When Should You Contact an Insolvency Practitioner?
Running a business comes with challenges, but when financial pressure builds and debt becomes unmanageable, it’s vital to know when to seek professional help. One of the most important decisions a struggling company director can make is knowing when to contact an insolvency practitioner (IP).
Here are the key warning signs that it’s time to reach out:
- Mounting Debts and Missed Payments
If your company regularly misses payments to suppliers, lenders, or HMRC, and you’re juggling cash just to stay afloat, these are clear red flags. An IP can assess whether the business is viable and help you find a way forward.
- Inability to Pay Tax Liabilities
Falling behind on VAT, PAYE, or Corporation Tax is one of the most common triggers for HMRC action. If you’re struggling to meet tax obligations, an IP can help negotiate a Time to Pay arrangement or suggest formal solutions like a Company Voluntary Arrangement (CVA).
- Creditor Pressure or Legal Action
If you’ve received a statutory demand, winding-up petition, or threats of court action, time is critical. An IP can act quickly to halt proceedings and protect the company through legal processes such as administration or a CVA.
- Insolvency Concerns
If you suspect your company is insolvent—meaning it can’t pay its debts as they fall due, or liabilities exceed assets—you have a legal duty to act in the interests of creditors. An IP will help you understand your responsibilities and avoid personal liability for wrongful trading.
- Closure or Exit Planning
Even if your business is solvent but you’re considering retirement, restructuring, or selling up, a Members’ Voluntary Liquidation (MVL) managed by an IP can be a tax-efficient way to close down.
Final Thoughts
Contacting an insolvency practitioner early doesn’t mean your business will close. In fact, it often opens up rescue and recovery options you may not know exist. The earlier you act, the more solutions are available.
Don’t wait for court papers or creditor threats—seek professional advice before it’s too late. A simple conversation could protect your business, your employees, and your future.
Keywood Group is an independent firm of Licensed Insolvency Practitioners based in Birmingham and London, specialising in providing confidential and expert advice on all aspects of corporate insolvency.
