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Limited Companies - Is your business in financial trouble?
Managing a company can be stressful and problematic. Each year, thousands of companies run into financial difficulty.
  The decision whether to continue to trade is fundamental and has to be made early. A company trading whilst insolvent may leave a director liable for wrongful trading. If the director knows or is in a position where he ought to know that the company could not avoid becoming insolvent, he should immediately seek professional advice. If there is no alternative, the company should cease to trade and possibly proceed to liquidation. The director of a company that 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.
A wrong or delayed decision may result in the directors having to contribute personally to the company's losses and undergo investigation by the Department of Trade and Industry.
 The decision whether to continue to trade.

This decision should not be made lightly but should be made with diligence and in consideration of the consequences. A director should not ignore the early warning signs that can threaten a company's survival. The following steps should be taken as a precaution.

  1. Ensure that regular meetings take place between the directors to discuss current events
  2. Ensure detailed minutes are kept of all meetings
  3. Ensure accurate and up to date accounting information is accessible and utilised
  4. Ensure that accurate cash-flow statements are prepared
  5. Ensure that any decision to continue trading is reviewed on a frequent basis
  6. Ensure that expert advice is sought if the viability of the business is in doubt
Directors may escape liability for wrongful trading if they can prove adequate steps were taken to minimise the loss to creditors after it became apparent that the company was insolvent.
 The Choices

A company experiencing financial crisis will not always find itself the subject of insolvency proceedings - seeking advice at an early stage can result in a less terminal solution being found.
There are four main types of insolvency proceedings for limited companies, and not all of them mean the end of a company or its business activity.
There are procedures designed to allow a solution to be found for the company's survival and procedures designed to bring the activities of the company to an end.
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