UK Business Bankruptcy – Is It A Good Option?

If you’re thinking about filing bankruptcy for your business, then you’ll want to read this article and discover what a bankruptcy will mean for your business. In this article we will discuss how a bankruptcy is caused, the different ways to resolve a company’s insolvency, and how to determine if filing for bankruptcy is right for you and your business.

A business bankruptcy occurs when a company is unable to pay its debts either because it does not have enough cash in the bank, or because it is overwhelmed with debt and its liabilities are greater than its assets. Technically, businesses don’t go “bankrupt” from a terminology standpoint. They either enter, a Company Voluntary Arrangement known as a “CVA” or the company’s assets are liquidated.

Upon taking part in a Company Voluntary Arrangement (CVA), the company enters into a receivership because of the lack of capital. When going through the process of receivership, the company’s creditors will generally select a receiver to sort out the company’s possessions and make corporate decisions that are to the benefit of the creditors.

In the event that the company’s financial duress can not be solved by a CVA and their financial means are minimal, the company would be considered insolvent and would begin liquidation proceedings. Prior to the liquidation, an insolvency agent would be appointed in order to take control of the company and be responsible for liquidating all of the company’s property in an attempt to recoup some of the money owe to the creditors of the business.

There can be many creditors that are owed money following the liquidation of a company’s assets. Generally, the liquidation firm is entitled to receive payment for its services from the liquidation proceeds before any other creditor is paid. After the firm has been paid any outstanding tax liabilities owed by the company will be paid next. Tax authorities generally hold the highest authority amongst creditors and therefore they will always be the first creditors paid. If there are no tax liabilities to be paid, then all of the secured debt liabilities will be paid next, followed by unsecured creditors and employees.

Any business that is considering a business bankruptcy should seek the advice of a competent insolvency practitioner. And experience practitioner will be able to guide you in your business through the procedure of filing a business bankruptcy. Although a Company Voluntary Arrangement or liquidation might be the best option for your business, it is important to see competent advice to ensure that you are making the right decision for you and your business.

Now Try – Business Bankruptcy Or Business Liquidation

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