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National Debtline

Advice you can trust

Business insolvency

There are a number of different business insolvency options that you or your creditors can consider. Which option is right for you depends on any assets your business has and your business status.

Insolvent trading

  • If you are trading insolvently, you may need to close your business.
  • You are insolvent if your business cannot pay its debts as they fall due, or there are not enough assets to sell to pay off the debt in full.
  • If you are a director of a limited company, it could be an offence to carry on trading when your company is insolvent.

Voluntary arrangements

  • Voluntary arrangements are legally binding agreements to pay back creditors a set amount of money over a set period of time.
 
  • They can be made if you are a sole trader, a partner in a partnership or have a limited company.
  • You may be able to continue trading.
 

Personal bankruptcy

  • If you are a sole trader, going  bankrupt will mean you are no longer liable for any business or personal debts.
  • If you go bankrupt your business and personal assets could be sold.
  • It will also make it difficult to carry on being self-employed.
  • Our fact sheet gives you more information about personal bankruptcy.

Closing your limited company

  • If your limited company is insolvent you need to think carefully about stopping trading and closing it down.
  • There are formal and informal ways of closing your company.
  • We can help you to find out about the ways of closing your limited company and which is the right option for you.

Partnership bankruptcy

  • A partnership can petition to make itself bankrupt.
  • Any partnership debts included will be written off.
  • As partners are personally liable for partnership debt, it is common for all partners to go personally bankrupt too.