Insolvency Services – Information & Guidance
Insolvency is when a company or an individual is unable able to pay their debts. If a company can’t pay its debts, it may be put into liquidation, meaning all its unsecured assets are sold to repay creditors.
If you have been served a Statutory Demand you should seek advice immediately so we suggest you contact our office as soon as possible.
At ABA we will:
* review your situation;
* if an individual, discuss the options of Bankruptcy, No Asset Procedure (NAP) and Debt Repayment Order (DRO);
* if a company, refer you to one of our associates who is a specialist in this field.
Statutory Demands: What Are They?
A Statutory Demand is a demand for payment. If it is not paid within fifteen working days, or there is no dispute raised within that time, the company demanding payment can ask the Court to put the business into liquidation.
Solvent Voluntary Liquidation
The various tasks associated with liquidating the company, include paying creditors and shareholders and striking the company off the Register of Companies.
Insolvent Voluntary Liquidation
An insolvent voluntary liquidation will usually avoid the cost and delay that is associated with a Court ordered liquidation. A special resolution by 75% of the shareholders is necessary.
Court liquidation notices
Court liquidation notices generally result from an application to court by a creditor for a company to be wound up, based on the premise that the company is insolvent by virtue of its inability to pay a debt. The Court will appoint the Liquidator.
Advantages of Liquidation
Some of the advantages include:
- Bringing an end to an insolvent and difficult financial situation.
- Capital distributions made by the Liquidator to the shareholders should not be taxable even if the Declaration of Solvency has not been signed by the Director.
- Avoiding the situation where capital profits can be taxable if distributed before a liquidation.
- Peace of mind.
If you are facing overwhelming debt or you have received a Statutory Demand, talk to us about our services. Our team are here to provide information and guidance on insolvency issues.
The 10-day Rule
If a creditor has petitioned the Court to liquidate your company you have ten days to appoint your own Liquidator or enter Voluntary Administration. After that time, the company must settle with the creditor or face having a Court appointed Liquidator. If a creditor is threatening to liquidate your company, you need to make a decision if you can voluntarily liquidate the company before it gets to Court. Use the following decision tree to establish your position: