It is important for business owners and managers to identify when trouble is starting and then take action quickly. This requires careful consideration and advice to ensure the most appropriate steps are being taken. If a company is struggling, it is important for the directors not to ignore the problem or else they could expose themselves to personal liability for insolvent trading.
What is voluntary administration?
If a company is in financial difficulty, an administrator can be appointed by the directors, a creditor or a liquidator. The administrator’s role is to take control of the company and make decisions about its future. Sometimes, this can involve restructuring the business so that it can continue trading. In other cases, this will not be possible and so winding up the company is the best option.
What is liquidation?
A liquidator may be appointed to the company when it can no longer pay its debts as and when they fall due or if trading out of the situation is not an option. Their role is to take control of the company and its assets so that the company can be wound up, with payment to creditors for outstanding debts, should that be financially possible.
What to do if my business is in financial trouble?
If you are having difficulty keeping up with the expenses of the business, this could be a sign of potential insolvency. Depending on the circumstances, there could be a number of possible solutions that can be explored, from negotiating with creditors through to appointing an administrator or liquidator, if required. The key is to act and to act fast! Get advice about your options and make careful decisions that put you and your business in the best position, moving forward.
If your business is in financial trouble and you need advice on what to do next, please get in touch.