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Get now!Expert insolvency support tailored for directors under pressure.
If your business is under financial pressure, the decisions you make right now matter more than ever. Insolvency advice from licensed insolvency practitioners we work with can protect you personally, stabilise the situation, and often preserve value.
At a glance
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Insolvency problems
When cash flow tightens, pressure builds fast — and the risks aren’t always obvious until it’s too late.
Here’s the uncomfortable truth most directors don’t realise early enough:
Once a company is insolvent, your legal duty shifts from shareholders to creditors. Continuing to trade without proper advice can expose you personally — even if your intentions are good.
Many directors come to us dealing with:
Insolvency basics
Insolvency is not a single event — it’s a legal state. And how you behave once insolvency is likely, matters enormously.
Once insolvency applies, your legal duties change. At that point, your responsibility shifts from shareholders to creditors — and decisions made after that moment can expose you personally.
Most directors don’t know exactly when that line has been crossed.
But equally important, here are formal and informal routes that can:
Director protection
We start by understanding your situation properly before any formal insolvency advice is given. That means looking at cash flow pressure, creditor issues, personal guarantees, HMRC exposure, director loan accounts, and whether the company may already be insolvent under UK law.
At this stage, we help you understand where you stand, what duties apply to you as a director, and which actions could increase personal risk if handled incorrectly.
If insolvency advice is required, we introduce you to a licensed insolvency practitioner whose role is to give regulated advice and handle any formal process. We do not replace the practitioner — we help you approach the process correctly and avoid costly missteps before and during engagement.
We help you prepare the information an insolvency practitioner will need. Throughout the process, we can stay involved to help you understand correspondence, timelines, and next steps, and to make sure nothing important is missed or misunderstood. The aim is clarity, structure, and control at a time when most directors feel overwhelmed.
Many directors get into trouble not because they act dishonestly, but because they act too late or without sound advice.
By taking a structured, staged approach before formal action begins, you reduce the risk of:
This approach also helps you understand when insolvency is not inevitable, and where alternatives may still exist — such as negotiated arrangements, refinancing, or structured exits.
Most importantly, it ensures that when a formal insolvency route is required, it is entered into deliberately, with preparation, evidence, and professional oversight — not under pressure from creditors or enforcement action.
Director benefits
FAQs about Insolvency
Browse the questions below. If you cannot find what you need, give us a call or drop us a line — we always answer.
Wrongful trading occurs when directors continue to trade while knowing (or reasonably should know) that the company cannot avoid insolvency.
Once this point is reached, directors must act to minimise losses to creditors. Failure to do so can lead to personal liability.
Warning signs include:
Insolvency is often a combination of these tests, not just one.
Taking professional advice early is one of the strongest protections against wrongful trading claims.
Fraudulent trading involves deliberate intent to defraud creditors. Examples include:
This can lead to:
Early advice significantly reduces risk.
An overdrawn director’s loan account becomes a serious issue in insolvency.
If the company enters liquidation:
Beware if there are no accumulated profits, dividends paid may actually be classified as an overdrawn directors loan account.
Offsets (such as unpaid salary or expenses) may reduce exposure — but this must be handled carefully and properly documented.
You can talk with the insolvency practitioner as to their proposed course of action before starting the insolvency process.
If you’ve lent money to the company:
This is why structure matters before problems arise.
No, resigning does not remove responsibility.
If you resign while insolvency issues exist:
Doing nothing often makes matters worse and can result in personal liability.
Bounce Back Loans are unsecured — but misuse can create personal liability.
Risks include:
If misuse is found, consequences may include:
Early advice can help mitigate exposure.
Yes, in many cases.
A Time To Pay (TTP) arrangement may be possible if:
HMRC will often request:
Handled properly, TTP can prevent escalation. It stops additional penalties but doesn’t eliminate interest.
A winding-up petition is extremely serious and time-sensitive.
Once advertised:
Petitions are often triggered after:
There is a short window to act.
Possible solutions include:
If the court grants the order, the company enters compulsory liquidation and directors lose control immediately.
Early action can stop or suspend the process, delay usually removes options.
A CVA is a formal agreement allowing a company to repay part of its debts over time while continuing to trade, taking the pressure off, and avoiding liquidation or administration with no formal investigation into the directors conduct.
Key points:
The insolvency practitioner drafts a detailed proposal outlining why the CVA is a better option than insolvency for creditors.
Te repayment percentage may range from perhaps just 5% to a full 100% depending on the company’s financial situation.
The company should be insolvent or at risk of insolvency.
All unsecured debts are rolled into one affordable monthly payment, usually spread over 1 to 5 years. Secured debts are excluded and will need to be negotiated separately.
