Insolvency Proceedings

Forbes Solicitors' insolvency solicitors provide expert legal advice on all aspects of insolvency law including insolvency proceedings.

More about Insolvency Proceedings

We understand the complexities of insolvency law and can provide practical and effective solutions to businesses facing insolvency issues. Our experienced team can advise on all aspects of insolvency proceedings, including administration, liquidation, and receivership, and we can provide representation throughout the process.

What are Insolvency Proceedings

What are Insolvency Proceedings

Insolvency proceedings refer to legal processes that individuals or businesses go through when they are unable to pay their debts or where their liabilities are greater than their assets. This could involve a range of options, such as filing for bankruptcy, liquidation, administration, restructuring debts and negotiating repayment plans with creditors.

Recovering outstanding debts can be really important for businesses. Having debtors can affect your cashflow and the smooth running of your day to day activities, so it's vital to recover the funds owed as quickly as possible.

If another company or an individual owes your business money and there is not any known disputes to the debt but they still haven't paid what they owe after formal demands have been made, they are technically considered insolvent by being unable to pay their debts. If there are other creditors also seeking money from them, the situation can get quite complicated. One option is to start insolvency proceedings against them, which means that your repayment would then be at the front of the queue.

An insolvency proceedings definition is that this is the process taken when a business or an individual are not able to pay their creditors when debts are due or meet their financial obligations.

Company insolvency process

The outstanding debt must have a value of more than £750 and the debtor must not dispute that you are owed the money in order to proceed with company insolvency action.

If the circumstances meet the above criteria, a winding up petition can be drafted by Forbes Collect and sent to the debtor, along with a demand for the payment within a set period of time; usually seven days. The letter asking for payment must also outline that if the money owed is not paid within the given timeframe, the petition will be presented to Court.

In most cases, the debtor will make the necessary payment at this stage to avoid any further action being taken against them.

If payment is not received at this point, you can present the winding up petition to the Court and a date will be given for a hearing. The petition is served to the debtor and can be advertised in the London Gazette. The debtor's bank account may be frozen, which gives an incentive for them to make the payment sooner, rather than later.

As a result of the petition being advertised, other creditors might make themselves known and wish to support the petition.

Insolvency proceedings against an individual or sole trader

Insolvency proceedings against an individual or sole trader

The outstanding debt must be worth more than £5,000 and there must be no dispute that the money is owed to you before you can proceed with this course of action.

A statutory demand can then be drafted which sets out the debt that is due and has a deadline of 21 days from the date that it is served for the debtor to pay the sum owed. The statutory demand letter must be served to the named individual and proof of this must be given.

If no payment is forthcoming, or the debtor doesn't apply to have it set aside, the next part of the process is for a bankruptcy petition to be issued to the Court. A hearing date will then be set. The bankruptcy petition must also be served to the debtor personally and, again, proof of this will be required by the Court.

Whether the individual or corporate insolvency process is the route you choose to follow, the appropriate formalities need to be followed strictly in order for the outcome to have a chance of success at the following hearing of the petition.

Considerations for issuing insolvency proceedings

Considerations for issuing insolvency proceedings

An important consideration before taking this course of action is to ensure that the debt is not disputed. If the debtor disputes that they owe the money then the process will be halted and it's possible that you may need to pay the debtor's costs, which could be considerable.

Due to the complexity of insolvency proceedings, it's recommended that you take expert legal advice before deciding on the best course of action for debt recovery. It may be the case that another enforcement option is more suitable in the circumstances.

Who do our solicitors help with insolvency proceedings?

The team of insolvency solicitors help individuals, businesses, and creditors with insolvency proceedings, including bankruptcy, liquidation, and administration.How can our lawyers help with insolvency proceedings?Here at Forbes Solicitors our lawyers can provide expert advice and representation in insolvency proceedings, including bankruptcy and liquidation. We can assist with debt restructuring, negotiating with creditors, and developing a plan for financial recovery. Our team has extensive experience in insolvency law and can guide you through the process, ensuring your rights and interests are protected. We work closely with clients to find the best possible outcome and help them navigate the complex legal and financial issues involved in insolvency proceedings.

