Insolvency Warning Signs
A company becomes insolvent when it is unable to meet its financial commitments due to a shortage of cash, or when the total value of its assets is less than the money it owes any creditors. Either scenario can ultimately lead to the winding down of a business, which is why it’s important to spot the warning signs of insolvency before it’s too late.
The common warning signs of insolvency are
Three tests of company insolvency
If your Company is encountering financial pressure and you are unsure whether the Company can meet its commitments as and when they fall due, your Company may be technically insolvent. Three test of solvency are:
Expert insolvency advice
The exact point at which a business becomes insolvent is not determined by one single factor but by a range of circumstances specific to each company. It is therefore important that clear, independent advice is sought at the earliest opportunity to enable as many restructuring and recovery options as are available.
As outlined above, a business can be comfortably solvent on a balance sheet basis yet suffer from a poor cash flow position, rendering the company illiquid and unable to settle its liabilities as and when they fall due.
In all circumstances, Parker Andrews can help – contact one of our Insolvency Practitioners for a confidential discussion about your situation.
Need Further Guidance?
If you’re facing company liquidation and need expert advice, contact Parker Andrews for a consultation. Our team can guide you through every step, ensuring you fulfil your responsibilities while protecting your interests.
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