Shareholders cannot receive dividends during the CVA process.
It’s often suitable where the business is viable but overburdened. Employees and clients are often unaffected.
Administration provides immediate legal protection from creditors.
An insolvency practitioner takes control to:
It may involve:
Directors lose control, but it can preserve value and jobs.
A pre-pack involves selling the business immediately upon entering administration.
In this process, a company’s assets are sold to a new company (“newco”), which may be managed by the same directors or purchased by a third party. This sale is usually arranged before the original company (“oldco”) formally enters administration.
Pre-pack administration is ideal when:
Key features:
Used correctly, it can:
Rules apply to prevent abuse.
A “phoenix company” is a new business that acquires the assets of an insolvent one and continues trading.
This can be legal, but only if done correctly.
Key points:
Done properly, phoenix arrangements can preserve jobs and value. Done badly, they can lead to director disqualification or personal liability.
A CVL is used when a company cannot continue and needs to close and is initiated by the directors.
It allows:
It is usually preferable to compulsory liquidation.
Directors may also be eligible for redundancy payments.
A creditors’ voluntary liquidation (CVL) gives directors control and protection.
Compared to compulsory liquidation:
Compulsory liquidation removes control entirely and places the process in the hands of the Official Receiver.
If the company has no assets, directors may need to fund the process personally, but there is often help available.
Director Redundancy Claims can significantly reduce or even cover the cost:
Eligibility usually requires:
This option is frequently overlooked and should always be explored.
An unfair preference occurs when one creditor is paid in priority to others shortly before insolvency.
This often includes:
These payments can be challenged and reversed by a liquidator.
Time limits:
If found, directors can face:
This is why “trying to tidy things up” before insolvency can backfire badly without proper guidance.
Doing nothing is usually the worst option.
If the company cannot afford a formal liquidation, some directors wait for creditors to force the issue. This often creates bigger problems, not fewer.
Risks include:
The safer route is to take control early by engaging a licensed insolvency practitioner. This demonstrates responsible conduct and often reduces personal exposure significantly.
Yes, and this is often where early advice makes the biggest difference.
Before formal insolvency, there may be practical alternatives, including:
Negotiating directly with HMRC, landlords, lenders, or suppliers to restructure arrears or agree breathing space.
In some cases, shareholder loans, third-party investment, or refinancing can stabilise the business if there is underlying value.
If the business has value (customers, goodwill, IP, contracts), a sale may be possible — but it must be handled carefully.
Important warning:
Selling assets without proper advice can create serious problems. Transactions carried out shortly before insolvency may later be challenged as:
Attempts to avoid creditors
This can lead to personal liability. Always take advice before selling assets or restructuring.
In most cases, directors are not personally liable for company debts, and insolvency does not affect your personal credit record.
However, personal liability can arise if:
This is why early advice matters. When handled correctly, many directors exit insolvency without personal financial damage. When handled badly or too late, personal exposure increases significantly.
If your company is solvent, you may be able to close it via:
An MVL can be very tax-efficient, allowing distributions to be taxed as capital rather than income.
Voluntary dissolution is a simpler, faster, and cheaper alternative to formal liquidation for companies without debts or disputes. It allows directors to wind down operations efficiently and avoid unnecessary costs.
Yes. Much of the guidance on this page applies not only to company directors, but also to designated members of Limited Liability Partnerships (LLPs).
While LLPs are structured differently, designated members carry legal responsibilities similar to directors when the LLP becomes insolvent. This includes duties to creditors, exposure to wrongful trading claims, and obligations to act once insolvency is likely.
If you are a designated member facing financial difficulty, it’s critical to seek advice early. The risks, protections, and available solutions often mirror those faced by limited company directors.
Different structures have different solutions.
A PVA allows a partnership to restructure its debts with approval from 75% (by value) of creditors. It works similarly to a CVA and can allow continued trading.
Sole traders — or individual partners with personal exposure — may use an IVA to avoid bankruptcy. This can deal with both business and personal debts.
Because partners often have joint and several liability, individual partners may each need their own IVA depending on the structure of the debts.
As soon as you notice:
Early advice = more options, less risk.
Insolvency fees vary depending on:
You should always receive:
We introduce directors to licensed insolvency practitioners who provide competitive, transparent pricing, tailored to small businesses.
Be cautious of “free” or ultra-cheap offers — these often lead to poor outcomes, hidden charges, or inadequate protection.
Always ensure your adviser is properly licensed and regulated.
We’ll take a few minutes to understand your needs, identify if the insolvency service is worth exploring, and help you decide if specialist advice could help.
No obligation — just a straightforward conversation to see what’s right for you.
