Commercial Bankruptcy

Commercial bankruptcy is commonly a company’s declaration that it is unable to pay its debts - a financial position known as insolvency. Commercial bankruptcy, or insolvency protection, as it is more commonly known in the UK, allows a company to deal with its current debt without the constant threat of imminent litigation being brought against it.

Commercial bankruptcy is an extremely complex area of law, and one that is ever-changing. Relatively new legislation now offers companies filing for commercial bankruptcy several different ways of avoiding the winding up of a company. The most notable options are administration and administrative receivership. The former can be appointed the courts, the company or a floating charge holder, whilst the latter is appointed by a fixed charge holder. Both scenarios allow the company to continue trading successfully, but only the administrator has this goal as its priority. The main interest of the administrative receiver is to ensure the lender which appointed him is able to collect the debt. A third option – forced liquidation – simply shuts down the company and forces it to sell all of its assets at the maximum price possible.

If you are facing insolvency and are considering applying for commercial bankruptcy it is highly recommended that you seek professional advice. The Insolvency Act 1986, along with several other pieces of legislation, states that not acting in accordance with the law may result in the directors of an insolvent company being personal liable, and includes criminal offences such as fraudulent trading.

If you would like to obtain legal advice on commercial bankruptcy, Contact Law can put you in touch with a local specialist Insolvency Solicitor free of charge. So, if you have any questions or would like our help in finding local specialist Insolvency Solicitor please call us on 0800 1777 162 or complete the web-form above.