Posted on December 22, 2025
Josh Bryson
In October we posted about the concept of insolvency, and the processes involved as a director of an insolvent company, and the process of recovering a debt as a creditor.
As a company the main goal is to remain solvent and keep the business alive, but if your company does become insolvent, you will need to obtain legal and insolvency advice and may need to consider coluntary administration.
Voluntary administration allows an administrator to attempt to pay off any debts owed by the company, which often reduces potential personal liabilities of a director.
Directors should note that if you continue to trade as a company while insolvent, you may become personally liable for any debts incurred during this time.
Sometimes there is no other option for a company to pay off debts that are owed to creditors. By entering voluntary administration, the administrator creates a report to maximise the return to all the creditors and decides on the next course of action. The report may recommend the creditors enter a deed of company arrangement. The deed of company arrangement aims to discharge all the debts owed by the company and stays any legal action by the creditors to recover the debts.
The deed of company arrangement also sets out the next steps in which a company may take to potentially restructure and rebuild.
Next steps
It is important to seek legal and insolvency advice as a director of a company facing insolvency to ensure that you are not trading whilst insolvent and to ensure that all required duties are being met.
Additionally, if you are a creditor that is owed a debt by an insolvent company it is important to seek legal advice to ensure you are getting the best outcome to recover your debt.
If you have any queries in relation to insolvency or outstanding debts, please contact the team at Scanlan Carroll.
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