Insolvency

Insolvency refers to a financial state where an individual or company is unable to pay off their debts as they become due. It is a challenging situation that arises when the liabilities (debts) exceed the available assets or cash. This can happen due to various reasons such as economic downturns, poor financial management, cash flow problems or unexpected events.

Insolvency can lead to serious consequences, including bankruptcy, investigation, claims, director disqualification, potential closure or restructuring. However, it is important to remember that insolvency is not the end – it is a chance to take control of the situation and work towards a solution.

Our expert insolvency lawyers at Go Legal specialise in helping individuals and businesses facing insolvency. We understand the complexities of the insolvency process and offer strategic guidance to navigate through these challenges. Whether you are looking to restructure your debts, negotiate with creditors, received a claim from a liquidator, require some general insolvency advice or explore other options, we are here to provide the support and guidance you need. 

Our expert insolvency lawyers also help clients who have received winding up petitions in relation to debts. Our lawyers have an excellent track record of resolving insolvency disputes.

With the right approach and professional advice, you can overcome financial difficulties and pave the way for a brighter financial outlook.

Please call us on 0207 459 4037 or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

It is important to recognise the signs of insolvency and to take action on resolving matters without delay (and this includes by seeking professional assistance from our firm). In our experience, insolvency is not something that happens overnight and therefore there are several key indicators we are used to seeing from an individual or a business that might be facing insolvency:

1. Cash Flow Problems: Difficulty in paying bills, employees, or suppliers on time can be a sign of financial distress.
2. Increasing Debts: If your debts are consistently growing and becoming unmanageable, it is a signal that financial obligations might be outweighing your income.
3. Late Payments: Regularly missing payment deadlines and receiving reminders from creditors could point to financial difficulties.
4. Decline in Profits: Sustained periods of low or declining profits might indicate underlying financial problems that need attention.
5. Reduced Access to Credit: If lenders and suppliers become reluctant to extend credit, it could be a sign that your financial health is a concern.
6. Legal Actions: Receiving letters of demand, threats of legal action, or facing lawsuits due to unpaid debts are signs of escalating financial troubles.
7. Overdue Taxes: Failing to meet tax obligations or receiving notices from tax authorities can signal financial instability.
8. Inability to Secure Funding: If you are unable to obtain loans or investments to cover operational expenses, it could suggest a lack of financial viability.
9. Lack of Working Capital: When you cannot cover day-to-day operating costs, it is an alarming sign that needs immediate attention.
10. Strained Relationships: Tensions with suppliers, creditors, and even within the business can be indicative of underlying financial stress.

We can help you assess the situation and explore potential solutions. Our experienced team can guide you through various options, including negotiation with creditors, debt restructuring, or other measures to regain financial stability.

Remember, addressing insolvency early increases the chances of finding a positive resolution and securing your financial future. Our expert insolvency and restructuring solicitors have written a Free Guide on Avoiding Insolvency – Early Warning Signs and Remedial Actions.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency solicitors in London today.

Business insolvency occurs when a company is unable to pay its debts as they fall due. Understanding the primary causes of business insolvency can help business owners take proactive steps to mitigate risks and ensure financial stability. In our experience these are the main factors that can lead to business insolvency:

1. Poor Cash Flow Management: Inadequate management of cash inflows and outflows can quickly lead to financial strain, making it challenging to meet financial obligations.
2. High Levels of Debt: Accumulating excessive debt, especially when coupled with high interest rates, can burden a business’s finances, and impede its ability to operate smoothly.
3. Declining Sales and Revenue: A sustained decrease in sales and revenue can result from factors like changing market trends, increased competition, or economic downturns.
4. Ineffective Cost Management: Failure to control expenses and inefficiencies can erode profits and hinder the ability to generate enough revenue to cover costs.
5. Lack of Profitability: Businesses need consistent profitability to cover their operational costs, invest in growth, and service debt obligations.
6. Overexpansion or Rapid Growth: Expanding too quickly without the necessary resources or a solid customer base can strain finances and lead to insolvency.
7. Legal Issues and Disputes: Ongoing legal battles, lawsuits, or regulatory challenges can result in substantial financial burdens that impact the business’s viability.
8. Poor Financial Planning: Lack of accurate financial forecasting and strategic planning can leave a business vulnerable to unexpected financial challenges.
9. Market Changes: Drastic changes in the market, consumer preferences, or technological advancements can render a business’s products or services obsolete.
10. Inadequate Management and Leadership: Ineffective decision-making, lack of leadership, or internal conflicts can hamper a business’s ability to navigate challenges.
11. Loss of Key Customers or Contracts: Dependence on a small number of clients or contracts can be risky; losing a key client or contract can significantly impact revenue.
12. Economic Downturns: Economic recessions or downturns can lead to reduced consumer spending, decreased demand, and financial instability for businesses.

