If your company is facing the threat of insolvency, it is important to seek professional advice, whether that is from your accountant, solicitor or a qualified and licensed insolvency practitioner. It can also be helpful to have an understanding of the key insolvency rules that apply to businesses under UK law. Company directors and small business owners in particular need to be aware of their obligations and liabilities in the event of their company becoming insolvent and unable to repay its debts.
What laws apply to insolvent companies? The key piece of government legislation relating to businesses in the UK is the Insolvency Act 1986. The Insolvency Act provides detailed rules relating to both personal and company insolvency in England and Wales, and in Scotland. Specific subjects covered by the Act include:
Amongst other specific technical provisions, the Insolvency Act provides a legal definition of “inability to pay debts” as the following: If a creditor to whom the company is indebted in a sum exceeding £750 has served on the company a written demand requiring the company to pay the sum due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor.
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Finance Lead Tech Limited T/A Assist My Finances are an Appointed Representative of Sterling Green LTD who are authorised under the Financial Conduct Authority under registration number 469956. Finance Lead Tech Limited T/A Assist My Finances do not directly provide solutions. We offer no obligation referrals to trusted providers of appropriate solutions and receive a fee from these providers if you choose to proceed with the solution. Free and Impartial advice, debt counselling, debt adjustment and credit information services are available from the Money Advice Service and you can find out more by contacting them. The solutions on this page are not available if you reside in Scotland.