Applying the two primary tests should be straightforward, but in practice, it is not.  One of the main problems is how long an investigation into the organisation takes before a decision can be reached as to the viability of the organisation.  Close analysis of liabilities can bring about disputes which require evaluation and resolution before […]

Paired with the cash flow test is the balance sheet test.  Both are applied to protect creditors who have supplied goods and services to an organisation beyond the point at which the organisation is insolvent.  If the balance sheet test were not applied, newer creditors would lose out because of a significant imbalance between the […]

Companies incorporated in Scotland or Northern Ireland have different laws to those incorporated in England and Wales, and this includes the law relating to insolvency.  In addition to a demand being served on the company for monies outstanding, a creditor can obtain a judgment or court order requiring the company to pay the amount outstanding […]

Why is it so important to know if your company can meet its debt obligations? Because this forms the basis upon which the solvency of your company is assessed.  If your company cannot meet its debts as and when they fall due, then it is insolvent and appropriate action must be taken to protect both […]