It is important to note that each business’s situation is unique, and multiple factors can contribute to insolvency. The key is to identify these challenges early and seek professional guidance to explore options for restructuring, refinancing, or other strategies to turn the business around. At Go Legal we have a dedicated team of insolvency experts ready to provide tailored advice and solutions to guide your business toward financial recovery and success.

For more information on understanding the cause of insolvency and ways to remedy issues when things go wrong, our lawyers have written a Free Guide to help you avoid insolvency issues.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

The insolvency process in the UK is a legal procedure designed to address the financial challenges of individuals and businesses that are unable to meet their financial obligations. It involves different routes depending on the circumstances, aiming to achieve a fair distribution of assets and provide a fresh start for those involved.

1. Seek Professional Advice: If you are facing financial difficulties, our insolvency and restructuring solicitors are here to help you. We are highly experience and can assess your situation, explain your options, and guide you through the process.
2. Informal Agreements: Before formal insolvency procedures, businesses may explore informal agreements with creditors to renegotiate payment terms or propose debt repayment plans.
3. Company Voluntary Arrangement (CVA): This is a formal agreement between a company and its creditors to repay debts over a fixed period. It allows the company to continue trading while repaying its debts under the supervision of a licensed insolvency practitioner.
4. Administration: If a company is facing financial difficulties but has a viable future, administration may be an option. It involves appointing an administrator to manage the company’s affairs, with the goal of rescuing it, selling it as a going concern, or achieving a better outcome for creditors than liquidation.
5. Liquidation: Liquidation is the process of winding up a company’s affairs and distributing its assets to creditors. In a compulsory liquidation, the company is wound up by court order. In a voluntary liquidation, the company’s shareholders decide to wind it up.
6. Individual Voluntary Arrangement (IVA): An IVA is a formal agreement between an individual and their creditors to repay debts over a fixed period. It allows the individual to avoid bankruptcy and make manageable payments.
7. Bankruptcy: Bankruptcy is a formal insolvency procedure for individuals who are unable to pay their debts. A trustee is appointed to manage the individual’s assets and distribute them to creditors.
8. Debt Relief Orders (DROs): DROs are designed for individuals with low income, few assets, and relatively low levels of debt. They provide a way to have debts written off after a specific period.
9. Individual Insolvency Register: Details of individuals subject to insolvency proceedings are recorded on the Individual Insolvency Register, which is accessible to the public.
10. Company Insolvency Register: Similar to the individual register, details of companies undergoing insolvency procedures are recorded on the Company Insolvency Register.

Throughout the insolvency process, our lawyers will work to achieve the best possible outcome for you. It is important to note that seeking professional advice early is crucial to understanding your options and making informed decisions. Go Legal provides tailored advice and guide you through the insolvency process, helping you navigate challenges and work towards a fresh financial start.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

In the UK, company directors have important legal rights and responsibilities, especially when their company faces insolvency. Understanding these obligations is crucial for making informed decisions during challenging times.

Legal Responsibilities:

1. Duty to Act in the Best Interest: Directors are legally obligated to act in the best interest of the company and its creditors, even when facing insolvency. This means considering the long-term welfare of the business and its stakeholders.
2. Avoiding Wrongful Trading: Directors must not continue trading if they know the company cannot avoid insolvent liquidation or administration. Continuing trading in such circumstances could lead to personal liability for company debts.
3. Duty to Avoid Preference Payments: Directors must not give preferential treatment to certain creditors before insolvency, as this can be reversed by the court. Payments made that put one creditor in a better position than others may be recovered.
4. Duty to Avoid Fraudulent Trading: Directors should not engage in fraudulent activities, such as hiding assets, concealing debts, or continuing trading with the intent to defraud creditors.
5. Cooperating with Insolvency Practitioners: In formal insolvency procedures, directors are obligated to cooperate with appointed insolvency practitioners, providing necessary information and access to company records.

