Expert Insolvency Support Tailored For Directors Under Pressure
If your business is under financial pressure, the decisions you make right now matter more than ever. Insolvency advice from licensed insolvency practitioners we work with can protect you personally, stabilise the situation, and often preserve value.
The Problems Directors Face And Why Delay Makes Them Worse
When cash flow tightens, pressure builds fast — and the risks aren’t always obvious until it’s too late.
Many directors come to us dealing with:
- Mounting HMRC arrears (VAT, PAYE, Corporation Tax)
- Pressure from lenders, landlords, or suppliers
- Personal guarantees causing anxiety
- Bounce Back Loan concerns
- Difficulty paying staff or funding payroll
- Long or unbreakable lease commitments
- Threats of legal action or winding-up petitions
- Fear of personal liability
- Confusion over what they can or can’t legally do
Here’s the uncomfortable truth most directors don’t realise early enough:
Once a company is insolvent, your legal duty shifts from shareholders to creditors.
Continuing to trade without proper advice can expose you personally — even if your intentions are good.
What Directors Must Understand Early
Insolvency is not a single event — it’s a legal state. And how you behave once insolvency is likely, matters enormously.
Key Realities Every Director Needs To Understand
- You can become personally liable if losses to creditors increase after insolvency is clear
- Paying the “wrong” creditor first can be challenged later
- Repaying yourself or connected parties can be reversed
- Selling assets incorrectly can trigger claims
- Resigning does not remove responsibility
- Ignoring HMRC usually makes matters worse
- Delay increases scrutiny
Once insolvency applies, your legal duties change. At that point, your responsibility shifts from shareholders to creditors — and decisions made after that moment can expose you personally.
The problem?
Most directors don’t know exactly when that line has been crossed.
But equally important:
Insolvency Law Also Provides Powerful Protections — If Used Correctly.
There are formal and informal routes that can:
- Stop creditor pressure
- Protect viable parts of the business
- Freeze enforcement
- Reduce personal exposure
- Provide an orderly exit
- Allow a fresh start
The key is acting early and getting proper advice before damage is done.
A Controlled Process Designed To Protect You First
A Coordinated, Director-First Approach
We start by understanding your situation properly before any formal insolvency advice is given. That means looking at cash flow pressure, creditor issues, personal guarantees, HMRC exposure, director loan accounts, and whether the company may already be insolvent under UK law.
At this stage, we help you understand where you stand, what duties apply to you as a director, and which actions could increase personal risk if handled incorrectly.
If insolvency advice is required, we introduce you to a licensed insolvency practitioner whose role is to give regulated advice and handle any formal process. We do not replace the practitioner — we help you approach the process correctly and avoid costly missteps before and during engagement.
We help you prepare the information an insolvency practitioner will need. Throughout the process, we can stay involved to help you understand correspondence, timelines, and next steps, and to make sure nothing important is missed or misunderstood. The aim is clarity, structure, and control at a time when most directors feel overwhelmed.
What This Approach Protects You From
Many directors get into trouble not because they act dishonestly, but because they act too late or without sound advice.
By taking a structured, staged approach before formal action begins, you reduce the risk of:
- Accidentally continuing to trade while insolvent
- Creating personal liability through wrongful trading
- Making preferential payments that can be clawed back
- Mishandling director loan accounts
- Worsening HMRC exposure
- Taking steps that trigger unnecessary investigations
- Being pushed into the wrong insolvency route
- Losing control through inaction or panic decisions
This approach also helps you understand when insolvency is not inevitable, and where alternatives may still exist — such as negotiated arrangements, refinancing, or structured exits.
Most importantly, it ensures that when a formal insolvency route is required, it is entered into deliberately, with preparation, evidence, and professional oversight — not under pressure from creditors or enforcement action.
The goal is to help you make informed, defensible decisions that protect your position as a director.
Why Directors Speak To Us Before Making Any Big Decision
Reduce Personal Risk Early
The sooner you act, the more protection you have against wrongful trading, personal guarantees, and director claims.
Avoid Sleepwalking Into Insolvency
Many directors drift into formal insolvency without realising it. We help you spot danger early — and change course.
