What is Business Insolvency?
Insolvency is a state of financial distress in which your business is unable to pay its debts. In addition, Insolvency is when there aren’t enough assets to sell in your business, in order to pay off its debts.
Should your business find itself insolvent, there are a number of routes you can take. The option your business decides upon depends on a number of factors. These include your business’ status, as well as whether or not assets are available.
Read more on the different types of business status.
If you’re unable to pay your creditors back, you might want to consider a voluntary arrangement.
Voluntary arrangements are legally binding agreements, and are different depending on your business status. You may also be able to continue trading.
Read more on voluntary arrangements with PayPlan.
One option for dealing with Insolvency is bankruptcy. If you’re a sole trader bankruptcy will resolve you of any liability for unsecured personal or business debts.
Going bankrupt means that your personal or business assets may be sold. It may also make it more difficult to carry on being self-employed.
Closing your business
If you find your business is insolvent whilst trading, you may need to shut it down. You should think carefully about how you close your business, as your form of closure will have lasting implications.
There are many ways of shutting down a business, both formal and informal.
Other insolvency procedures
One method of closing down your business is administration. This is a form of insolvency that involves an administrator taking control of your company. They will operate the company and manage its trading and assets. Whilst this is going on you are protected from your creditors.
Another common insolvency procedure is liquidation, sometimes known as winding up. Liquidating your company means that its assets will be used to pay off its debts, with any remaining money being left to shareholders. Once the Liquidation is completed, your business will be closed.
Get in touch
If you find your business is struggling, get in touch with PayPlan today. When it comes to insolvency there are many solutions available. Our job is to find the right one, for both you and your business.You can call us on 0800 280 281, or request a call back from one of our advisers by filling out our online debt-help form.