Insolvency can be one of the most stressful situations a person or business can face. It can affect cash flow, trading, personal finances, employees, creditors, directors and the future of a company.
In simple terms, insolvency means that a person or business can no longer pay debts as they fall due, or that the amount owed is greater than the value of the assets owned.
However, insolvency does not always mean the end of a business. In some cases, there may be options to rescue, restructure or manage the position before matters become more serious. In other cases, formal insolvency steps may be needed to protect your position, recover money owed or bring matters to an orderly conclusion.
Havard Law Solicitors helps businesses, directors, individuals and creditors understand their options and take practical steps when insolvency issues arise.
What is insolvency?
Insolvency is a legal and financial position where a person or business is unable to meet their debts.
For companies, this may mean being unable to pay suppliers, wages, rent, tax, loans or other liabilities when they become due. For individuals, it may involve serious personal debt, bankruptcy risks, creditor pressure or an inability to keep up with regular payments.
Insolvency law covers more than simply closing a business. It can include business rescue, restructuring, voluntary arrangements, administration, liquidation, bankruptcy, debt recovery, director duties, creditor claims and disputes about assets.
The right approach will depend on the circumstances, the level of debt, whether the business is viable, who is owed money, who is making demands, and what outcome you want to achieve.
When might you need help?
You may need insolvency advice if you have received a statutory demand, winding up petition, bankruptcy petition, or formal demand for payment.
You may also need help if your business cannot pay bills, wages, suppliers, rent, tax or HMRC debt, or if you are worried about continuing to trade while the company is in financial difficulty.
Directors may need advice on their duties, personal guarantees, personal liability, wrongful trading concerns, director disqualification risks, or how to protect themselves when a company is struggling.
Creditors may need advice if they are owed money by a company or individual who cannot pay. This can include suppliers, landlords, employees, business creditors and individuals trying to recover unpaid debts.
Employees may also need advice where an employer has become insolvent and wages, holiday pay, redundancy pay or other sums are outstanding.
What insolvency options may be available?
The available options will depend on whether you are an individual, director, company, creditor or employee.
For a struggling business, options may include negotiation with creditors, time to pay arrangements, restructuring, administration, company voluntary arrangements, liquidation or other formal insolvency processes.
For individuals, options may include advice on bankruptcy, creditor negotiations, repayment arrangements or alternatives to formal insolvency where appropriate.
For creditors, options may include sending formal demands, pursuing debt recovery, responding to insolvency processes, submitting claims, challenging improper conduct, or taking steps to recover assets.
In some cases, urgent action may be needed. For example, a winding up petition can have serious consequences for a company, including the risk of bank accounts being frozen and trading being disrupted. Statutory demands and bankruptcy petitions also require prompt advice.
How Havard Law Solicitors can help
Havard Law Solicitors provides practical insolvency advice in plain English.
We can review your position, explain your options, advise on risks, deal with creditors, respond to statutory demands or petitions, assist with recovery action, guide directors through their duties, and represent clients where court proceedings are needed.
We can also advise creditors who are trying to recover money from an insolvent company or individual, including businesses, landlords, suppliers and employees.
Where rescue or restructuring is possible, we can help explore the available options. Where a formal insolvency process is unavoidable, we can help you understand what is likely to happen and how to protect your position.
Our aim is to provide clear, practical advice at the earliest possible stage, so you can make informed decisions under pressure.
Case study: ongoing banking litigation following company liquidation
Havard Law Solicitors is acting in a significant and complex piece of banking litigation currently before the High Court of England and Wales.
The case arises from the liquidation of a company following alleged large scale fraud connected to the business. The claim concerns substantial financial losses said to have been suffered by creditors.
As part of the investigation, evidence has been reviewed from banking records, mobile phone data, company documentation and other sources. The claim being advanced alleges serious failures by a major national bank.
At the centre of the case is the Quincecare duty. In broad terms, this is a legal principle that may require a bank to refrain from processing a payment instruction where there are reasonable grounds to suspect that the instruction may be an attempt to misappropriate funds.
The claim alleges that, over a prolonged period, the bank failed to respond properly to warning signs and processed transactions that should have triggered further scrutiny.
The case is a multi million pound claim and has required a specialist legal team, including King’s Counsel and an experienced junior barrister, with expertise in complex commercial and banking litigation.
Proceedings have been issued in the High Court Business and Property Courts. The matter remains live and actively progressing. The defendants are robustly defending the claim, including through a strike out application, which is being contested.
Litigation funding and after the event insurance are in place, reflecting the scale and complexity of the claim.
As the matter is ongoing, no final outcome has yet been reached. Havard Law Solicitors continues to act for the client and remains committed to pursuing the claim.
