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Is your business in financial trouble?

Running a company today can be volatile and it is likely that a number of companies will run into financial difficulty.

Directors must make an early decision on whether the business should cease to trade. Failure to do so may result in the directors having to contribute personally to the company’s losses and be heavily investigated by the Department of Industry (DTI).

Under UK law, if a company is trading insolvent, a director may be liable for wrongful trading. If the director knew or should have known that the company could not avoid becoming insolvent but still continues to trade then he or she must cease to trade immediately and take steps to liquidate the company.

The director of a company which is facing financial difficulty should ensure that there is a reasonable prospect that the company will avoid insolvent liquidation before being party to any decision to trade on.

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