Legal Rights:

1. Participating in Decision-Making: Directors can participate in company decisions, even during insolvency. However, their decisions should align with the best interests of the company and its creditors.
2. Appointing Insolvency Practitioners: In some insolvency procedures, directors have the authority to appoint an insolvency practitioner to handle the process.
3. Access to Company Information: Directors have the right to access company records and information to make informed decisions during insolvency.

While insolvency can be challenging, directors have an opportunity to work constructively to maximise the outcome for all parties involved. Seeking professional advice early is crucial. Engaging with our expert insolvency lawyers can help directors navigate the complexities of the process, make informed decisions, and ensure compliance with their legal responsibilities.

At Go Legal, we are committed to assisting company directors during insolvency by providing expert legal guidance tailored to your unique situation. Our experienced team is here to help you understand your rights, responsibilities, and options, so you can move forward with confidence and a positive approach.

Please call us or complete our booking form for a Free Consultation today.

Insolvency, whether affecting a business or an individual, can have significant financial and legal implications. Understanding how insolvency affects both parties is essential for making informed decisions during challenging times.

Impact on Businesses:

1. Continued Operations: Insolvency doesn’t necessarily mean the end of a business. In many cases, businesses can continue to operate under the supervision of insolvency practitioners or administrators.
2. Legal Protection: Insolvency procedures can provide legal protection from creditors’ legal actions, giving businesses the opportunity to restructure, repay debts, and recover.
3. Creditor Negotiations: Insolvency procedures may involve negotiations with creditors to establish manageable repayment plans, helping businesses stabilize their financial situation.
4. Asset Liquidation: In some cases, assets may need to be sold to repay creditors. However, this doesn’t always lead to the closure of the business; it might provide an opportunity to focus on core operations.
5. Employee Impact: Employees’ rights are protected in insolvency. Redundancy payments and other entitlements are often covered by government schemes or from the proceeds of asset sales.

Impact on Individuals:

1. Personal Finances: Personal insolvency, like bankruptcy or Individual Voluntary Arrangements (IVAs), can provide a structured way to manage and repay debts over time.
2. Credit Rating: Insolvency can negatively impact credit scores, making it challenging to access credit in the future. However, it’s not permanent, and credit can be rebuilt over time.
3. Asset Protection: In some cases, personal assets may be at risk in insolvency. However, there are regulations to protect essentials like housing and pension funds.
4. Debt Repayment: Insolvency procedures can provide a manageable way to repay debts, allowing individuals to regain financial stability without overwhelming burdens.

Our insolvency solicitors in London understand the complexities of insolvency and the impact it can have on both businesses and individuals. Our experienced team is here to provide expert guidance, helping you navigate the challenges and find the best path forward. With the right approach and professional support, you can overcome the obstacles and achieve financial stability.

Bankruptcy is a formal legal process designed to help individuals who are unable to repay their debts. While it might sound daunting, bankruptcy can provide a fresh financial start and a path towards rebuilding your financial stability. 

What is Bankruptcy?

Bankruptcy is a legal declaration that you are unable to meet your financial obligations. It is a way to deal with overwhelming debt and offers a structured process to manage your financial situation.

Implications of Bankruptcy:

1. Debt Relief: Bankruptcy provides relief from unmanageable debts. Once declared bankrupt, your creditors cannot pursue you for the debts covered by the bankruptcy order.
2. Assets: Some assets, known as “bankruptcy assets,” might be sold to repay creditors. However, essential assets like household goods and tools necessary for work are usually protected.
3. Credit Rating: Bankruptcy will impact your credit rating, making it challenging to access credit in the short term. The bankruptcy record remains on your credit file for a certain period.
4. Debt Repayment: Bankruptcy usually lasts for one year. During this time, you’ll make affordable payments towards your debts if your income allows.
5. Restrictions: Bankruptcy involves restrictions on your financial activities. For example, you cannot borrow more than a certain amount without disclosing your bankruptcy status.
6. Professional Impact: Certain professions, such as law or finance, might have restrictions if you are declared bankrupt.

Benefits of Bankruptcy:

1. Fresh Start: Bankruptcy provides a chance for a fresh financial start. Once discharged, you can begin rebuilding your credit and financial stability.
2. Protection from Creditors: Creditors can’t take legal action against you for the covered debts, giving you relief from the constant pressure.
3. Structured Process: Bankruptcy offers a structured way to manage your debts, ensuring fair treatment for both you and your creditors.
4. Short Duration: Bankruptcy usually lasts for a year, after which you’re discharged. This means you can move forward relatively quickly.

