Ten top tips for directors who are thinking of causing their company to enter into an insolvency process and who want as stress free process as possible

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  1. Ensure the company’s accounting records are brought up to date.
  2. Take professional advice from the company’s accountants and / or solicitors   – remember they have experience with other clients that have been there before.
  3. Be honest with yourself and identify matters that the insolvency practitioner may well have concerns about before the insolvency button is pressed so that anything that can be done about those concerns is done. 
  4. Pay attention to and get advice on the three matters that crop up time and time again, overdrawn directors / connected party loan accounts, bounce back loans and other Covid – 19 support schemes, the constraints for starting up in business again and director disqualification.
  5. Set aside sufficient time to deal with the insolvency process – directors’ duties continue up to and after the insolvency practitioner is appointed.
  6. Be honest and upfront with creditors (including employees) at all times.
  7. Make sure all personal guarantees given to creditors of the company have been identified.
  8. Do not abuse HMRC – their powers and resources are “limitless”.
  9. Do not be clever and do something dodgy in the run up to insolvency – it will be spotted.
  10. Work with your insolvency practitioner and not against him – it makes a huge difference and invariably results in a better outcome than a confrontational approach.
  11. One for good luck – do not think instructing an insolvency practitioner is all you need to do for the whole sorry saga to be put to bed without any further pain.  All insolvency practitioners have legal obligations when carrying out insolvency work (whether they say it when they meet you or not) and the sensible director recognises that truth rather than simply hoping everything will be fine. 
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