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Bankruptcy

If your business is no longer viable, you’re unable to raise further finance, and you’ve personally guaranteed debts to creditors, bankruptcy may be an option to consider. While it’s often seen as a last resort, for some individuals, it can provide a much-needed fresh start.

What is Bankruptcy?

Bankruptcy is a formal insolvency process for individuals who can no longer pay their debts. A bankruptcy order can be made either:

– Voluntarily, by applying to the court yourself, or

– Involuntarily, by a creditor who is owed £5,000 or more

Once a bankruptcy order is made, your debts are managed by an Official Receiver or Trustee, and you are no longer responsible for repaying them directly.

Benefits of Bankruptcy

– Immediate protection from creditors – Legal action, enforcement, and collection efforts (e.g. bailiffs or lawsuits) must stop once bankruptcy is declared

– Debt discharge – Many unsecured debts can be written off, freeing you from repayment obligations

– Asset exemptions – Depending on your situation, you may be able to keep essential possessions and certain assets

– A chance to rebuild – Bankruptcy typically stays on your credit file for 6 years from the date of the bankruptcy order. However, many individuals begin to rebuild their credit shortly after being discharged.

Consequences of Bankruptcy

While bankruptcy can offer relief from unmanageable debt, it carries significant consequences:

– Valuable assets may be sold, including your home, vehicle, or personal possessions

– Your credit rating will be severely impacted, affecting your ability to borrow

 

For a typical period of 12 months, you may face restrictions, such as:

– Not being allowed to act as a director of a limited company

– Being barred from borrowing more than £500 without informing the lender of your bankruptcy

– Not being allowed to form, manage, or promote a business without court approval

– Having to disclose your bankruptcy if trading under a different name

Despite these challenges, bankruptcy can be the most effective solution in certain circumstances, particularly where there is no realistic prospect of repaying debts.

Is Bankruptcy Right for you?

Bankruptcy is a serious step with lasting implications, but it can also offer a structured path to financial recovery. If you’re struggling with debt and considering your options, it’s important to seek professional advice before proceeding.

Advice for Companies and Individuals

Creditors Voluntary Liquidation (CVL)

If your company’s debts have become unmanageable and creditor pressure is mounting, it can feel overwhelming. In such cases, Creditors Voluntary Liquidation (CVL) could offer a structured and professional way to close the business and address its financial issues.

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Members Voluntary Liquidation (MVL)

An MVL is, in essence, the liquidation of a company that is solvent.
A company is solvent by definition if it has assets sufficient enough to settle all liabilities in full plus statutory interest.

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Administration

Administration is a rescue process for businesses in financial difficulty which can sometimes result in the company becoming solvent again. Alternatively, a sale of the business could achieve continuity thus preserving employment and goodwill.
Administrators, who must be Licensed insolvency Practitioners, can be appointed by the company, the Directors, a creditor or by a direct application to the Court. During this process, the company is protected from any creditor taking any legal or enforcement action.

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Compulsory Liquidation

Compulsory Liquidation sees company assets being sold involuntarily, the staff being made redundant and ultimately being struck off the register.

Compulsory Liquidation is generally the least favourable insolvency process and best avoided if possible.

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Individual Voluntary Arrangement (IVA)

If refinance isn’t the right solution for your problems, or you can’t find a lender prepared to offer the facilities you need to avoid bankruptcy, one possible solution is to enter an Individual Voluntary Arrangement (IVA).

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Documents

The following guidance sheets provide useful guidance of processes and other useful information. They are free to download.

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Creditors Voluntary Liquidation (CVL)

If your company’s debts have become unmanageable and creditor pressure is mounting, it can feel overwhelming. In such cases, Creditors Voluntary Liquidation (CVL) could offer a structured and professional way to close the business and address its financial issues.

1/6

Members Voluntary Liquidation (MVL)

An MVL is, in essence, the liquidation of a company that is solvent.
A company is solvent by definition if it has assets sufficient enough to settle all liabilities in full plus statutory interest.

2/6

Administration

Administration is a rescue process for businesses in financial difficulty which can sometimes result in the company becoming solvent again. Alternatively, a sale of the business could achieve continuity thus preserving employment and goodwill.
Administrators, who must be Licensed insolvency Practitioners, can be appointed by the company, the Directors, a creditor or by a direct application to the Court. During this process, the company is protected from any creditor taking any legal or enforcement action.

3/6

Compulsory Liquidation

Compulsory Liquidation sees company assets being sold involuntarily, the staff being made redundant and ultimately being struck off the register.

Compulsory Liquidation is generally the least favourable insolvency process and best avoided if possible.

4/6

Individual Voluntary Arrangement (IVA)

If refinance isn’t the right solution for your problems, or you can’t find a lender prepared to offer the facilities you need to avoid bankruptcy, one possible solution is to enter an Individual Voluntary Arrangement (IVA).

5/6

Documents

The following guidance sheets provide useful guidance of processes and other useful information. They are free to download.

6/6

Creditor Portal

Already a client? Log in to view your case file and stay updated through our secure portal.

Go to Portal

Get in Touch

All initial meetings are free and confidential. The first consultation will help us establish the current position and allow us to present a range of options available to you.

Send us an email at restructuring@groupams.co.uk or call us on 0161 413 0999.

Disclaimer

AMS Business Recovery & AMS BR is the trading name of Path Business Recovery Ltd, a company registered in England and Wales. Gareth Howarth & Philip Lawrence are Licensed Insolvency Practitioners authorised to act in the United Kingdom by the Insolvency Practitioners Association.

 

The company’s registered address is 1 Hardman Street, Spinningfields, Manchester, M3 3HF. Registered in England and Wales No.: 10149403. VAT No: 242 7332 23

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