Explore Rescue Before Closure
Not every struggling business needs to close. Time To Pay, restructuring, refinancing or sale options may still exist.
Work With Properly Licensed Experts
We introduce you to regulated insolvency practitioners who handle matters correctly, ethically, and professionally.
Stay In Control Of The Process
Early action gives you choices. Late action gives control to creditors and the court.
Confidential, Pressure-Free Guidance
Talking to us doesn’t trigger insolvency. It gives you clarity and breathing room.
Practical Advice You Can Act On Immediately
No theory. No waffle. Just clear next steps tailored to your situation.
Common Questions About Insolvency
Wrongful trading occurs when directors continue to trade while knowing (or reasonably should know) that the company cannot avoid insolvency.
Once this point is reached, directors must act to minimise losses to creditors. Failure to do so can lead to personal liability.
Warning signs include:
- Inability to pay debts as they fall due
- Liabilities exceed assets
- Reliance on constant creditor extensions
- Mounting HMRC arrears
- Cash flow deterioration
- Signs of creditor legal actiopn or statutory demands
- No realistic rescue plan
Insolvency is often a combination of these tests, not just one.
Taking professional advice early is one of the strongest protections against wrongful trading claims.
Fraudulent trading involves deliberate intent to defraud creditors. Examples include:
- Taking credit with no intention of paying
- Falsifying records
- Using company funds for personal purposes
- Misrepresenting the company’s position
This can lead to:
- Personal liability
- Director disqualification
- Civil penalties
- Criminal prosecution
Early advice significantly reduces risk.
An overdrawn director’s loan account becomes a serious issue in insolvency.
If the company enters liquidation:
- The insolvency practitioner must attempt to recover it
- You may face tax charges
- Repayments may be demanded
Beware if there are no accumulated profits, dividends paid may actually be classified as an overdrawn directors loan account.
Offsets (such as unpaid salary or expenses) may reduce exposure — but this must be handled carefully and properly documented.
You can talk with the insolvency practitioner as to their proposed course of action before starting the insolvency process.
If you’ve lent money to the company:
- You are treated as an unsecured creditor
- Repayments made shortly before insolvency can be challenged
- Secured loans (via a properly registered debenture) rank higher (tip: make sure you do this when lending money to your company)
This is why structure matters before problems arise.
No — resigning does not remove responsibility.
If you resign while insolvency issues exist:
- Your past conduct can still be investigated
- You may still face wrongful trading claims
- Creditors or the Official Receiver may scrutinise your actions
Doing nothing often makes matters worse and can result in personal liability.
Bounce Back Loans are unsecured — but misuse can create personal liability.
Risks include:
- Using funds for personal spending
- Repaying personal debts
- Providing false information on the application
- Preferential repayments
If misuse is found, consequences may include:
- Personal repayment demands
- Director disqualification
- Fraud investigations
Early advice can help mitigate exposure.
Yes — in many cases.
A Time To Pay (TTP) arrangement may be possible if:
- The business is viable
- You can demonstrate affordability
- You act before enforcement begins
HMRC will often request:
- Cashflow forecasts
- Up-to-date filings
- Evidence of effort to explore other funding options
Handled properly, TTP can prevent escalation. It stops additional penalties but doesn’t eliminate interest.
A winding-up petition is extremely serious and time-sensitive.
Once advertised:
- Bank accounts are usually frozen
- Credit access disappears
- Trading becomes extremely difficult
Petitions are often triggered after:
- A statutory demand is ignored
- HMRC or a creditor believes debts cannot be paid
There is a short window to act.
Possible solutions include:
- Proposing a CVA
- Negotiating a Time To Pay arrangement
- Applying for administration
- Challenging the debt (if genuinely disputed)
If the court grants the order, the company enters compulsory liquidation and directors lose control immediately.
Early action can stop or suspend the process — delay usually removes options.
A CVA is a formal agreement allowing a company to repay part of its debts over time while continuing to trade, taking the pressure off, and avoiding liquidation or administration with no formal investigation into the directors conduct.
Key points:
- Requires approval from 75% of voting creditors (by value)
- Directors stay in control
- Legal protection from creditor action
- HMRC debts included
The insolvency practitioner drafts a detailed proposal outlining why the CVA is a better option than insolvency for creditors.
