Company in Financial Trouble?
Here’s Where to Start.
You know something’s wrong. Cash is tight, creditors are calling, and the stress is building. But you’re not sure how serious it is or what to do about it. This page will help you understand your situation and find the right path forward.
Common Signs Your Company Is in Trouble
Financial difficulty rarely appears overnight. It builds. Recognising these warning signs early gives you more options.
Struggling to Pay Bills on Time
Constantly juggling which creditors to pay, delaying payments, or choosing between bills.
HMRC Debt Building Up
VAT, PAYE, or Corporation Tax payments falling behind, with arrears growing.
Creditors Chasing Payment
Increasing calls and letters from suppliers, landlords, or lenders demanding payment.
Relying on Overdraft
Constantly at or near overdraft limits, using credit to cover day-to-day operations.
Personal Money Going In
Directors putting personal funds into the business to keep it afloat.
Sleepless Nights
Constant worry about money, avoiding post and phone calls, stress affecting health.
Revenue Declining
Sales falling, key customers leaving, market changing against you.
Legal Threats Received
Letters threatening court action, statutory demands, or winding up proceedings.
If Any of This Sounds Familiar…
You’re not alone. Thousands of directors face these situations every year. The important thing is recognising it and taking action—the earlier you act, the more options you have.
Your First Steps—Starting Today
Feeling overwhelmed is normal. Here’s how to start making sense of your situation.
Stop and Breathe
Financial trouble is stressful, but panic makes things worse. Take a moment to recognise that problems can usually be solved—or at least managed—with the right approach.
Face the Numbers
Gather your accounts, bank statements, and creditor correspondence. You can’t solve a problem you don’t understand. What do you owe? To whom? When is it due?
Check for Urgent Deadlines
Are there any statutory demands (21 days)? Winding up petitions (7 days before advertisement)? Court dates? Identify anything with an immediate deadline.
Understand Your Cash Flow
What’s coming in over the next 3-6 months? What must go out? A simple cash flow forecast helps you see whether the problem is temporary or structural.
Don’t Make It Worse
Avoid taking on new debt you can’t repay, making preferential payments to some creditors over others, or withdrawing money from the business inappropriately.
Get Professional Advice
This isn’t the time for guesswork. An experienced insolvency adviser can quickly assess your situation and explain your options—often achieving outcomes you couldn’t get alone.
Assess the Severity of Your Situation
Different levels of financial trouble require different responses. Which of these sounds most like you?
Concerned but Coping
Cash flow is tight but you’re still paying bills. You can see problems developing and want to get ahead of them.
Signs you’re here:
- Payments are slower but still happening
- No legal action from creditors
- Business is still profitable (or close)
- You have time to plan
Struggling to Keep Up
Creditors are actively chasing. You’re juggling bills, missing some payments, and feeling the pressure mount.
Signs you’re here:
- Regular creditor calls and letters
- HMRC debt accumulating
- Choosing which bills to pay
- Directors putting in personal funds
Facing Legal Action
You’ve received statutory demands, winding up threats, or your bank accounts are frozen. This needs urgent attention.
Signs you’re here:
- Statutory demand received
- Winding up petition filed
- Bank accounts frozen
- Court deadlines approaching
Remember: Director Duties Change When Insolvent
Once a company is insolvent (can’t pay debts as they fall due), directors’ duties shift from shareholders to creditors. Continuing to trade without addressing the situation could expose you personally to “wrongful trading” liability. This is why getting advice early matters.
Common Pathways from Here
Depending on your situation, several paths may be available. Here’s an overview of the main options.
Negotiate with Creditors
For less severe situations, direct negotiation with creditors may be enough—payment plans, reduced settlements, or Time to Pay arrangements with HMRC.
Learn about HMRC optionsCompany Voluntary Arrangement (CVA)
A formal arrangement to pay creditors a percentage over 3-5 years. Directors stay in control. Good when multiple creditors need to be dealt with together.
Learn about CVAsAdministration
Provides immediate protection from creditors while options are explored. An insolvency practitioner takes control to rescue the company or achieve a better outcome than liquidation.
Learn about administrationDefend Legal Action
If you’re facing winding up proceedings, these can often be stopped—by paying the debt, disputing it, or entering a formal insolvency procedure.
Learn about defenceOrderly Closure
If the business can’t be saved, a voluntary liquidation may be better than being forced into compulsory winding up—it protects directors better and is less disruptive.
Learn about closure optionsNot Sure? Get an Assessment
If you’re unsure which path is right, a free consultation with Femi can quickly clarify your situation and identify your best options.
Book free consultationThere’s Almost Always a Path Forward
Even in the worst situations, there are usually options. The key is getting expert advice early, understanding your choices clearly, and taking decisive action. Most directors who seek help wish they’d done so sooner.
Why Talk to Femi?
When your company is in trouble, you need someone who can quickly understand your situation, cut through the complexity, and show you the path forward clearly.
- 30+ years in insolvency — has seen every situation and knows what works
- Former HMRC Inspector — invaluable when tax debts are part of the problem
- Plain English advice — explains complex situations clearly, without jargon
- Honest assessment — you’ll get the truth about your situation, not false hope
- Free initial consultation — understand your options before committing to anything
Frequently Asked Questions
A company is insolvent if it can’t pay its debts as they fall due (cash flow test) or if its liabilities exceed its assets (balance sheet test). Signs include consistently being unable to pay bills on time, creditors pressing for payment, and relying on new borrowing to pay old debts. If you’re unsure, an adviser can help you assess this quickly.
Not necessarily. Limited company directors are generally not personally liable for company debts—that’s the point of limited liability. However, there are exceptions: personal guarantees, wrongful trading, preferential payments, or director misconduct can create personal liability. Getting advice early helps protect your personal position.
It depends. If there’s a realistic prospect of recovery, continuing to trade may be appropriate. But if you know (or should know) the company can’t avoid insolvent liquidation, continuing to trade can make you personally liable for “wrongful trading.” Get advice quickly to understand where you stand and what’s appropriate.
If you have debts, you can’t just “close” the company informally. Creditors don’t disappear. Strike off at Companies House is only appropriate when there are no debts or liabilities. If there are debts, formal liquidation is usually required. Trying to close informally when debts exist can create serious problems for directors.
Almost never. Even when winding up petitions have been filed, bank accounts frozen, or court dates set, there are usually still options. The range of options narrows as situations deteriorate, which is why acting early is better—but even in crisis situations, expert advice often reveals paths that weren’t obvious.
Femi offers a free 30-minute initial consultation to understand your situation and outline your options. After that, costs depend on what’s needed. Simple negotiations cost less than complex restructurings. You’ll always get a clear quote before any chargeable work begins. Given what’s at stake, professional advice usually saves far more than it costs.
The First Step Is Understanding Where You Stand
You’ve already taken the hardest step—acknowledging there’s a problem. Now let’s work out what to do about it. Book a free consultation today.
Get FREE 30-Minute ConsultationCompletely confidential. No judgment. No obligation.