Company bankruptcy is a term commonly used when referring to a company becoming insolvent. A bankrupt company means that it has insufficient cash to pay its bills, or the value of its assets is less than its total liabilities. In the UK, the term bankruptcy is only applicable to individuals, including sole traders and members of partnerships. 

How do I know if my company is insolvent? 

Defined by section 123 of The Insolvency Act 1986, there are two ways of determining if your company is insolvent and bankrupt: 

• Cash flow insolvency 
  When a company is unable to pay its debts as they fall due. 
• Balance sheet insolvency 
  The liabilities on the balance sheet outweigh the assets. 

Liabilities resulting from legal action, including County Court Judgements (CCJs), that remain unpaid are another indication of insolvency. 

How we can help you close your bankrupt company? 

If your company is struggling financially and you want to close it, we can help by carrying out the formal liquidation procedures below to close your insolvent company.  

• Close your company down via a Creditors Voluntary Liquidation (CVL)
  A CVL is a liquidation procedure for companies that are insolvent. The process will formally close and liquidate your company, ceasing its trading operations, realising any assets and removing the threat of creditor legal action. If your company has employees, they can claim for redundancy and other statutory entitlements through the government’s Redundancy Payment Service (RPS). The process is final and irreversible. Once completed your company’s unsecured debt will be written off and the company is dissolved, allowing you, the director to move on.
  Find out more about Creditors Voluntary Liquidation
• Close your company down and start again via a pre-pack liquidation
  A Pre-Pack liquidation is a type of CVL where the sale of your company’s assets is arranged before liquidation, allowing business operations to continue seamlessly under the purchasing company. The company name may be reused, and employees can transfer under TUPE. Contracts and essential agreements can also be included as part of a sale, ensuring minimal disruption to your business operations. This process eliminates the unsecured debts of your previous company, providing a fresh start free from previous unsecured liabilities.
  Find out more about Pre-pack Liquidation

How we can help rescue your bankrupt company? 

If your company is insolvent but the business still has the potential to repay its debts, we can carry out the below formal processes to help restructure your company or establish a payment plan. 

• Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA) 
  A CVA is a payment plan between a company and its creditors that allows you to restructure your company’s unsecured debts, while continuing to trade, by making affordable monthly payments over a fixed period. We start by assessing your company’s financial position, determining a realistic repayment amount. These terms are then proposed to your creditors and if approved, your company enters the repayment plan. When in place, all interest and charges are dropped and creditors in the arrangement cannot take further legal action. The process lasts for up to 5 years and on successful completion, any remaining unsecured debt in the arrangement is written off.
  Find out more about Company Voluntary Arrangements
• Restructure your company through administration  
  Administration is an insolvency procedure for companies that are insolvent. Entering the procedure, your company will be in a temporary state of protection by a moratorium, that halts creditor action, including legal proceedings, giving your company the breathing space to continue trading. We will act as administrator and our primary purpose is to rescue your company as a going concern, attempting to restructure and turn it into a leaner more profitable organisation. If rescuing the company isn’t a viable option we will also look at the most appropriate exit strategies from administration, whether that be a potential sale of the business, assets, the whole company, or transitioning to an alternative insolvency procedure.
  Find out more about Administration

Personal bankruptcy

Personal bankruptcy is a process for individuals who owe at least £5,000 and cannot afford to repay their creditors. Bankruptcy offers no protection to personal assets, meaning assets such as a house or a car could be sold in order to repay creditors.  

How to get in touch with us: The next steps 

1. Speak with our initial advisers 
   Make contact with our team, via phone, filling in a form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation.  
2. Initial assessment 
   During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or whether alternative solutions better suit your company’s problems 
3. Formally engage with Wilson Field 
   If there is an appropriate insolvency solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us.  

In summary

In the UK, bankruptcy is only applicable to individuals. Company bankruptcy is a term referring to a company which is insolvent. If your company is insolvent, there are various insolvency procedures which your company can enter, whether you want to try and rescue the company, or formally close and liquidate it. 
  

