All businesses should have a good idea when they are experiencing trouble. If you are a company leader, you have a commitment to ride the highs and the lows of a business so you should never ignore these warning signs or simply walk away from them.
Always seek the advice of a licensed insolvency practitioner before taking action, as you could risk making matters worse. Some practitioners offer a free initial consultation.
If the company’s long-term prospects look good, you may be able to arrange some short-term finance to ease it through the turbulence. You can take out a new loan, chase late payments or sell non-essential assets.
There may be the possibility of negotiating payment terms with your creditors, especially if you make your situation known to them as they’re at risk of receiving nothing at all if your business becomes insolvent.
If your long-term prospects aren’t looking great, you may have little choice but to cease trading.
If your company continues trading with no reasonable prospect of avoiding insolvency you could be held liable for ‘wrongful trading’. This would make you personally liable for the company’s debts as well as being permanently disqualified from being a director.