Facing the Unknown? Common Questions to Guide You Forward.

We've compiled the most common queries from directors like you, providing straightforward explanations on key topics, options, and what to expect. Dive in to find the clarity you need to move forward.

"Will I lose my business?"

Not necessarily. Acting early and seeking advice can prevent problems from becoming unmanageable, potentially leading to more options for your company. Some formal insolvency processes, such as a Moratorium or Administration, are specifically designed to help rescue the business.

"How much does it cost to get advice?"

Many R3 members offer a free initial consultation. If you proceed, the Insolvency Practitioner will provide an estimated cost and an engagement letter. For formal procedures, fees are typically paid from the company's assets. Fees vary but must be transparent and disclosed.

"Is my initial consultation confidential?"

Insolvency Practitioners can act as an impartial sounding board for your concerns and provide accurate information. All discussions during the initial consultation are typically confidential.

"What is personal liability for directors?"

Directors are usually not personally responsible for company debts. However, this changes if they mismanage the company, especially when it's insolvent. Key risks for personal liability or disqualification include continuing to trade when there's no reasonable prospect of avoiding insolvency (wrongful trading), fraudulent trading, not keeping proper accounting records, not paying tax owed, or using company assets for personal benefit. Your duties continue even if you resign.

"Can I rescue my business?"

Yes, rescuing your business is often possible, particularly with early advice. Insolvency Practitioners are experienced in finding ways to restructure and save businesses. Formal options like Moratoriums, Administrations, and Company Voluntary Arrangements (CVAs) are designed for business rescue.

"What happens to employees?"

This will depend on the insolvency process. You should seek early advice from an Insolvency Practitioner who will be able to provide more information.

"What's the difference between an Insolvency Practitioner, an accountant and a solicitor?"

- Insolvency Practitioners: Licensed, regulated professionals specifically authorised to act for insolvent companies, supervising formal procedures and advising on rescue or closure. They must act in the best interests of creditors.

- Accountants: Provide financial expertise and assistance with keeping records and preparing annual accounts.

- Solicitors: Provide legal advice.

- Collaboration: While distinct, these professionals can work together. An Insolvency Practitioner provides overall insolvency guidance, while accountants handle financial records and solicitors offer specific legal advice. Directors can delegate matters but must still use independent judgment.

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