When should I seek insolvency advice and where can I get it from?

If concerns arise that your company faces challenges in meeting its debts, indicating technical insolvency, seeking prompt professional advice is crucial. 

However, identifying a reliable source for such guidance can be challenging. This guide addresses when to seek insolvency advice and offers insights into trustworthy avenues for obtaining assistance.


What is the purpose of insolvency advice for my company?

Operating a prosperous company poses its challenges. Inherent risks and constant stress are part of the journey. Challenges escalate when the business faces adversity. Many companies undergo phases of reduced income and strained cash flow.

Yet, if settling bills becomes a struggle, creditor pressure intensifies, and there’s no foreseeable resolution, your business may be insolvent. Engage in our test to assess the insolvency status of your company.

When a director is aware or should be aware of their business’s insolvency, prioritising creditors over the company becomes imperative. Shifting this focus can prevent allegations of misconduct and wrongful trading, mitigating the risk of personal liability concerns.

The key step to reducing these risks is to promptly seek professional advice when there’s a suspicion that your company facing insolvency.

Engaging with an insolvency practitioner involves discussing your situation and devising a strategy for recovery. Optimal solutions might include a formal insolvency process to gradually repay debts or the liquidation of the company if viability is no longer feasible.

They will also guide you on actions to safeguard yourself from potential adverse repercussions on a personal level.


Where can you get free insolvency advice for your company?

If concerns arise about your company’s insolvency, numerous reliable sources can provide honest and reputable advice.

1. Business debt charities

Debt charities for businesses, like Business Debt Line, offer valuable free and impartial advice. They can provide insights into insolvency procedures and direct you to an insolvency practitioner for their implementation.

2. Licensed insolvency practitioners 

Licensed insolvency practitioners, fully regulated, can guide you through various solutions for managing your debts. They are authorised to implement insolvency procedures, negotiate with creditors like HMRC, and assist in devising a recovery plan.

3. Your accountant

Consult your accountant for advice on your company’s financial status. While not business recovery specialists, accountants may possess knowledge of available insolvency procedures and could guide you towards a licensed insolvency practitioner.

At Vanguard Insolvency, our team of corporate recovery specialists, which includes licensed insolvency practitioners, works with companies of various sizes across nearly every sector. 

We take the time to converse about your situation, assist in assessing whether your company is insolvent, and provide an action plan to either rescue or close your business.

Our initial insolvency guidance is always complimentary, allowing you to thoroughly explore your options and discuss them with your fellow directors before making any commitments.


When will a company need insolvency advice?

If you suspect your business is insolvent, promptly seek professional advice. Acting early provides more options for potential rescue and demonstrates proactive directorial responsibility, aiding in protection against personal liability concerns.

The detrimental course of action is to neglect your financial situation and persist in trading, as it contradicts your duty to prioritise creditors’ interests.

If you eventually enter insolvent liquidation or administration, the insolvency practitioner will scrutinise directors’ conduct, potentially leading to allegations of misconduct and wrongful trading.

Not taking action also heightens the risk of a creditor filing a Winding Up Petition against the company. Such a petition can compel Compulsory Liquidation, introducing additional personal risks for you.


What guidance might I receive from an insolvency practitioner?

The initial step involves gaining a clear understanding of your financial position, identifying the causes, and assessing the company’s prospects for recovery

For this, we require details about the company’s assets, debts, revenue, and cash flow. Additionally, information about the company’s creditors is essential.

We proceed to offer customised advice regarding available solutions and the potential outcomes of each option. This empowers you to make an informed decision on how to proceed. Some of the solutions include:

  • Selling the business or its assets to a connected or unconnected buyer through Pre-Pack Administration.
  • Opting for Company Administration to restructure or sell the business.
  • Voluntarily closing the business through a Creditors’ Voluntary Liquidation (CVL).
  • Defending the company against the impact of a Winding Up Petition.
  • Exploring alternative funding options such as asset-based lending and invoice financing.
  • Proposing a formal payment plan, known as a Company Voluntary Arrangement (CVA), to gradually repay creditors over time.
  • Engaging in negotiations for an informal repayment agreement with creditors, such as a Time to Pay arrangement with HMRC.

Is there a cost for company insolvency guidance?

You might encounter companies offering insolvency advice for a fee. While some could be reputable, it’s advisable not to pay for initial advice. 

Charities providing business debt advice typically offer free guidance, and certain licensed insolvency practitioners may provide complimentary initial consultations.

We believe everyone should have access to professional debt advice without the concern of associated costs.


Getting the right insolvency advice for your company

Company insolvency operates within strict regulations. Insolvency practitioners are licensed and regulated by a professional body, ensuring the highest professional standards. 

Verify an insolvency practitioner’s qualifications and licensing on the Insolvency Service website. The site also assists in locating licensed IPs in your vicinity.

Exercise caution with firms and individuals using titles like ‘insolvency experts’ or ‘insolvency advisers’. While anyone can use these labels, only licensed insolvency practitioners possess the qualifications and licensing required to provide genuine insolvency advice.

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Are you looking for professionals for insolvency advice?

Concerned about your company’s insolvency? Reach out to our team for a complimentary same-day consultation or schedule an in-person meeting at one of our 100+ offices across the UK.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.