Trading Insolvent – What Are Your Legal Duties As A Director?

The definition of an insolvent company is one which can't pay its debts as and when they fall due; or, one with assets that are exceeded by its liabilities on the balance sheet. If either of these is true of your company then it could well be insolvent. But what is the likely impact of insolvency in real terms? If any of the following are true then your business is likely to be insolvent:

The business is unable to keep up with its financial obligations and makes frequent late payments to HMRC and other creditors; The value of all the company's assets i.e. bank accounts, debtor book, equipment, property etc. is less than its liabilities i.e. current and future debts; The company has already received a statutory payment demand or has a county court judgement (CCJ) against its name. If any of the above apply to your current situation then you are at serious risk of further action being taken in the form of a winding-up petition. For this reason, it's essential you act...