What are consequences of business insolvency in England?
If your business is considered insolvent, UK law states that you must employ authorized insolvency practitioners (IP) to perform formal insolvency proceedings. That much is just common knowledge, but what an insolvency practitioner actually does (and can do) within your business remains ambiguous for many. In this brief guide, we will provide some examples of what IP can advise and make appointments to, but first, a short paragraph defining the basic function of an insolvency practitioner.
Insolvency practitioners, once assigned to your business, will first try to save your business from bankruptcy. They look at the books and try to work out whether your business can be saved if not they will aim to sell your company assets. They will also collect any funds due to your company, discuss and approve the claims with your creditors and distribute the funds collected after paying the costs involved. The insolvency practitioners will also work in the following areas if asked to do so:
– Bankruptcy: This is personal insolvency and it occurs when a person is unable to pay off his debts. Most will take their property (including belongings) and this means that they will not be able to act as a company managers,but will be only able to trade under their names ever since. The money raised will be shared from the sale of their belongings among creditors who are owed money. If so requested, the insolvency practitioners may act as a trustee in bankruptcy in such cases.
– Management: The sale of commercial assets to repay loans and save the business from full liquidation.They will work as an administrator during this periods
– Voluntary arrangement: A procedure allowing any company or individual to enter into an arrangement to repay the debt owed by its creditors. The IP Section will act as an administrator during these negotiations and ensure that the agreed terms of the arrangement are maintained by both parties for the arrangements.
– Liquidation: This is a procedure in which the company’s assets are collected by insolvency practitioners that usually will sell in order to repay the creditors in a particular application. Courts can order liquidation if an issue is filed between a company or a company can decide to put itself in voluntary liquidation.
These are just some of the things that insolvency practitioners can help you with and your business, so do not be late if you put your work through formal procedures.