FAQs

There are certain restrictions on trading under a similar name when a company is placed into liquidation, therefore, you should always  obtain legal advice before setting up a new company or trading.  If you breach any of the restrictions, it is a criminal offence and you may be liable to a fine, imprisonment and/or both.

There are different ways in which to place a company into an insolvency process and the cost will depend on the steps taken.   We can provide advice on the different forms of insolvency and likely costs involved.  

If a company goes into liquidation, it is likely that the business will be closed and any employees will be made redundant. If a company goes into administration, the administrator may ask some employees to continue to work although, in most circumstances, there will be redundancies. In some cases, if the Company’s business is sold after the administration, the employees may be transferred to the new company.

If an employee is owed wages, they may be able to make a claim with the insolvency practitioner appointed or through the Redundancy Payments Office.

As soon as you become aware that it is probable that the company will become unable to pay its debts as and when they fall due, the directors should seek urgent professional advice from a solicitor or an accountant as to the options available to ensure that the directors comply with their statutory duties. In some cases, if advice is sought immediately, the business can be saved.

If you believe that you may be unable to pay your debts as and when they fall due, you should seek professional advice from your solicitor or the Citizen’s Advice Bureau as to the options available to you.

Administration is a formal insolvency procedure whereby an administrator is appointed by either the court, the directors of the company or a floating charge holder. The purpose of the administration is to either attempt a reorganisation of the business or to take steps to sell the company’s assets under the protection of a moratorium. Creditors cannot take steps against the company whilst it is in administration but they may be able to recover goods under a retention of title clause.

There are different forms of liquidation including members’ voluntary liquidation, creditors’ voluntary liquidation and compulsory liquidation. A members’ voluntary liquidation is where a company is solvent and able to pay its debts but the shareholders wish to cease trading and wind up the company’s affairs. A creditors’ voluntary liquidation is where the directors of a company believe that the company is insolvent and can no longer trade. A compulsory liquidation is where a creditor of the company applies to the court for an order winding up the company.

It is important that you deal with the statutory demand quickly to prevent a bankruptcy petition being issued against you. If the money is due, you will need to make payment. If you are unable to make payment, you may wish to contact the creditor and agree a repayment plan or look at other options such as an individual voluntary arrangement. If the debt is disputed, you will need to make an application to the court asking for the statutory demand to be set aside (if this cannot be agreed with the creditor). You have a limited amount of time to deal with a statutory demand and, therefore, if you require any assistance in dealing with the statutory demand, you need to obtain legal advice quickly.