What is insolvency?
Insolvency occurs when an individual or company are unable to pay their debts or outgoings on time or at all. A business is stated as insolvent when it cannot pay its debts or when its assets are outweighed by its debts.
If 75% of creditors vote in favour of a voluntary arrangement, a contractual agreement will be drafted which legally binds all creditors. A voluntary arrangement is considered an alternative as it discharges all debt by paying a reduced amount of money or else payment over an extended period of time.
The insolvent company benefits from this arrangement, as they avoid liquidation or bankruptcy and it is an informal and low publicised arrangement.
If a voluntary arrangement is rejector by the creditors, the company may be faced with formal insolvency. The insolvent party will be declared as liquidator, trustee, or administrator in bankruptcy. This assignment is often made in the best interest of creditors.
How we can help
At P.A. Duffy Solicitors we understand that the insolvency matters can be difficult and stressful for business owners. Our legal experts have experience in the area of insolvency proceedings to provide advice for you if you are facing the threat of insolvency within your company.
Through years of experience in the field of insolvency our solicitors, can also inform our insolvent clients of the consequences of bankruptcy and how that can affect future business credit. However, it is important to note that though there are consequences with bankruptcy, for many individuals it is not as damaging to their future business aspirations as considered years ago.
For further information and guidance on insolvency matters please contact our offices at P.A. Duffy Solicitors.