Insolvency

Any business can find itself in financial trouble.

If a company is basically sound and well-run, it is in everyone’s interest to help it back on its feet. If there are deeper problems, sometimes there is no way back.

Whatever the circumstances, we can provide independent, expert advice backed by many years' experience in insolvency matters. We work closely with a few select and trusted insolvency practitioners who can help rescue, restructure, or bring the business to an orderly conclusion.

If a company goes into liquidation the liquidator is obliged to investigate the directors conduct in managing the business and whether there are any claims which may be brought that can add to the funds available to pay creditors. This can lead to action to disqualify individuals from acting as company directors, or claims that directors should pay money to the liquidator arising from matters such as wrongful/fraudulent trading, transactions at an undervalue, preferences, and misfeasance.

Our lawyers can advise if you are facing claims by a liquidator or administrator of an insolvent company, the official receiver/insolvency service, or a trustee in bankruptcy.

We can deal with all aspects of insolvency law, including:

Personal bankruptcy/corporate insolvency
Advice on directed disqualification proceedings
Buying a business from a liquidator or administrator
Creditor and debtor disputes

We also advise creditors of businesses in difficulty.

A statutory demand can be issued either to an individual, ie a person, or to a company. A statutory demand requires payment of a specified debt within 21 days, failing which the creditor making the demand can present a petition to the Court for the bankruptcy of an individual or the winding up of a company.
If you dispute the debt on genuine grounds, then, if you are an individual, you can apply to the Court to set aside the statutory demand. This application must be made within 18 days of the date on which you received the demand. If the demand is made against a company, the company may apply to the Court for an injunction to prevent the creditor issuing a winding up petition.
If the debt is not disputed, or only partially disputed, then the individual or company should consider what payment terms it can offer and whether it is able to offer any security for the debt.
If in doubt, take legal advice. Our insolvency specialists at Biscoes will be able to help you.
Directors (including shadow directors) of a limited company that has gone into liquidation may be made personally liable if there has been wrongful or fraudulent trading. This means that the liquidator can seek an order of the Court requiring those directors to pay money which can be used to help pay creditors of the company.
Wrongful trading occurs when directors continue the business of the company after a point when they know or should know that the company has no realistic prospect of avoiding going into insolvent liquidation.
Fraudulent trading is carrying on business of a company with intent to defraud creditors of the company or for any fraudulent purpose.Directors of limited companies have a duty to have regard to the interest of creditors and to protect those interests. Failure to do so can lead to personal liability.
Directors of limited companies should therefore ensure that they are always aware of the company’s financial position. If there is any doubt about the continued solvency of the company or its continued ability to trade, or even if they think there may be doubt about this, they should take legal advice. Biscoes specialist insolvency lawyers will be able to help.
Misfeasance is a catch-all term used in the Insolvency Act 1986. This covers a wide range of breaches of company law by directors of the company that has gone into insolvent liquidation. If a liquidator considers that directors of the company have been guilty of any breaches of company law, he may apply to the Court to order those directors to pay money which can be used to help repay creditors.
A transaction at an undervalue is a disposal by a company of any of its property either as a gift or for consideration, in money or in kind, that is significantly less than the value of other property disposed of by the company.
A typical example of a transaction at an undervalue is when a director of a company that is in difficulty arranges to transfer for only a nominal payment an important piece of plant or equipment to the new company that he is setting up. The liquidator, representing the creditors of the company, is in this way being deprived of the full value of this piece of equipment.
When there has been a transaction at an undervalue, a liquidator may take action against both the recipient of the property in question and the directors who authorised the transaction, with a view to obtaining payment of money which can be used to repay creditors of the company.
Biscoes insolvency law specialists are able to advise if such a claim is being made against you.