A Company is considered to be insolvent under English law if it is unable to pay its debts.
There are two tests for Corporate Insolvency:
the cash-flow test: is the company currently, or will it in the future, be unable to pay its debts as and when they fall due?
the balance sheet test: is the value of the company's assets less than the amount of its liabilities, taking into account as-yet uncertain and future liabilities?
If the answer to either of these questions is yes on balance of probabilities, then the company is deemed insolvent under English law. Furthermore a company is deemed unable to pay its debts, and therefore insolvent, if:
a creditor who is owed more than £750 has served a formal demand for an undisputed sum at the company's registered office and the debt has not been paid for three weeks; or
a judgement or other court order has not yet been satisfied.
There can be consequences of a Company Insolvency
Depending on the facts of a given case, the following consequences of Corporate Insolvency may apply:
increased risk of personal claims and directors' disqualification
heightened risk of formal insolvency procedure
a winding-up petition
any disposal of assets will be void
default under banking facilities
withdrawal of support from suppliers and customers.
transactions can be reviewed and reversed
To reduce the risk of Corporate Insolvency and the directors potential for personal liablities being claimed against you, contact Absolute Recovery Limited now.