Get Help if You Can’t Repay Your Debts

If your company’s debts are growing and at a point where you can’t repay them with its current assets, it’s time to consider getting help. Failing to pay the debts when they fall due can lead to creditors taking more drastic action to recover what you owe them.

This action could be a statutory demand, or a County Court Judgement (CCJ), which would set a date for the debt to be repaid. If the debt remains unpaid, they can send in debt collectors, and in some circumstances, bailiffs.

Should this happen, and your company’s debts push it into insolvency where its liabilities outweigh its assets, you should seek help from a licensed insolvency practitioner. Depending on your circumstances, you may be able to repay the debt in affordable instalments.

Close Voluntarily Before Being Wound Up

Once threats of legal action become threats of winding-up, closing the company might be your best option. In the UK, this is done via a Creditors Voluntary Liquidation (CVL). This process works by closing the company, making employees redundant and realising the remaining assets for distribution to the creditors. Closing voluntarily is more organised and preferable to having the company wound up via a compulsory liquidation, in which you’ll have substantially less control. Once the company is closed, and if your liquidator finds you’ve acted lawfully, you can start a new limited company free from the old one’s debts.

Final Words

Any sign of financial trouble should be taken seriously. Ignoring it can easily lead to further creditor action, and even the end of your company if it escalates far enough. Reviewing your outgoings can help indicate what’s costing the most and if it’s having a detrimental effect on your company. If unpayable debts are piling up, even if your creditors haven’t taken further action, you should seek help from a licensed insolvency practitioner who can offer a range of solutions to suit your company’s needs. These could include paying your debt in monthly instalments or restructuring, and if necessary, closing the company, allowing you to start afresh.