Options when a company is insolvent

Overindebtedness shall exist if the debtor's assets no longer cover his existing obligations to pay, unless it is highly likely, considering the circumstances, that the enterprise will continue to exist. A creditor's request shall be admissible if he has a legal interest in the opening of the insolvency proceedings, and shows his claim and the reason why insolvency proceedings should be opened to the satisfaction of the court. If a request for the opening of insolvency proceedings on the debtor's assets was already filed in the two years prior to the request being filed, the request shall not become inadmissible solely on account of the claim being satisfied. In such cases the creditor must also show the previous request to the satisfaction of the court.

If the debtor files a request, subsection shall also apply to the creditor's request. In this case, the debtor shall initially attempt to reach an out-of-court agreement in accordance with section 305 subsection no. 1. The proceedings relating to the request to open insolvency proceedings shall be suspended until the decision is taken on the plan for the settlement of debts. After hearing the debtor, the court shall order the continuation of the proceedings regarding the request to open proceedings if in accordance with his freely-formed conviction the debt settlement plan is likely not to be accepted. If the debtor has not submitted all the declarations and documents specified in subsection , Business Insolvency Services the insolvency court shall request him to supply the missing parts immediately.

This option could give your business lower monthly payments and keep creditors satisfied in order to avoid legal actions being taken against your company. If your liabilities are mainly owed to hmrc, you may be able to get a time to pay arrangement put in place. As the name suggests, this gives you additional time to bring your account with hmrc up to date. Once your company is knowingly insolvent, you have certain duties and responsibilities as its director.

If hmrc are chasing you for payment, the company is already in the danger zone as they are relentless in the pursuit of bad debts. Penalties for late payment of tax can be significant, making a dire financial situation untenable. When directors are caught up in the day-to-day running of their company, it is very easy to miss the signs of approaching insolvency.

The decision ordering any of the restrictions on property transfers mentioned at section 21 subsection no. 2 and designating a provisional insolvency administrator shall be published. It shall be individually served on the debtor, on any person with an obligation to the debtor, and on the provisional insolvency administrator. At the same time the debtor's obligors shall be required to meet their obligations to the debtor exclusively in compliance with the order. If in the case of a legal person, or of a company without legal personality, the request is not filed by all members of the board of directors, all general partners or all liquidators, subsection shall only apply if the person or persons filing the request are empowered to represent the company or the partnership. If the debtor requests the opening of insolvency proceedings, imminent insolvency shall also be a reason to open. If the creditor's claim is satisfied after filing of the request, the debtor shall carry the costs of the proceedings in the event of the request being rejected as unfounded.

If the administrator terminates under the first sentence or if he submits the declaration in accordance with the second sentence, the other party may claim damages as an insolvency creditor for premature termination of such contract. The debtor shall disclose any circumstances relating to the insolvency proceedings to the insolvency court, the insolvency administrator, the creditors' committee and, if so ordered by the insolvency court, to the creditors' assembly. He shall also disclose any facts able to bring about criminal prosecution for commission of a criminal or administrative offence.