The current economic climate means that the finances of businesses are now more perilous than ever. With rising inflation, increased cost of living, decreased spending, and problems with supply chains; it is important that businesses carefully consider their finances. Bankruptcies in the first quarter of 2023 were 18% higher than in the first quarter of 2022.
Bankruptcy is a final resort when there is no other option for repaying debts. It is a formal, legal insolvency route, with long-lasting implications. All finances and assets will be under the control of the official receiver or trustee until the bankruptcy order is in place.
Should financial difficulties arise, it is important that businesses first speak to their financial providers to establish what solutions or products may be available to help.
Whilst an individual is under a bankruptcy order, there will be restrictions in place against them.
An undischarged bankruptcy prevents you from being a company director.
Sole traders can continue trading after a bankruptcy order, so long as trading occurs under the same name.
Both sole traders and company directors will be restricted to £500 worth of credit without telling the person that they are subject to bankruptcy.
Bankruptcy does not prevent a business from opening a bank account, but many banks will conduct a credit reference check. Outstanding debts and CCJs may result in a declined application.
Business advisory:
If your business is struggling and no longer financially viable, an experienced business advisory service such as www.randall-payne.co.uk/services/business-advisory/ may be able to help before it becomes necessary to consider bankruptcy. A Gloucester business advisory service can provide a complete diagnostic on business growth and profit, change management, and cash flow forecast planning, as well as assistance in helping your business to meet short and long-term goals.
There are many resources that can provide information and advice on the bankruptcy process. Bankruptcy is a sad necessity for some businesses that have no other way to cope, but a full understanding of what it will mean for you is crucial before proceeding.