Evidence that can help with insolvency issues
The evidence needed will depend on the situation and the type of advice required.
Helpful documents may include statutory demands, winding up petitions, bankruptcy petitions, creditor letters, loan agreements, personal guarantees, company accounts, tax demands, HMRC correspondence, invoices, payment records, bank statements, board minutes, shareholder documents, contracts, leases, supplier correspondence and employee records.
It is also useful to prepare a clear timeline of events. This can help identify when financial difficulties started, what debts are owed, what steps have already been taken, and whether any urgent deadlines apply.
If you are a director, it is important to keep proper records of decisions made while the company is in financial difficulty. If you are a creditor, it is important to preserve evidence of the debt and any attempts made to recover it.
Speak to our insolvency team
If you are dealing with insolvency, debt pressure, creditor action or recovery issues, it is sensible to get advice as early as possible. Acting quickly can help preserve options and avoid unnecessary escalation.
To speak to Havard Law Solicitors, call 0151 556 1234 or email info@havardlaw.co.uk with a short summary of the issue, who is involved, the amount in dispute, any deadlines and any documents you have received.
A member of the team can review the information and explain the next steps in clear, practical terms.
Insolvency Solicitors FAQs
Employees can be heavily affected when a company becomes insolvent. They may lose their jobs and may be owed wages, holiday pay, notice pay, redundancy pay or other sums.
In some insolvency situations, employees may have preferential status for certain payments. They may also be able to claim some payments from the Government’s Redundancy Payments Service.
Employers and directors may also need advice on their obligations to employees during an insolvency process.
Havard Law Solicitors can advise employees, directors and employers on the legal position and the options available.
In some cases, yes. A business may be insolvent but still viable if action is taken early enough.
Options may include restructuring, negotiating with creditors, reaching time to pay arrangements, entering administration, proposing a voluntary arrangement, or selling part of the business.
Whether the business can be saved will depend on the level of debt, cash flow, assets, creditor pressure, future trading prospects and whether directors act quickly.
Early advice is important because options can narrow as pressure increases. Havard Law Solicitors can help you understand whether rescue or restructuring may be realistic.
Administration is usually aimed at protecting a company while options are explored. This may include rescuing the business, achieving a better outcome for creditors, or selling parts of the business or assets.
During administration, creditors are generally restricted from taking action against the company without permission.
Liquidation is different. It is usually the process of bringing a company to an end. The company’s assets are collected in and sold, creditors are paid as far as possible, and the company is eventually closed.
Administration is often focused on rescue or preserving value. Liquidation is generally focused on an orderly closure and distribution of assets.
A winding up petition is a formal court application made by a creditor asking the court to wind up a company.
If the petition is successful, the company may be placed into compulsory liquidation. Its assets can then be sold and the proceeds used to pay creditors as far as possible.
A winding up petition is a serious step and can have immediate consequences. It may affect bank accounts, trading, contracts, reputation and the company’s ability to continue operating.
If you have received a winding up petition, you should take legal advice immediately. There may be options to dispute the debt, negotiate payment, seek an adjournment, or take other steps to protect the company.
In most cases, a limited company’s debts belong to the company, not to its directors personally. However, there are important exceptions.
A director may be personally liable if they have given a personal guarantee for a company debt, such as a bank loan, lease, supplier account or finance agreement.
Personal liability can also become an issue if a director continues trading when they know, or should know, that the company cannot avoid insolvency, or if they act improperly while the company is in financial difficulty.
If you are worried about personal exposure, it is important to take advice before making further decisions. Havard Law Solicitors can review your position and help you understand the risks.
If your business cannot pay its debts, it is important to seek advice as early as possible.
Do not ignore the problem or continue as normal without understanding your duties and risks. Directors may need to consider their responsibilities to creditors, whether the business can continue trading, and whether personal liability or director disqualification issues could arise.
Early advice can help you understand whether the business may be rescued, restructured or placed into a formal insolvency process. It can also help you deal with creditor pressure, HMRC debt, supplier claims, unpaid rent, employee issues and cash flow concerns.
Havard Law Solicitors can review the position and explain the options in clear, practical terms.
Being insolvent means that a person or business cannot pay debts as they fall due, or that the amount owed is greater than the value of the assets owned.
For a company, this might mean being unable to pay suppliers, employees, rent, tax, loans or other regular liabilities. For an individual, it may mean being unable to manage personal debts or facing the risk of bankruptcy.
Insolvency does not always mean that everything is lost. In some cases, there may be options to restructure, negotiate with creditors, enter a formal arrangement, rescue part of the business, or manage the position in a more controlled way.
The earlier advice is taken, the more options may be available.
