What is Company Bankruptcy in the UK?
Company Bankruptcy is a term commonly used to refer to Company Liquidation, Insolvency or Administration. However it is important to note that, in the UK, the term bankruptcy is only applicable to insolvent individuals and sole traders and that a company cannot technically ‘go bankrupt’. When a company can no longer meet its financial obligations it is deemed to be insolvent and this may lead to the pursuit of processes such as Administration or Liquidation. Company Bankruptcy as a process does not exist in the UK.
Any Director seeking Company Bankruptcy advice would be best advised to visit our Administration or Liquidation page, or getting in touch with a Wilson Field insolvency adviser.
Is Company Bankruptcy similar to Liquidation?
Company Bankruptcy and Company Liquidation generally speaking mean the same thing, Company Liquidation is simply the UK equivalent of its US counterpart. Liquidation involves the cessation of trade and the sale of company assets in order to make payments to Creditors. The company will then be struck off the register and cease to exist as a corporate entity. A number of different Liquidation procedures exist however and the individual circumstances surrounding a company will dictate which Liquidation process is most appropriate.
Creditors Voluntary Liquidation (CVL)
A Creditors Voluntary Liquidation is available to insolvent companies and should be considered as a way to minimise Creditor losses and reduce the possibility of a wrongful trading accusation being made against Directors.
Click here for more information on Creditors Voluntary Liquidations (CVL).
Compulsory Liquidation is a serious insolvency process that is generally best avoided if possible. It occurs when a Creditor has grown tired of pursuing their due monies and has issued a Winding up Petition. The company will then be placed into Liquidation which will result in the cessation of trade, realisation of assets and ultimately the company being struck off the register. Compulsory Liquidation is usually regarded as the worst thing that can happen to a company, so advice needs be sought before a company’s position deteriorates to the point where a Winding up Petition is issued.
Click here for more information on Compulsory Liquidation.
Is Company Bankruptcy similar to Administration?
Company Bankruptcy is often confused with Company Administration, as the two phrases are sometimes seen as interchangeable. Company Administration actually refers however to a powerful tool used by Insolvency Practitioners to protect insolvent companies from Creditor action and provide breathing space to devise a strategy to repay Creditors and save the company if all possible.
Click here for more information regarding Company Administration.
What if I think my company is insolvent?
If you think your business may be insolvent you should seek the advise of a Wilson Field adviser as a matter of urgency. Wilson field can help insolvent companies by:
- Identifying the causes of the businesses difficulties.
- Formulating a realistic recovery strategy.
- Helping you understand the impact different options will have on your business and you.
- Help you decide upon an appropriate course of action, taking into consideration all relevant factors.
- Sourcing finance or investment, wherever appropriate.
Are you looking for personal Bankruptcy?
Wilson Field also offer industry leading personal finance solutions. If you are an individual or sole trader looking for more information on personal bankruptcy, please contact us today.
Wilson Field offer a fast and efficient service with nationwide coverage from a network of regional offices, meaning a free consultation can be arranged at a time and location most convenient to you.
If you think your company may be insolvent, get in touch today to arrange a free confidential consultation with no obligation.