A company, its directors or a creditor can petition for an insolvent company to be placed into Administration. Once in administration, the company is protected from any action by disgruntled creditors whilst the appointed administrator attempts to either salvage the business or realise the assets of the company in the most beneficial way for creditors.
There are numerous reasons for a company entering into liquidation. Although there can be solvent liquidations, the majority of cases involve insolvent companies. The directors of the company can, with the support of the shareholders, place a company into Creditors Voluntary Liquidation. Alternatively, a creditor of the company can, where its debt is greater than £750, petition for the company to be wound up
Any individual facing financial difficulties has two options available, they can either petition for their own bankruptcy or propose a Voluntary Arrangement (IVA) for creditors to approve. A Voluntary arrangement with creditors often provides a better outcome than bankruptcy due to the lower costs.
Laurence S Burt
licensed to act in the UK by the Institute of Chartered Accountants in England & Wales
© Ganley Burt 2005