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Debunking myths about insolvency
We’re here to help you, the Director.
At 1st Business Rescue we have over 50 years of experience providing insolvency, liquidation and company debt advice to business owners.
We understand how challenging it can be when dealing with financial difficulties within your business. It’s easy to ignore the problem and hope that it disappears, but this is often the worst thing you can do.
Our dedicated team is here to provide honest, valuable advice to help UK company directors.
No case or circumstance is the same, but I can guarantee that my team and I are here to give you the best advice.
We are one of the only 5-star business insolvency companies on Trustpilot and Google, with 100’s of 5-star reviews.
Contact our friendly team for a 100% confidential, no-obligation consultation today.
Free Guide: Directors guide to liquidation the correct way
If you are a director and considering closing your company by liquidation or insolvency, you must read our free guide to discovering how to do it the right way. Simply click the button below and enter your details below to receive this free guide now:
Facing insolvency? We help you explore all your options.
We regularly support directors dealing with the “sharp end” of business distress: threats of winding-up petitions, bailiffs at the door, and the mounting pressure of Bounce Back Loan repayments.
If you are struggling with HMRC arrears or rent pressure, the worst thing you can do is “guess” your way through. The wrong move can increase your personal risk.
We specialise in taking that pressure off your desk, dealing with creditors on your behalf, and explaining your options—from CVAs to restructuring—in plain English.
Why directors trust 1st Business Rescue with insolvency advice
Many directors find us through our Google and Trustpilot reviews because they are looking for more than just a legal process—they want a team that understands the human side of business failure.
We offer speed when time matters and experience across all UK sectors, from construction to hospitality. Whether we are helping you rescue the business or guiding you through an orderly closure (CVL), our goal is a calm, confidential process that protects your reputation and your future.
Our focus is on you, the director - not your creditors.
We completely understand the emotional anguish company directors like you face when considering the future of your company – and the knock-on impact this can have on your personal life.
Our expert team will outline all of your options in a jargon-free, easy-to-understand way and advise you and your business on the best route forward – with the goal of protecting you and your personal assets.
Contact us for a confidential, no-obligation conversation.
Insolvency - Frequently Asked Questions
Insolvency is a financial state where a company can no longer pay its debts. In the UK, this is legally defined by two tests: the Cash Flow Test (can the company pay its bills as they fall due?) and the Balance Sheet Test (do the company’s total liabilities outweigh its total assets?). If your company fails either of these tests, it is technically insolvent.
A company is insolvent if it meets either of the legal tests. Practical indicators include being unable to pay HMRC on time, receiving threats of legal action from suppliers, having maxed-out overdrafts, or realizing that the total value of your business assets is less than the total amount you owe to creditors.
This is a critical legal turning point. Under the Companies Act 2006 and the Insolvency Act 1986, once a company is insolvent, your primary legal duty shifts from looking after the shareholders to protecting the interests of your creditors. Failing to prioritize creditors from this point forward can lead to personal liability.
Key warning signs include HMRC arrears (VAT, PAYE, or Corporation Tax), constant creditor pressure, County Court Judgments (CCJs), bailiff visits, or the threat of a winding-up petition. If you are struggling to meet payroll or are being refused credit by suppliers, the business is likely insolvent.
Yes, being insolvent does not always mean the business must close. If the underlying business is still viable, there are several rescue options available, such as negotiating a Time to Pay (TTP) arrangement with HMRC, entering a Company Voluntary Arrangement (CVA), or seeking professional restructuring advice to stabilize cash flow.
A TTP is an informal agreement with HMRC that allows an insolvent company to pay back tax arrears (such as VAT or PAYE) over a set period, usually up to 12 months. This is a common first step for businesses facing temporary cash flow insolvency but who have a realistic plan to recover.
A CVA is a formal insolvency procedure that allows a company to keep trading while repaying a percentage of its unsecured debts over a fixed period (typically 3–5 years). It provides a legal “breathing space” and can often result in a portion of the total debt being written off.
Administration is a formal process that places a company under the control of an Insolvency Practitioner. It provides immediate legal protection (a moratorium) from creditor action, allowing the practitioner time to see if the business can be rescued, sold as a going concern, or if assets need to be realized for the benefit of creditors.
If the business is no longer viable and cannot meet its obligations through a rescue plan, the most responsible next step is a Company Voluntary Liquidation (CVL). This allows for an orderly closure, ensures creditors are treated fairly, and helps protect the directors from further personal risk.
Wrongful trading is a legal term for continuing to trade and incurring new debt when you knew—or should have known—that there was no reasonable prospect of avoiding insolvent liquidation. If found guilty of wrongful trading, directors can be ordered to personally contribute to the company’s assets to pay creditors.
Generally, no. Because a limited company is a separate legal entity, the company’s insolvency is not recorded on your personal credit file. Your personal credit rating is only affected if you have personal debts you cannot pay, such as an enforced personal guarantee for a business loan.
In a standard insolvency, directors are not personally liable for company debts. However, liability can arise if you have signed a Personal Guarantee (PG), if you have an overdrawn Director’s Loan Account (DLA), or if an investigation finds evidence of “preferences” (paying certain creditors ahead of others) or wrongful trading.
The most important step is to stop taking on new credit and seek professional advice immediately. Taking early action is the strongest evidence that you have acted responsibly. At 1st Business Rescue, we provide a 100% confidential assessment to help you understand your safest next move.