Case Studies

Principal Packaging Ltd

Kelly Burton • Service Agency • Administration

Sheffield administrators Wilson Field has helped save all 14 jobs at a Lancashire packaging supplier and manufacturer after it was bought out of administration.

Administrators Kelly Burton and Joanne Wright from business turnaround experts Wilson Field were appointed joint administrators on 17 February after Principal Packaging Ltd suffered cash flow problems.

The company, based at Pit Hey Place in Skelmersdale, was one of the main independent providers of quality packaging for the retail food industry, and major food and dairy suppliers.

Directors Tracy and Richard Sharratt took early advice and the business was sold to new company Surepac Ltd as a going concern saving all 14 employees’ jobs.

Kelly Burton from Wilson Field said:

“Historically, the company offered a holding service to its customers. This meant that it held a significant amount of stock at any one time, which tied up a substantial amount of cash.

“This created cash flow problems and was exacerbated in the early part of 2016 when the amount available on the company’s funding facility was reduced.

“Directors took early advice from Wilson Field with the business sold to Surepac Ltd as a going concern, safeguarding all 14 employees’ jobs. The new company will offer the same service and standards and will operate under the same management team”.

Principal Packaging, started in 2006, served packaging needs for meat, fish, horticulture and poultry sectors throughout the United Kingdom and Ireland and traded successfully in the early years.

It gained a reputation for being one of the most professional, yet affordable, companies in a competitive market with its high-quality paper, plastic or board packaging, custom print services and high customer service levels.

M J Squire Limited

Kelly Burton • Construction & Engineering • Creditors Voluntary Liquidation (CVL)

A bespoke joiners and shop fitters in Sheffield, M J Squire Limited, had been in its trade for more than 30 years.

However, recently it has been forced to close due to the downturn in the construction and retail industry.

The company was located at Orgeave Close in Sheffield, after working for many household names over the years including House of Fraser, Levi’s, Austin Reed and Tommy Hilfiger.

Until 2014, it had been a profitable company but over the past couple of years, it had been unable to secure profitable contracts.

February 10^th, 2016 saw the appointment of Wilson Field’s Andy Wood and Robert Dymond as liquidators. This development for the company came as a result of suffering cash flow problems.

Operations at M J Squire Limited have now ceased and regrettably, all nine roles within the company were made redundant.

Andy Wood, insolvency practitioner from Wilson Field, spoke about his work on this case. 

“Declining sales at M J Squires significantly impacted cash flow and the business’ ability to meet its liabilities. In the face of tough market conditions, the director has taken the difficult decision not to continue trading. The business has closed and the assets are being sold.”

“It is very sad to see this well-known local business cease to trade after over 30 years. The downturn in the retail sector has hit this business hard.”

Aristocrat Pet Supplies

Kelly Burton • Retail • Administration

The business and assets belonging to a Sheffield online pet supplies company are up for sale. Aristocrat Pet Supplies, a family owned and run business, milled its own feed and seed on-site in Sheffield and has been trading for over 25 years selling agricultural raw materials, livestock, textile raw materials and semi-finished goods.

Sheffield-based insolvency specialists Wilson Field were called into the firm after it experienced increasing pressure and competition online. Andy Wood and Lisa Hogg were appointed as joint administrators for the company on January 26.

Wilson Field is trading the business in the short term with a view to finding a potential buyer for the company based on Holbrook Green Industrial Estate near Sheffield.

Andy Wood, associate director and insolvency practitioner at Wilson Field said:

“The business has encountered increased competition in recent years, principally from discount stores which have reduced margins.

“It has been on the market for several months but has not attracted any significant interest so far. As administrators, Wilson Field is trading the business in the short term to maximise realisations on a reduced staff base of seven.”

Aristocrat, which employed 19 staff, offered a range of pet supplies including dog and cat treats, chews, small animal bedding, wild bird supplies, poultry and aquatic food.

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