Te repayment percentage may range from perhaps just 5% to a full 100% depending on the company’s financial situation.
The company should be insolvent or at risk of insolvency.
All unsecured debts are rolled into one affordable monthly payment, usually spread over 1 to 5 years. Secured debts are excluded and will need to be negotiated separately.
Shareholders cannot receive dividends during the CVA process.
It’s often suitable where the business is viable but overburdened. Employees and clients are often unaffected.
Administration provides immediate legal protection from creditors.
An insolvency practitioner takes control to:
- Rescue the business
- Sell it as a going concern
- Or maximise asset value to distribute to creditors.
It may involve:
- A pre-pack sale
- Business restructuring
- Orderly wind-down
Directors lose control, but it can preserve value and jobs.
A pre-pack involves selling the business immediately upon entering administration.
In this process, a company’s assets are sold to a new company (“newco”), which may be managed by the same directors or purchased by a third party. This sale is usually arranged before the original company (“oldco”) formally enters administration.
Pre-pack administration is ideal when:
- The company is insolvent and at risk from creditors
- Other options like refinancing or a CVA are not viable
- The business is fundamentally sound but cannot survive under the weight of historical debts
- Jobs and value can be preserved by transferring operations to a new company.
Key features:
- Sale agreed in advance
- Often to a new company
- Assets transferred at fair value
- Employees may transfer under TUPE
Used correctly, it can:
- Preserve operations
- Protect jobs
- Achieve better creditor outcomes
Rules apply to prevent abuse.
A “phoenix company” is a new business that acquires the assets of an insolvent one and continues trading.
This can be legal, but only if done correctly.
Key points:
- Assets must be sold at fair market value
- Sales must usually be handled by an insolvency practitioner
- Creditors’ interests must be protected
- Strict rules govern reuse of the old company name
- Directors must comply with statutory restrictions
Done properly, phoenix arrangements can preserve jobs and value. Done badly, they can lead to director disqualification or personal liability.
A CVL is used when a company cannot continue and needs to close and is initiated by the directors.
It allows:
- Controlled closure
- Appointment of a licensed liquidator
- Distribution of assets
- Investigation of directors’ conduct
- Final closure
It is usually preferable to compulsory liquidation.
Directors may also be eligible for redundancy payments.
A Creditors’ Voluntary Liquidation (CVL) gives directors control and protection.
Compared to compulsory liquidation:
- Faster and more orderly
- Avoids court proceedings
- Less adversarial
- Reduced scrutiny when handled properly
- Directors choose the insolvency practitioner
- Better communication and planning
Compulsory liquidation removes control entirely and places the process in the hands of the Official Receiver.
If the company has no assets, directors may need to fund the process personally — but there is often help available.
Director Redundancy Claims can significantly reduce or even cover the cost:
Eligibility usually requires:
- At least 2 years on payroll
- Minimum 16 hours per week
- PAYE salary (not dividends only)
This option is frequently overlooked and should always be explored.
An unfair preference occurs when one creditor is paid in priority to others shortly before insolvency.
This often includes:
- Repaying loans to friends or family
- Repaying yourself
- Clearing personally guaranteed debts
- Paying connected parties first
These payments can be challenged and reversed by a liquidator.
Time limits:
- Up to 6 months before insolvency for unconnected creditors
- Up to 2 years for connected parties
If found, directors can face:
- Repayment orders
- Personal liability
- Increased scrutiny of conduct
This is why “trying to tidy things up” before insolvency can backfire badly without proper guidance.
Doing nothing is usually the worst option.
If the company cannot afford a formal liquidation, some directors wait for creditors to force the issue. This often creates bigger problems, not fewer.
Risks include:
- Prolonged Investigations
The Official Receiver will examine your conduct in detail, often more aggressively than in a voluntary process. - Companies Being Restored To The Register
Even if struck off, creditors can restore the company later, reopening scrutiny and stress. - Increased Personal Exposure
Delays can be interpreted as failure to act responsibly, increasing wrongful trading risk.
The safer route is to take control early by engaging a licensed insolvency practitioner. This demonstrates responsible conduct and often reduces personal exposure significantly.
