Support and guidance from McAlister & Co
At McAlister & Co, we understand that financial challenges can feel daunting, but you’re not alone.
Our team of licensed insolvency practitioners are here to guide you through the right solution for your situation, whether you’re a director, sole trader, or individual in debt.
We’ve answered some of the most common questions below to help you better understand your options.
1. Personal Insolvency (Individual debt solutions)
What types of personal insolvency solutions do you have available?
We offer a range of personal insolvency solutions depending on your individual circumstances, including:
- Individual Voluntary Arrangements (IVAs): a formal agreement to repay what you can afford over time.
- Debt Relief Orders (DROs): a lower-cost option for those with minimal assets and debts.
- Bankruptcy: a formal process for writing off unmanageable debts and starting afresh.
- Debt management and informal repayment plans: where appropriate, for short-term cashflow issues.
Our insolvency practitioners will assess your full situation and recommend the most suitable, sustainable route.
Will a debt solution make the debt collectors go away?
Yes. Once a formal debt solution (like an IVA, DRO or bankruptcy) is approved, your creditors must stop contacting you and all legal action is paused.
We’ll handle communications on your behalf so you can focus on rebuilding financial stability.
Are there any creditors that can’t be included in a debt solution?
Certain debts cannot be included, such as:
- Student loans
- Court fines
- Child maintenance arrears
- Fraud-related debts
However, most unsecured debts (credit cards, loans, overdrafts, tax arrears, supplier debts, etc.) can be managed through an insolvency process.
Do I have to attend court if I apply for bankruptcy?
In England and Wales, bankruptcy applications are now handled online, so there’s no need to appear in court in most cases. A government adjudicator reviews your application and decides whether to make a bankruptcy order.
Only in exceptional circumstances (for example, if a creditor has petitioned for your bankruptcy and you wish to contest it) might you need to attend court.
What is the difference between bankruptcy, a Debt Relief Order (DRO) and an Individual Voluntary Arrangement (IVA)?
- Bankruptcy is for those with significant debt and few assets. It usually lasts 12 months, after which most debts are written off.
- DROs are designed for people with very low income, minimal assets (under £2,000) and debts under £30,000.
- IVAs are structured repayment plans lasting 5–6 years, suitable for those with regular income who wish to avoid bankruptcy.
Our team can help you decide which route fits your needs.
How long will a personal insolvency procedure last?
- IVAs typically run for 5–6 years.
- Bankruptcy usually lasts 12 months.
- DROs run for 12 months.
The exact length depends on your individual situation, the amount you owe, and your ability to make repayments.
Will I lose all of my assets if I become bankrupt or enter an IVA?
No, not necessarily.
Essential household goods and items you need for work are usually exempt.
If you enter an IVA, your home and car are often retained, provided you can maintain repayments.
In bankruptcy, higher-value assets may be sold to repay creditors, but every case is assessed carefully and fairly.
After the insolvency procedure is over, what happens to my remaining debt?
When your insolvency term ends, any remaining unsecured debt is written off, allowing you to make a fresh financial start.
How will this affect my credit rating and future borrowing?
An insolvency procedure will appear on your credit record for six years. While this may impact your ability to obtain credit in the short term, many people rebuild their credit gradually after discharge, and we can advise on practical steps to do so.
Can I keep trading or running a business while I’m in a personal insolvency process?
Yes, in some cases.
- During an IVA, you can continue trading as a sole trader or director with the IP’s consent.
- In bankruptcy, you can trade, but you must trade in your own name (not a limited company) unless approved by the Official Receiver.
We’ll guide you through what’s allowed in your situation.
2. Business / Company Insolvency & Restructuring (Rescue, turnaround and formal arrangements)
How do I know if my business is insolvent or just experiencing financial difficulty?
A business is likely insolvent if it:
- Can’t pay bills as they fall due
- Owes more than it owns (liabilities exceed assets)
- Has creditors threatening or taking legal action
If you’re unsure, speak to us immediately — early intervention often means more options for rescue.
What are some common issues that lead to insolvency?
Common causes include poor cash flow, loss of key contracts, rising costs, HMRC arrears, or late payments from clients.
We can help diagnose the root cause and implement practical steps to stabilise your business.
What is a Company Voluntary Arrangement (CVA) and could it be right for my business?
A Company Voluntary Arrangement is a legally binding agreement between a company and its creditors to repay debts over time while continuing to trade.
It’s ideal for viable businesses facing temporary financial pressure and helps protect from legal action while recovery takes place.
What is company administration and how does it differ from liquidation?
- Administration protects a company from creditors while an insolvency practitioner works to rescue or sell the business. Administration focuses on business rescue; liquidation winds things up permanently.
- Liquidation closes the company and sells its assets.
What is a pre-pack administration and is it legal?
Yes – when handled correctly, it is entirely legal.
