When is a business insolvent?
Before we can consider the various solutions available for an insolvent business, it is important to first first understand first what the term ‘insolvent’ means.
A business is insolvent when it has insufficient assets to cover its liabilities/debts or is unable to pay debts when they fall due.
Conversely, when there are sufficient assets to cover liabilities or to pay debts as and when they fall due, a business is solvent.
Tools available to an insolvency practitioner
We can administer different solutions in relation to insolvent companies in financial difficulty. The following sections give an overview of the different procedures we can employ:
- Administration
- Company voluntary arrangement (CVA)
- Insolvent liquidation
- Solvent liquidation
- Administrative receivership
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