Is your company insolvent?
The following information should enable you to establish the status of your company.
There are two questions that should be considered and reviewed periodically in relation to the company:
- Is the company able to pay its debts as they fall due? (‘Cashflow Test’)
- Are the company’s liabilities greater than its assets, taking into account its contingent and prospective liabilities? (‘Balance Sheet Test’)
If the answer to either question is yes then your company maybe technically insolvent and you should seek professional advice immediately, otherwise you, as a director, run the risk of personal liability.