Corporate Insolvency

Establishing whether a company is insolvent is an important step in understanding its financial position. The following two tests are commonly used and should be considered regularly:

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Cashflow Test
Can the company pay its debts as they fall due?

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Balance Sheet Test
Do the company’s liabilities exceed its assets, including any contingent or prospective liabilities?

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If the answer to either question is yes, the company may be technically insolvent and professional advice should be sought promptly. Directors who continue to trade in these circumstances may risk personal liability.

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We provide clear, practical guidance to help you assess your position and understand your responsibilities. Where formal insolvency is necessary, we will outline the available procedures and support you in determining the most appropriate course of action.