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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.

Trust deeds

  • A trust deed is a formal agreement with creditors to repay them part of what is owed.
  • If you are a sole trader or have a partnership, you can enter into a trust deed.
  • You may be able to continue trading.

Personal bankruptcy

  • If you are a sole trader, going  bankrupt (also known as sequestration) 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

  • To make a partnership bankrupt, the partners have to petition for the partnership to be made bankrupt and then petition for the individual partners to be made bankrupt as well.
  • This means any partnership and personal debts included are written off.
  • Any partnership and personal assets could be sold to pay creditors.