Insolvency & Bankruptcy

Our barristers can obtain Validation orders from the Court to allow directors to access funds or dispose of the company’s assets as appropriate if a winding-up petition has been presented.

From a taxpayer's perspective, insolvency is when the total liabilities exceed total assets. An 'adjudicator' will decide if you should be made bankrupt during an insolvency service.

In England and Wales, bankruptcy lasts 12 months, and during this period, you would be referred to as an undischarged bankrupt. After 12 months, you will be free of your debts, but they will remain on your credit score for six years. In future, if asked, you must answer honestly about your bankruptcy if creditors ask, even if six years have elapsed.

Bankruptcy is a type of insolvency, but the difference is that bankruptcy is a legal process or a court order, whereas insolvency is a state of denial distress

This is a legal action taken by a creditor against a company that owes them money. The advertisement of a winding-up petition can damage a company’s reputation within a very short period. The company will have ten days from the date of the winding up petition to prevent the winding up from being advertised.

When a party becomes unable to meet their financial obligations when they fall due, the incidence of insolvency arises for consideration. A creditor may have commenced insolvency proceedings by way of a Winding Up Petition (in the case of a company) or a Bankruptcy Petition (in the case of an individual).

Generally, where a debt is owed by a company, a petition may be issued if the debt is due now; the creditor has demanded it, and it remains unpaid; the debt is undisputed, and the debt is £750 or more. Where the debt is owed by an individual, the creditor can only serve a Statutory Demand or file a Bankruptcy Petition where the debt is for £5,000 or more.