If you are considering bankruptcy or experiencing financial issues, it is crucial to seek professional advice. At Go Legal, our lawyers specialise in helping individuals navigate the complexities of bankruptcy. Our experienced team can assess your situation, explain your options, and guide you through the process step by step.

Please call us or complete our booking form for a Free Consultation today.

An Individual Voluntary Arrangement (IVA) is a powerful legal solution designed to help individuals in financial distress regain control over their debts and work towards a more stable financial future.

An IVA is a formal agreement between you and your creditors, outlining a structured plan to repay your debts over a fixed period. It is a legally binding arrangement, giving you the chance to make affordable payments while protecting you from further creditor actions.

Features of an IVA:

1. Debt Repayment Plan: Under an IVA, you propose a manageable repayment plan based on what you can realistically afford. This plan is presented to your creditors for their approval.
2. Protection from Creditors: Once the IVA is approved, your creditors are legally bound by its terms. They cannot take legal action against you or contact you for payment outside of the agreed terms.
3. Single Monthly Payment: Instead of managing multiple payments to various creditors, you make a single monthly payment to the insolvency practitioner, who then distributes it among your creditors.
4. Fixed Term: IVAs typically last for a set period, usually five to six years. At the end of this term, any remaining included debts are usually written off.
5. Debt Write-Off: In some cases, a portion of your debt might be written off, especially if you’re unable to repay the full amount within the agreed term.
6. Assets and Equity: You might need to release equity from certain assets, like your home, to contribute towards the IVA. However, this is carefully evaluated to ensure fairness.

Benefits of an IVA:

1. Manageable Payments: IVAs offer a practical way to make affordable payments based on your income and expenses, preventing financial strain.
2. Legal Protection: Once approved, the IVA provides legal protection against further creditor actions, including legal proceedings and contact.
3. Debt Resolution: After successfully completing the IVA term, any remaining included debts are typically written off, providing a significant relief.
4. Structured Plan: An IVA provides structure and transparency, allowing you to take control of your finances and work towards debt-free living.

Considering an IVA:

If you are struggling with unmanageable debts, an IVA could be the solution you need to regain financial stability. At Go Legal, our expert insolvency lawyers specialise in helping individuals explore their options and make informed decisions. Our experienced team can assess your situation, explain the IVA process, and guide you step by step.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Facing financial challenges can be overwhelming, especially when creditors are pressuring you. It is essential to understand your rights and options when it comes to insolvency in the UK.

Creditors have the right to take certain actions if you are unable to repay your debts.

Legal Actions by Creditors:

Creditors may initiate legal proceedings to recover their debts. Some actions they can take include:

1. County Court Judgment (CCJ): A CCJ is a court order that confirms you owe a debt and outlines the repayment terms. Failing to comply with a CCJ can lead to further actions.
2. Statutory Demand: Creditors can issue a statutory demand, demanding payment of a debt within a specific period. If you fail to respond or make payment, they may then apply for your bankruptcy or to petition to wind up the company.
3. Winding Up Petition: In the case of a business, creditors can file a winding up petition to force the company into compulsory liquidation.
4. Bankruptcy Petition: in the case of an individual, creditors can file a bankruptcy petition to make the individual bankrupt and the affairs and assets of the individual will be handled and taken over by the trustee in bankruptcy.

Your Rights and Options:

While creditors can take these actions, it is important to know that you have rights and options to address your financial situation:

1. Negotiation: You can negotiate with your creditors to come to an agreement on repayment terms that are feasible for you.
2. Individual Voluntary Arrangement (IVA): If you are an individual, you can proactively propose an IVA, a structured repayment plan agreed upon by you and your creditors.
3. Debt Management Plan: This is an informal arrangement where you work with a debt management company to consolidate and manage your debts.
4. Bankruptcy: If you are struggling to repay debts, you can choose to file for bankruptcy voluntarily.

Navigating insolvency and dealing with creditors can be complex. At Go Legal, we are here to empower you with knowledge and support. Our experienced team can help you navigate the intricacies of insolvency, protect your rights, and work towards a positive resolution.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Liquidation and administration are both formal insolvency procedures in the UK, but they serve different purposes and are initiated under different circumstances.