Contact our highly experienced solicitors today to receive expert legal services and support for Insolvency Proceedings. With their in-depth expertise, they have assisted clients across the country. Don't hesitate to reach out to them.

Insolvency Proceedings Additional Information

What is the difference between liquidation and administration?

Liquidation is the process of winding up a company's affairs and distributing its assets to creditors and shareholders. Administration is a process where an administrator is appointed to manage the company's affairs and try to rescue it as a going concern. The main difference is that liquidation is the end of the road for a company, while administration is an attempt to save it.

How do I know if my company is insolvent?

A company is considered insolvent if it cannot pay its debts as they fall due or if its liabilities exceed its assets. This can be determined by conducting a cash flow test or balance sheet test. If a company is insolvent, it must take immediate action to avoid further financial difficulties and potential legal action from creditors. Directors have a duty to act in the best interests of the company and its creditors in such circumstances.

Can I continue to trade while in insolvency proceedings?

If you are a sole trader or a partnership, you can continue to trade while in insolvency proceedings. However, if you are a limited company, you can only continue to trade if the administrator or liquidator allows it. They will consider whether it is in the best interest of the creditors and the company to continue trading. If they allow it, you must follow their instructions and keep accurate records of all transactions.

What happens to my assets during insolvency proceedings?

During insolvency proceedings, your assets will be used to pay off your debts to creditors. The assets will be sold off and the proceeds will be distributed among the creditors according to their priority. Some assets may be exempt from being sold, such as essential household items and tools of trade. The insolvency practitioner will manage the process and ensure that it is carried out in accordance with UK law.

Can I be held personally liable for my company's debts?

If you are a director of a limited liability company, you are generally not personally liable for the company's debts. However, if you have acted negligently or fraudulently, or have given personal guarantees for the company's debts, you may be held personally liable. Additionally, if the company becomes insolvent and you continue to trade while knowing that the company cannot pay its debts, you may be held personally liable for any losses incurred by creditors.

How long do insolvency proceedings typically last?

The length of insolvency proceedings can vary depending on the complexity of the case, but typically they can last anywhere from several months to a few years.

What is the role of an insolvency practitioner?

An insolvency practitioner is a licenced professional who is appointed to manage the affairs of a company or individual who is insolvent or facing financial difficulties. Their role is to assess the financial situation, advise on the best course of action, and manage the process of restructuring or liquidating the company's assets. They are also responsible for ensuring that creditors are treated fairly and that the interests of all parties involved are protected.

Can I challenge a decision made by an insolvency practitioner?

Yes, you can challenge a decision made by an insolvency practitioner by making an application to court. The court will review the decision and determine whether it was made in accordance with the law and the insolvency practitioner's duties. This is governed by UK law, specifically the Insolvency Act 1986.

What are the consequences of being declared insolvent?

If an individual or company is declared insolvent their assets may be sold to pay off creditors. They may also be subject to restrictions on their ability to obtain credit or act as a director of a company. In some cases, bankruptcy or liquidation proceedings may be initiated. Insolvency can have serious financial and personal consequences, including damage to credit ratings and reputations.

What is the insolvency process?

The insolvency process is a legal procedure that deals with individuals or companies who are unable to pay their debts. It involves assessing the financial situation of the debtor, appointing an insolvency practitioner to manage the process, and distributing assets to creditors. The aim is to either restructure the debt or liquidate assets to pay off creditors.

Our dedicated Forbes Collect team

Chris Bowers.jpg

Partner and Head of Department, Insolvency

Chris Bowers

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Paralegal, Forbes Collect

Jack Tasker


Paralegal, Insolvency

Harry Silverman

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