Yes — and this is often where early advice makes the biggest difference.
Before formal insolvency, there may be practical alternatives, including:
Informal Negotiations
Negotiating directly with HMRC, landlords, lenders, or suppliers to restructure arrears or agree breathing space.
Refinancing Or New Investment
In some cases, shareholder loans, third-party investment, or refinancing can stabilise the business if there is underlying value.
Business Or Asset Sale
If the business has value (customers, goodwill, IP, contracts), a sale may be possible — but it must be handled carefully.
Important warning:
Selling assets without proper advice can create serious problems. Transactions carried out shortly before insolvency may later be challenged as:
- Preferences
- Transactions at undervalue
Attempts to avoid creditors
This can lead to personal liability. Always take advice before selling assets or restructuring.
In most cases, directors are not personally liable for company debts, and insolvency does not affect your personal credit record.
However, personal liability can arise if:
- You have given personal guarantees
- You have traded wrongfully or fraudulently
- You have taken improper payments or preferences
- You have breached your legal duties as a director
This is why early advice matters. When handled correctly, many directors exit insolvency without personal financial damage. When handled badly or too late, personal exposure increases significantly.
If your company is solvent, you may be able to close it via:
- Voluntary strike-off (for small balances)
- Members’ Voluntary Liquidation (MVL) for larger sums
An MVL can be very tax-efficient, allowing distributions to be taxed as capital rather than income.
Voluntary dissolution is a simpler, faster, and cheaper alternative to formal liquidation for companies without debts or disputes. It allows directors to wind down operations efficiently and avoid unnecessary costs.
Yes. Much of the guidance on this page applies not only to company directors, but also to designated members of Limited Liability Partnerships (LLPs).
While LLPs are structured differently, designated members carry legal responsibilities similar to directors when the LLP becomes insolvent. This includes duties to creditors, exposure to wrongful trading claims, and obligations to act once insolvency is likely.
If you are a designated member facing financial difficulty, it’s critical to seek advice early — the risks, protections, and available solutions often mirror those faced by limited company directors.
Different structures have different solutions.
Partnership Voluntary Arrangements (PVA)
A PVA allows a partnership to restructure its debts with approval from 75% (by value) of creditors. It works similarly to a CVA and can allow continued trading.
Individual Voluntary Arrangements (IVA)
Sole traders — or individual partners with personal exposure — may use an IVA to avoid bankruptcy. This can deal with both business and personal debts.
Because partners often have joint and several liability, individual partners may each need their own IVA depending on the structure of the debts.
As soon as you notice:
- Cash flow stress
- Creditor pressure
- HMRC arrears
- Concerns about personal exposure
Early advice = more options, less risk.
Insolvency fees vary depending on:
- The type of procedure (CVL, CVA, administration, etc.)
- Business size and complexity
- Number of creditors
- Level of investigation required
- Amount of work involved
You should always receive:
- A clear fee estimate upfront
- An explanation of what is included
- Transparency around funding
We introduce directors to licensed insolvency practitioners who provide competitive, transparent pricing, tailored to small businesses.
Be cautious of “free” or ultra-cheap offers — these often lead to poor outcomes, hidden charges, or inadequate protection.
Always ensure your adviser is properly licensed and regulated.
Let's Talk About Insolvency
We’ll take a few minutes to understand your situation, answer any questions and if you need expert insolvency advice, how a licensed insolvency practitiioner we work with could make a difference.
Our Role in Specialist Services
The information on this page is provided for general information only and should not be treated as advice.
We work with independent third-party specialists who provide the specialist services described here, not us directly. Where appropriate, we may introduce you to a specialist, and any advice or services are provided under their own terms and responsibility.
Our role is to help coordinate the process, share relevant information with your consent, and support you alongside the specialist. You are under no obligation to proceed and are free to choose any provider.
In some cases, we may receive a referral fee or other commercial benefit if you choose to engage a specialist we introduce. Any such arrangement will be disclosed to you in advance.
Important Notice
Insolvency services are provided by a licensed insolvency practitioner, not by us. Entering into a formal insolvency procedure can have serious legal and financial consequences, including effects on your credit rating, ability to act as a director, and access to future finance. You should always take professional advice before proceeding.