As UK Licensed Insolvency Practitioners (Please read’duties of an Insolvency Practitioner‘) the practice offers Directors insolvency solutions, offered to directors of limited companies, partners of partnerships, sole traders and individuals who are in difficulty throughout the United Kingdom. HBG Advisory offers honest, straight-talking insolvency advice, which then gives directors solutions and comfort moving forward
Company insolvency and how it works in the UK?
Upon deciding as directors, your company therefore requires assistance as your company appears insolvent. Then directors need to therefore check the following:-
Balance sheet test
Are your company’s liabilities greater than its assets in value?
If so, then the business remains therefore insolvent.
Cash flow test Can I then liquidate with an unpaid Bounce Back Loan?
Can your business pay its debts as and when they fall due?.
If not, then the company is therefore judged to be insolvent.
Legal action test
If your business is then subject to legal action that, if therefore lost, will then mean your business is therefore unable to pay, then again, the business is then insolvent.
Once then agreed to appoint, the control of the company’s assets is therefore then controlled by the licensed insolvency practitioner appointed. The IP then realises the assets and distributes the money raised in a strict priority to the creditors, with shareholders paid therefore then paid last.
Individuals or any association with fixed charge security registered to protect their interest over the company’s assets then remain paid first, subject to changes with the ruling December 1st, 2020 with HMRC ranking.
Then preferential creditors are therefore paid. This involves payments to previous employees covering their outstanding wages and holiday pay if owed at the time of the IP appointment.
Company creditors who have a floating charge registered are then next to accept funds, pursued later by unsecured creditors.
Should funds be therefore available after the initial distribution, the practitioner will then, therefore, pay the balance to the company’s shareholders?
For further information, please then read:’What is business insolvency in the UK? And what is insolvency for further clarity and peace of mind.