Here are the non-statutory options open to directors of companies that are at risk of going into insolvent liquidation.
Do Nothing – If you believe there is a risk to your company’s finances and you continue to trade, you may be liable for Wrongful trading under section 214 Insolvency Act 1986 and risk personal liability for any losses that the company suffers when as a director you knew or ought to have concluded there was no reasonable prospect that the company would avoid going into insolvent liquidation.
Informal Agreement – This can be done by your solicitors, by you or any third party acting in the recovery of your monies such as a Debt collection agency. They may be able to take steps to reach an informal agreement with creditors to postpone or re-structure debts and give the company time to recover.
Re-financing – The possibility of having this option open to you will ultimately depend on factors such as the company’s past credit history, current credit rating, the directors giving personal guarantees on any borrowings, the liquidity of the company and whether the company has any free assets it can offer as security to the amount is proposes to borrow.
Sale – This would seem the most drastic of the options. It may be possible to sell your company if there is a buyer who is wiling to take the responsibility for the outstanding liabilities. The sale is likely to be easier in cases where the company has strong brand awareness, identity and has an established customer base.