Call or email us now for FREE advice 01752 690101 | | |Online Documents ABOUT US OUR SERVICES MORE . . . Frequently Asked Questions These are frequently asked questions received from directors, partners and individuals in the fields of companies, partnerships, personal insolvency, forensic accounting and other matters. Company Insolvency How Do I Know That My Company Is Insolvent? There are two tests. Firstly a company is insolvent when its liabilities incuding actual and the present value of contingent liabilities exceed the realisable value of its assets. Secondly a company is insolvent if it is unable to pay its liabilities as and when they fall due. What Is A Pre-Pack Administration? A pre-pack Administration is a sale of the business and assets of an insolvent company, that for reasons of maintaining the goodwill of the business and minimising Administration costs is negotiated prior to Administration and effected shortly after the appointment of Administrators. Insolvency Practitioners have strict professional guidelines as to how such pre-packs are negotiated. What Risks Do Directors Take If Their Company Trades Whilst Insolvent? The Wrongful Trading provision of s.214 of the Insolvency Act 1986 provides that if a company trades whilst it is insolvent and the directors are, or should have been, aware of its position they may become personally liable for the debts of the company if it subsequently enters into insolvent liquidation. Personal Insolvency How Are Credit Records Affected In IVA'S As Compared To Bankruptcy? In Bankruptcy it is an offence to take credit of more than £500 in the period (usually one year) prior to discharge unless the lender is made aware that the individual is Bankrupt. After discharge it is likely that credit will be difficult if not impossible to obtain for a number of years. An individual who enters an IVA is usually not prohibited from taking credit including mortgages during the IVA and credit worthiness is likely to recover more quickly particularly if the IVA is successfully completed. Partnership Insolvency To What Extent Are Partners Liable For The Debts Of The Partnership Business? In an unincorporated (non LLP) partnership all partners are jointly and severally liable for any debts of the partnership business. In the event of an insolvency, to the extent that partnership business assets do not cover partnership liabilities, creditors of the partnership have joint and several claims against the personal estates of partners and this ultimately puts their domestic/other assets at risk. Are The Partners Of LLP'S More Protected Than If They Were Members Of Unincorporated Partnerships? In an LLP, usually but depending upon the partnership agreement, partners are only exposed to the extent of their capital and not jointly and severally liable for any debts of the partnership business. In the event of an insolvency, to the extent that partnership business assets do not cover partnership liabilities, creditors of the partnership do not have joint and several claims against the personal estates of partners and this limits the risk of partners. Creditors arising from a partner's negligence may however, be able to make a claim against that partner. Forensic Accounting Do Forensic Accountants Only Work For The Police? No. Whilst forensic accountants do work for the police they also provide expert evidence to a variety of government departments, private organisations and individuals. Other What Is Restructuring And Turnaround? 'Restructuring' and 'turnaround' are terms used to describe procedures and strategies that are adopted by businesses which are making losses or are less profitable than they should be. Restructuring and turnarounds can take place without a formal insolvency such as a Company Voluntary Arrangement or Administration but frequently such work is undertaken by Insolvency Practitioners who have these procedures at their disposal. Company Insolvency Partnership Insolvency Personal Insolvency Forensic Accounting Office Locations Ivybridge 53 Fore Street, Ivybridge, Devon, PL21 9AE 01752 690101 01752 690808 info@richardjsmith.com View on Google Maps Truro Norfolk House, 16 Lemon Street, Truro, Cornwall, TR1 2LS 01872 261132 01872 261134 info@richardjsmith.com View on Google Maps Exeter 24 Southernhay East, Exeter, Devon, EX1 1QL 01392 424 063 info@richardjsmith.com View on Google Maps Richard J Smith & Co is the trading name of Richard J. Smith & Co LLP Registered in England & Wales (Reg No. OC413160), Registered Office: 53 Fore Street, Ivybridge, Devon, PL21 9AE The members of Richard J. Smith & Co LLP are Hamish Adam, Sam Bailey and Jonathan Trembath. All of the members are licensed to act as Insolvency Practitioners in the UK by The Institute of Chartered Accountants in England & Wales © Richard J. Smith & Co 2021 | Terms & Conditions | Privacy Policy | Cookie Policy | Sitemap |