1. Liquidation:

• Purpose: Liquidation is the process of winding up a company, selling off or realising the value of its assets, and distributing the proceeds to its creditors. Essentially, it marks the end of a company’s life.
• Types of Liquidation:
  • Compulsory Liquidation: Initiated by the court, usually upon the petition of creditors.
  • Creditors’ Voluntary Liquidation (CVL): Initiated by the company’s directors when they believe the company is insolvent and cannot continue its operations.
  • Members’ Voluntary Liquidation (MVL): Initiated by company directors when a solvent company decides to close down and distribute assets to shareholders.
• Outcome: Once all assets are sold and funds are distributed, the company is dissolved and ceases to exist.

2. Administration:

• Purpose: Administration aims to rescue a company in financial distress, providing it protection from creditors called a moratorium to pause any claims against the company while a plan is formulated by the administrators to either:
  • Rescue the company as a going concern,
  • Achieve a better result for the company’s creditors than if the company were wound up, or
  • Realise more from the company’s assets than if it were under liquidation.
• Process: An administrator (usually an insolvency practitioner) is appointed to manage the company’s operations, make critical decisions, and develop a strategy for recovery or asset maximisation.
• Outcome: The ideal result is for the company to emerge from administration as a viable business. However, if that is not possible, the company might be sold, or its assets liquidated to repay creditors.

If you are facing financial challenges with your business, it is essential to understand these procedures and seek expert legal advice. Our insolvency and restructuring lawyers will guide and support you through these complex processes, ensuring the best possible outcome for your business.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Many businesses, at some point in their journey, face financial difficulties, but insolvency does not always mean the end of the road. In the UK, several legal measures and strategies can help businesses navigate these challenging waters and potentially return to profitability. In our experience the following remedies and measures could help you navigate cash flow and financial difficulties but it is important that you seek urgent help from our dedicated and experienced insolvency team.

1. Company Voluntary Arrangement (CVA):

• What is it? A CVA is a formal agreement between a company and its creditors, which allows for a proportion of its debts to be paid back over time.
• Benefits: It offers breathing space by freezing interest and charges on debts, giving your business a chance to get back on its feet while still trading.

2. Administration:

• What is it? As previously discussed, administration provides protection from creditors while a recovery or restructuring plan is formulated.
• Benefits: It can help preserve the business as a going concern, or at least, realise greater returns for creditors than a straight liquidation would.

3. Refinance or Secure New Investment:

• What is it? By attracting new investors or restructuring existing finances, businesses can infuse fresh capital.
• Benefits: It can provide the necessary funds to clear pressing debts and fuel growth strategies.

4. Negotiate with Creditors:

• What is it? Engage with creditors directly to discuss possible extensions, payment plans, or even debt reductions.
• Benefits: By showing proactiveness and a clear plan, many creditors might be willing to offer more lenient terms, alleviating immediate financial pressures.

5. Review and Restructure:

• What is it? Assess all aspects of your business, from operations to the market strategy, to identify inefficiencies or new opportunities.
• Benefits: Streamlining processes, cutting unnecessary costs, and pivoting in your approach can lead to better financial health.

While these options offer some hope, it is crucial to act quickly and seek professional advice the moment you sense financial difficulties. The sooner you address the issues, the more options you will have available to potentially save your business and better prospects we have to achieve your preferred outcome.

At Go Legal, we understand the stress and challenges of insolvency. Our dedicated team of insolvency experts and specialise lawyers are committed to providing tailored advice and solutions to help you navigate this period, aiming for the best possible outcome for your business.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Insolvency can be a challenging situation, and it is essential to be fully aware of its legal implications. Insolvency can lead to several legal consequences for both the company and its directors.

1. For the Company:

• Winding Up Petition: Creditors owed more than £750 can issue a winding-up petition against the company debtor. If successful, this can lead to the compulsory liquidation of the company and its assets being sold to repay debts.
• Assets Control: During insolvency process like administration or liquidation the control of the company’s assets typically shifts to an appointed insolvency practitioner. They will make decisions about the company’s future, including potential business rescue or asset liquidation.
• Cessation of Trade: In certain insolvency scenarios, the company may need to cease trading. This is to ensure no further debt is incurred that could disadvantage creditors.

