAT or PAYE?

HMRC Debt Management Solutions:

HMRC Time To Pay | CVA | Pre-Pack Administration | Alternative Finance: Invoice Factoring, Asset Finance, Peer to Peer Lending

CVA FAQs

When is a CVA suitable?

When a company could trade through their financial difficulties with support of their creditors by coming to an arrangement. Suitable action for winding up petitions, receiverships, distraints, walking possession & repossession.

Company Administration FAQs

What does administration mean?

Administration is a process which places a company under the control of a licensed insolvency practitioner and the protection of the court to achieve a specified statutory purpose. The aim of administration is to rescue the company, or if that is not possible, to achieve a better result for creditors than a liquidation, or if neither of those is possible, to realise property to enable funds to be distributed to secured or preferential creditors.
When should company administration be considered?

Company administration is an alternative to compulsory liquidation or receivership. Company administration, with the help of an insolvency practitioner, provides the time needed (all legal action against the company is stayed during an administration) to negotiate with creditors or to sell some assets to repay company debts.

Pre Pack Administration FAQs

What is a Pre Pack Administration?

When faced with company insolvency and where potential buyers for the business & assets are readily identified, a deal known as a pre pack (or pre pack administration) can be agreed in principle before a formal insolvency process begins (a pre pack is a precursor to a company administration procedure). Via a pre pack, the business can be sold as a going concern.

Creditor FAQs

What is the creditors order of payment?

When an Insolvency Practitioner has funds to distribute, creditors are prioritised as follows: secured fixed charge creditors, preferential creditors (e.g. employees, HMRC), secured floating charge creditors, non-preferential unsecured (e.g. trade creditors, suppliers, customers, HMRC) then shareholders.

Restructuring & Insolvency Frequently Asked Questions