What is Company Insolvency?
May be the most telling way to identify if a business is facing company insolvency is if it is struggling to pay suppliers and other creditors on time. Technically speaking not paying a creditor (any one that is owed money by the company) when it’s due is evidence of company insolvency.
Arguably most companies are facing insolvency on this test. On a more practical basis it will become evident when late payment becomes a necessity rather than voluntarily made and where the delays in payment are becoming longer and longer.
Don’t forget HMRC are also on the list of creditors that should be paid.
If your company or business may be facing company insolvency then please do have a read through the “Your Options Explained” section for either companies or sole traders.