Invocas Financial

We are often asked two very important questions:

• "When should I request expert assistance when faced with financial difficulties?"

• "When should I make the decision to enter a formal insolvency process?"

We can identify early warning signs that a business is in distress and can advise on the directors’ responsibilities.

The Insolvency Act 1986 states that a company should be wound up if it is unable to pay its debts as they fall due.

The statutory definition of this term is:

1. If a creditor to whom the Company is indebted in a sum exceeding £750 has served a statutory demand at the Company’s registered office in the prescribed form and the Company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor

or

2. If a charge for payment on an extract decree has been levied on the company and has expired without payment being made

or

3. If it can be proved to the satisfaction of the Court that the company is unable to pay its debts as they fall due

or

4. If it can be proved to the satisfaction of the Court that the Company’s liabilities are greater than its assets.

This is often not a clear cut decision and we can provide assistance to the directors or their advisers on this issue. In such a situation, if the business cannot continue trading out with an insolvency process, the directors' objectives must be to preserve value for creditors. At this point we can give advice on the most appropriate insolvency related route.