2. For the Directors:

• Personal Guarantees: If a director or other individual has personally guaranteed any debts of the company, then the creditors subject to the personal guarantee may be pursued against that individual.
• Director Disqualification: Directors can be disqualified for 2-15 years if they are found to have engaged in unfit conduct leading up to the company’s insolvency. This means they will not be able to be a director of a company, or be involved in forming, marketing, or running a company.
• Personal Liability: If directors continue trading and incur debt knowing the company is insolvent, they might be held personally liable for those debts and potential claims by the liquidator against them.
• Investigations: Directors may be subject to investigations by the Insolvency Service, which can lead to civil or criminal proceedings if any wrongdoing is discovered.
• Loss of Control: Directors typically lose control over the company’s operations during formal insolvency procedures, with key decisions being made by the appointed insolvency practitioner.

While these consequences may seem daunting, it is important to remember that insolvency law also aims to provide mechanisms for companies to recover, where possible. Moreover, many of these outcomes can be mitigated or avoided with timely action and the right guidance.

If you find your business facing insolvency or financial difficulties, seeking expert advice at the earliest opportunity is paramount. At Go Legal, we pride ourselves on offering compassionate, clear, and strategic counsel to help businesses navigate these challenging waters. Our primary goal is to find the best path forward for you, ensuring compliance and mitigating risks.

Please call us on 0207 459 4037 or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Protecting your personal assets when facing insolvency or bankruptcy is a critical concern for many business owners and directors. While corporate insolvency in the UK is designed to address company debts, there are circumstances where personal assets could be at risk.

1. Distinguish Between Personal and Business Assets:

• What to do: Ensure that personal and business assets are kept separate. This helps demonstrate that you have not been using company money for personal expenses.
• Benefit: By clearly distinguishing between personal and business assets, it becomes harder for creditors to make claims on your personal assets.

2. Avoid Personal Guarantees Where Possible:

• What to do: When securing finance for your company, try to avoid giving personal guarantees. If you have already given them, consider negotiating with the lender to remove or reduce them.
• Benefit: Without personal guarantees, creditors will find it challenging to pursue your personal assets for business debts.

3. Set Up a Limited Liability Company:

• What to do: If you operate as a sole trader, consider transitioning to a limited company. This legal structure separates personal assets from company liabilities.
• Benefit: In the event of insolvency, creditors can typically only claim against the company’s assets, not yours personally.

4. Consider Insurance:

• What to do: Secure insurance policies, like Director’s and Officer’s Insurance, which can offer a degree of protection against personal liability.
• Benefit: Such insurance can help cover legal fees and some liabilities if claims are made against directors personally.

5. Consult Our Insolvency Experts Early:

• What to do: If you anticipate financial difficulties, consult our insolvency lawyers today.
• Benefit: We can offer tailored strategies to protect your assets and guide you through the process, ensuring you make informed decisions.

While the landscape of insolvency can be complex, it is essential to remember that with the right steps and expert advice, you can navigate the process while safeguarding your personal assets. At Go Legal, we are committed to providing clear, supportive, and effective guidance to individuals facing insolvency. We understand the intricacies of the UK’s insolvency framework and are here to stand by your side, ensuring your interests are protected every step of the way.

Please call us or complete our booking form for a Free Consultation.

When a business encounters financial challenges, it is natural to seek solutions that allow it to recover and thrive. There are several established routes for business restructuring and turnaround that can help your company navigate rough waters.

1. Company Voluntary Arrangement (CVA):

• What is it? A CVA is an agreement between a company and its creditors, enabling a portion of its debts to be repaid over a specified period.
• Benefits: CVAs allow companies to continue trading, restructure their debts, and potentially ward off insolvency.

2. Administration:

• What is it? An insolvency procedure where a licensed insolvency practitioner takes control of the company to either rescue it as a going concern, achieve a better result for creditors than would be possible through liquidation, or realise assets to repay creditors.
• Benefits: Offers breathing space from creditors and can lead to a successful business restructuring or sale.

3. Scheme of Arrangement:

• What is it? A court-approved agreement between a company and its shareholders or creditors, often used to restructure debt.
• Benefits: Enables complex debt restructures, mergers, or demergers, providing flexibility for turnaround strategies.

4. Refinancing:

• What is it? Securing new finance or altering existing finance agreements to improve liquidity.
• Benefits: Brings in vital funds, often at better terms, to support the business during its recovery.

5. Informal Negotiations:

• What is it? Direct discussions with creditors, suppliers, or other stakeholders to agree on revised terms, payment plans, or solutions without formal proceedings.
• Benefits: Maintains good relationships with stakeholders and can provide short-term relief without the need for formal insolvency procedures.

