Insolvency solicitors in England & Wales

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Plain-language guide

What a insolvency solicitor does.

An insolvency solicitor acts when a company or an individual cannot pay their debts, for the debtor, the creditors or the office-holder. For companies that means advice on the wrongful-trading risk to directors, administration, company voluntary arrangements and liquidation under the Insolvency Act 1986; for individuals, bankruptcy, individual voluntary arrangements and debt relief orders. Creditors instruct the solicitor to serve statutory demands, present petitions, prove in the insolvency and challenge transactions at an undervalue or preferences.

When you need one

Your company cannot pay its debts as they fall due and you are worried about your personal exposure as a director.
A creditor has served a statutory demand or presented a winding-up petition against your company.
You are owed money by a company or person that has entered an insolvency process.
You are considering bankruptcy or an IVA and want to understand the consequences.

How fees usually work

Advice to directors and to individuals is charged by the hour, often with a fixed fee for an initial review of the options. Creditor work is often fixed-fee per step: the statutory demand, the petition and the hearing. Insolvency practitioners, who are licensed separately, charge for the process itself; the solicitor advises alongside them. Ask what the petition fee and the official receiver's deposit will cost.

Questions to ask before you instruct

Is the company insolvent on the cash-flow or the balance-sheet test, and when did it become so?
What must I do as a director now to avoid wrongful trading, and should we stop trading?
Would administration or a CVA rescue the business, or is liquidation the honest answer?
What are the chances of a dividend to unsecured creditors in this insolvency?

See the listed practitioners

General information about England & Wales law and practice, not advice on your matter. The practitioners listed on this page give that advice.

Insolvency solicitor questions

When is a company insolvent?

Under section 123 of the Insolvency Act 1986 a company is unable to pay its debts if it cannot pay them as they fall due, if its liabilities exceed its assets taking account of contingent and prospective liabilities, or if a statutory demand for £750 or more goes unpaid for three weeks. Directors' duties shift towards creditors once insolvency is likely.

Can directors be made personally liable?

Yes, in several ways: wrongful trading under section 214 where they continued trading past the point they should have known insolvency was unavoidable, misfeasance, fraudulent trading, and disqualification for up to fifteen years. Personal guarantees given to banks and landlords are enforced regardless.

What happens to my home if I go bankrupt?

Your interest in it vests in the trustee in bankruptcy, who has three years to deal with it. A spouse's or partner's share is unaffected, and the trustee will usually offer the family the chance to buy the bankrupt's share. An IVA may allow you to keep the home while paying creditors from income.

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