Bankruptcy & Insolvency Explained
Due to a rise in Bankruptcy & Company Insolvency being reported ( Midlands especially ), this article seeks to further explain how to test whether your clients (or you) are insolvent, and once known, to achieve business recovery by seeking our advice sooner.
Insolvency Processes and Terms
For an explanation of the most commonly used terms when dealing with a Company or an Individual faced with Company debt, visit our Glossary of Terms page. However the two key terms (being Bankruptcy and Insolvency) are explained below…
What is Bankruptcy? / Am I Insolvent?
“Insolvency” is the term used to explain when a Company or an Individual cannot repay their creditors from the assets they own.
There are two main tests as to whether a Company or individual is considered
insolvent, they are:-
1. Are the liabilities worth more than the assets?
2. Can the debts be paid as and when they fall due?
“ Bankruptcy“ is the formal insolvency process used for dealing with an individual’s debts once they become insolvent and owe more than £750. It is not a process used for companies, however the term “Bankrupt” is often used instead of “insolvent” for both individuals and companies, due to this being the term used in American Law for all insolvencies.
If you believe you or your client is insolvent and you wish to view our range of company insolvency services, visit our Company Bankruptcy advice page.
If you, or your client are an insolvent individual and need debt advice, visit our Bankruptcy page.
See here for a more recent article on Bankruptcy