6. Operational Review and Cost Cutting:

• What is it? A thorough assessment of business operations to identify inefficiencies or areas for improvement.
• Benefits: Streamlines the company, reduces overheads, and improves profitability.

7. Asset Sale:

• What is it? Selling non-core or underutilised assets to generate cash.
• Benefits: Provides immediate liquidity and allows the business to focus on core operations.

Financial challenges, while daunting, can sometimes serve as a catalyst for positive transformation. With the right strategies and expert guidance, businesses can overcome hurdles, reposition themselves, and emerge stronger than before.

At Go Legal, our mission is to help businesses navigate these complexities with clarity and confidence. Our team of dedicated professionals offers a wealth of experience in insolvency, restructuring, and turnaround solutions. If your business is facing challenges, reach out to us.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Yes, in certain circumstances, businesses can continue trading during the insolvency process, but it is essential to approach this with caution and the right guidance from our dedicated and experienced team otherwise there is a risk that directors could have claims against them for trading when it should not have been and this has negatively affected creditors.

1. Administration:

• What is it? When a company enters administration, an insolvency practitioner takes control to achieve specific objectives, like rescuing the company or achieving a better result for creditors.
• Can you trade? Often, the goal of administration is to keep the business running and preserve jobs. Thus, trading can continue under the insolvency practitioner’s supervision.

2. Company Voluntary Arrangement (CVA):

• What is it? A CVA allows companies to come to a binding agreement with creditors, often involving staggered payments over time.
• Can you trade? Yes, the primary purpose of a CVA is to allow the company to trade its way out of difficulties, thereby benefiting all stakeholders.

3. Liquidation:

• What is it? In a liquidation process, a company’s assets are sold to repay creditors.
• Can you trade? Generally, no. Once the liquidation process starts, the company typically ceases to trade.

4. Essential Considerations:

• Directors’ Responsibilities: If you continue to trade while insolvent without a clear path to recovery, directors may be held personally liable for any additional debts incurred.
• Best Interest of Creditors: Any trading during insolvency should be in the creditors’ best interests. The goal is to increase repayments or enhance the company’s viability.

At Go Legal, we are passionate about supporting businesses through their most challenging times. With a deep understanding of the UK insolvency landscape, our dedicated team is here to provide clarity, strategic advice, and a way forward that protects your interests. If you are facing insolvency or simply want to understand your options, please do not hesitate to get in touch.

Please call us or complete our booking form below for a Free Consultation with one of our expert insolvency lawyers today.

Insolvency can have profound effects on employment and contractual obligations. Given our extensive experience in dealing with insolvency matters, we provide the following the following summary setting out the key impact on insolvency on company employees and contracts:

1. Impact on Employees:

• Redundancy: In certain insolvency situations, such as liquidation, the company ceases to operate, leading to employee redundancies. If this happens, employees become unsecured creditors of the company for their unpaid wages and other entitlements.
• Claims: Employees can claim for unpaid wages, holiday pay, redundancy pay, and notice pay from the National Insurance Fund (NIF) via the Redundancy Payments Service. There are caps on the amounts that can be claimed, but this provides a safety net for affected employees if there is sufficient monies to pay the employees and other creditors.
• Transfer of Undertakings (Protection of Employment) Regulations (TUPE): In scenarios where a business is sold or transferred during insolvency (e.g., during administration), employees may be protected by TUPE. This means their employment contracts could transfer to the new owner, preserving their terms and conditions.

2. Impact on Contracts:

• Contract Clauses: Some contracts have clauses that allow termination in the event of insolvency. Parties involved should review contracts to determine the terms related to insolvency and the subsequent steps. In particular it is important to check the relevant contract clauses for terminate and event of default.
• Continuation or Termination: In certain insolvency procedures like administration, the insolvency practitioner may choose to honour or terminate ongoing contracts. Their decision will be based on what is in the best interest of the creditors.
• Supplier Relationships: If suppliers are concerned about your company’s solvency, they might demand upfront payment, change credit terms, or even stop supply. Establishing open communication is crucial in such scenarios to ensure business continuity where possible.

At Go Legal, we pride ourselves on offering empathetic and expert advice during such challenging periods. We understand the intricate nuances of the UK’s insolvency regulations and strive to guide businesses, employees, and contractual partners towards the most favourable outcomes. If you have concerns about insolvency or need clarity on your position, please reach out to our dedicated team.

