Tenable Support Team
Business Recovery Experts
When your company is struggling with debt, it can feel overwhelming. You're not alone—thousands of UK directors face this challenge every year. The good news? You have options. Whether your business can be saved or needs to close, understanding your choices is crucial for protecting yourself, your employees, and maximizing outcomes for creditors.
Critical Warning: Ignoring debt problems won't make them disappear. Taking action early gives you more options and better outcomes. Delaying can lead to forced liquidation, personal liability, and even director disqualification.
Before exploring your options, you need an honest assessment of your business's viability. This isn't about optimism or pessimism—it's about realistic evaluation of whether your company has a viable future.
Answer these questions honestly to determine if rescue is feasible:
✓ Signs Your Business Can Be Saved:
✗ Signs Liquidation May Be Inevitable:
Once you've assessed viability, your options fall into two main categories:
For viable businesses that can trade through difficulties:
Formal repayment plan over 3-5 years
Negotiate directly with creditors
Inject capital to clear urgent debts
Payment plans for tax debts
For companies that cannot continue trading:
Orderly, director-led closure
Protection while seeking rescue or sale
Sale of business assets before formal insolvency
For solvent companies (can pay all debts)
If your company is struggling with debt, taking these immediate actions can protect you and preserve your options:
If you cannot pay debts as they fall due, continuing to trade can make you personally liable for new debts. This is called "wrongful trading" and can result in director disqualification.
Legal Risk: Directors who continue trading while insolvent can be held personally liable for debts incurred after insolvency date.
Speak to a licensed insolvency practitioner (IP) within 48 hours. Initial consultations are free and confidential. An IP can assess your situation objectively and explain all options.
Protection: Early advice shows directors acted responsibly, which protects against personal liability claims.
Don't ignore creditors. Brief, honest communication ("We're experiencing difficulties and getting professional advice") is better than silence. This can prevent legal action while you explore options.
Gather these documents for your IP consultation:
Take these steps to minimize personal risk:
The sooner you act, the more options you have. Delaying even by days can:
Reduce your options
Creditors may take legal action, forcing your hand
Increase personal liability
Wrongful trading exposure grows each day
Worsen creditor returns
Asset values decline, new debts accumulate
Damage your reputation
CCJs and court action become public record
When facing financial difficulties, directors often make these costly mistakes:
The Problem: Hoping things will improve without taking action. Ignoring creditor letters and avoiding phone calls.
The Consequence: Creditors escalate to legal action (CCJs, winding-up petitions). Your options narrow. Personal liability risk increases.
The Solution: Face the problem immediately. Get professional advice within 48 hours.
The Problem: Taking out bounce-back loans, credit cards, or director's loans to keep the company afloat when insolvency is inevitable.
The Consequence: You're personally liable for new debts (especially if you've given guarantees). You're also at risk of wrongful trading allegations.
The Solution: Only borrow if you have a realistic plan to repay. Get IP advice first.
The Problem: Paying friends, family, directors, or "important" suppliers while ignoring others (especially HMRC).
The Consequence: Called "preference payments"—these can be reversed by a liquidator. Directors may have to repay these amounts personally.
The Solution: Once insolvent, treat all creditors equally. Pay in proportion to debts owed or not at all.
The Problem: Transferring company assets (vehicles, equipment, intellectual property) to directors or related companies at undervalue or for free.
The Consequence: Liquidators can reverse these transactions. Directors face personal liability and potential disqualification proceedings.
The Solution: All asset sales must be at fair market value with independent valuation. Get IP approval.
The Problem: Simply closing the doors and abandoning the company without formal liquidation.
The Consequence: The company remains on the register. Creditors can force compulsory liquidation. Directors remain liable. This looks terrible for future business ventures.
The Solution: Proper voluntary liquidation shows responsibility and protects your reputation.
Following these principles will protect you from personal liability and director disqualification:
Seek professional advice as soon as problems emerge
Keep records of decisions and advice received
Provide full disclosure to your insolvency practitioner
Implement recommendations from licensed professionals
No preferential payments once insolvent
Don't incur new debts you cannot pay