In today’s interconnected global economy, businesses often operate in multiple countries and internationally. This introduces complexities when a company faces financial difficulties, especially if insolvency procedures are required in more than one jurisdiction.

1. What is Cross-Border Insolvency:

Cross-border insolvency refers to situations where an insolvent company has assets or creditors in more than one country or no assets in the UK, and all assets are abroad outside of the jurisdiction. This presents challenges, as different nations have their own insolvency laws and regulations.

2. The UK’s Framework:

The UK, known for its robust legal infrastructure, is part of several international efforts to harmonise and cooperate on cross-border insolvency matters:

• UNCITRAL Model Law on Cross-Border Insolvency: Adopted by the UK in 2006, this provides a framework for cooperating with foreign courts and insolvency practitioners. It aims to protect the interests of all creditors and ensure the optimum realisation of an insolvent entity’s assets.
• EU Regulations on Insolvency Proceedings: Though the UK left the EU, certain transitional rules mean that insolvency proceedings started before the end of 2020 still follow these regulations. They focus on determining the primary jurisdiction for insolvency proceedings and recognise decisions from that jurisdiction across the EU.

3. Key Considerations:

• Contract: typically, your contract will have a jurisdiction and governing law clauses which should set out which Court any proceedings must be started. England and Wales is the most common jurisdiction.
• Centre of Main Interests (COMI): A critical concept in cross-border insolvency, COMI is the primary place where a debtor conducts its operations. Determining a company’s COMI can influence which country’s courts take the lead on insolvency proceedings.
• Secondary Proceedings: These might be opened in other countries where the debtor has assets but isn’t their main base of operations. These proceedings can run concurrently with the main proceedings but are bound by the laws of the hosting country.

For businesses operating internationally, understanding cross-border insolvency is crucial. It affects how assets are distributed, how creditors are paid, and can influence strategic decisions about where to base operations or hold assets. We will carry out an extensive due diligence process and strategy at the outset to analyse how best to deal with your insolvency matter and pursue any international creditors.

At Go Legal, our experienced insolvency lawyers and experts specialise in the intricacies of cross-border insolvency. We are dedicated to guiding our clients through every stage of the process, demystifying complexities, and offering strategic insights.

Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.

Insolvency is a complex area, and while it primarily pertains to financial difficulties, there are other important personal considerations that are important to understand and require legal advice from our expert insolvency lawyers. However, it is essential to recognise that simply being in a state of insolvency is not a criminal act. Businesses can face financial hardships for a myriad of reasons, many of which are beyond their control.

1. Director Responsibilities: Criminal implications can arise is in the conduct of directors before and during insolvency. Directors have a duty to act in the best interest of creditors when their company is facing insolvency.
2. Potential Offences: Certain actions (or inactions) related to insolvency could lead to criminal charges or investigations:

• Wrongful Trading: If a director continues to trade and incur debts when there is no reasonable prospect of the company avoiding insolvency, they can be held liable.
• Fraudulent Trading: If it is found that business has been carried out with the intent to defraud creditors, this is a criminal offence, and directors can face both fines and imprisonment.
• Misfeasance: This refers to situations where directors misapply, retain, or become accountable for any money or property of the company or breach any fiduciary or other duties.
• Other Offences: These can include not keeping proper accounting records, not submitting accounts or returns, or not cooperating with the insolvency practitioner.

4. Investigations:

• The Insolvency Service: This UK government agency can investigate and prosecute directors who breach their legal responsibilities. They also have the power to disqualify individuals from acting as directors and may pursue director disqualification proceedings.
• Other Agencies: Depending on the nature and severity of the misconduct, other entities like the Serious Fraud Office, the Financial Conduct Authority, or HM Revenue & Customs might also get involved.

While insolvency can be stressful, it is worth noting that with proper guidance and timely action, many potential issues can be addressed proactively. Directors who seek advice early, act transparently, and in the best interests of their company and its creditors, have a solid foundation to navigate these challenges.

At Go Legal, we understand the pressures and responsibilities directors face, especially in turbulent financial times. Our dedicated team offers clear, actionable advice, ensuring that you are informed, compliant, and poised for the best possible outcomes.

Facing potential insolvency or concerned about your responsibilities? Please call us or complete our booking form for a Free Consultation with one of our expert insolvency lawyers today.