A pre-pack administration allows an insolvent business to sell its assets to a new company (often run by the same directors) at fair market value. This preserves jobs, continuity and value while shedding unmanageable debt.
McAlister & Co ensures every pre-pack process is transparent, compliant and ethical.
What are the responsibilities of company directors if the business becomes insolvent?
Once insolvency is apparent, directors have a legal duty to act in creditors’ best interests — not their own.
This means avoiding further debt, protecting company assets, and seeking professional advice promptly.
Failing to do so could lead to personal liability for company debts.
Am I personally liable for company debts if my business fails?
Normally, no. Limited companies are separate legal entities. However, you may be personally liable if:
- You’ve given a personal guarantee
- You’ve traded wrongfully or fraudulently
- You’ve withdrawn funds improperly
We’ll review your position to ensure your interests are protected.
How quickly should I act if I suspect the company is insolvent?
Immediately. Acting early can protect you from personal risk and open up recovery options such as a CVA, refinancing or administration.
Delaying can limit your choices and increase the risk of compulsory liquidation.
3. Business Liquidation (When closure becomes the appropriate route)
When is liquidation the best option for a business?
Liquidation may be the best route if your company:
- Can’t pay its debts
- Has no realistic prospect of recovery
- Has pressure from creditors, HMRC or the bank
It provides a structured and lawful way to close the business while limiting your personal exposure.
What does liquidation involve and what is the process?
Liquidation formally closes a company by selling its assets, paying creditors, and removing it from the Companies House register.
Our licensed insolvency practitioners handle the entire process which includes managing creditors, legal requirements, asset recovery, and final deregistration.
How much does a liquidation cost?
In every case we explore options to make the liquidation self-funding.
If the company has very little cash or assets, placing it into liquidation before it runs out of funds will make the process easier and more affordable.
Our fees are usually paid from realised assets, so directors rarely need to contribute personally.
What happens to employees during a company liquidation?
Yes. When done properly through a pre-pack sale, it’s a legal and effective way to preserve a viable business.
The new company can continue trading and employing staff while leaving old debts behind, provided the sale is transparent and independently valued.
What types of liquidation are there (e.g. CVL, MVL, compulsory)?
- Creditors’ Voluntary Liquidation (CVL) – for insolvent companies initiated by directors.
- Members’ Voluntary Liquidation (MVL) – for solvent companies wishing to close efficiently.
- Compulsory Liquidation – when the court orders closure following a creditor petition.
We’ll advise which option best suits your situation.
Are there risks to directors when liquidating a company?
Risks are minimal if you act responsibly.
However, if investigations uncover wrongful trading or misuse of funds, you could face disqualification or personal liability.
We ensure all processes are handled lawfully and transparently.
How can costs of liquidation be covered if the company has little cash?
We can often structure liquidation to be self-funding, using company assets to cover costs. Acting early increases the likelihood that enough funds remain to cover professional fees and simplify the process.
4. Sole Trader & Partnership Insolvency (Business owners who are not incorporated or in partnership)
What options are available if I’m a sole trader facing financial difficulty?
You may be able to enter a Sole Trader IVA, a Debt Relief Order, or bankruptcy, depending on your circumstances. Each option provides a path to resolve debts while protecting your livelihood as far as possible.
How does bankruptcy for a sole trader differ from personal insolvency for an individual?
They follow the same legal framework, but as a sole trader, business debts are your personal debts. Bankruptcy can write off those debts while allowing you to restart free from the financial burden.
Can I enter a Sole Trader IVA and how does that work?
Yes. A Sole Trader IVA lets you repay what you can afford over 5 years while continuing to trade. It protects you from creditor action and allows you to retain essential business assets.
What happens to my business assets in a sole trader insolvency?
Essential tools and equipment needed for your trade are usually protected, but non-essential assets may be sold to repay creditors.
If my business fails, what happens to my personal liability or guarantees?
Because there’s no legal separation between you and your business, you’re personally liable for its debts. Insolvency procedures like an IVA or bankruptcy can clear these liabilities.
Can I trade or form a new business after a sole trader insolvency?
Yes, you can. Many people successfully rebuild after insolvency — often stronger and better informed. We’ll help you restart on stable footing.
5. Creditor Support & Finance (Support for creditors and business finance options)
If I’m a creditor, what rights do I have when a debtor becomes insolvent?
You can submit a proof of debt, attend creditors’ meetings, and vote on key decisions such as the appointment of a liquidator. We keep all creditors informed throughout the process.
How will I be updated if a company I’m owed money by enters liquidation or administration?
The appointed insolvency practitioner will provide regular updates on progress, asset realisations, and potential distributions. You’ll also receive formal notices and reports as the case progresses.
What financing or refinancing options exist when a company is facing distress?
Options include invoice finance, asset refinance, director loans, or new equity investment. We can introduce you to trusted finance partners to explore suitable funding for business recovery.
Can I negotiate with HMRC for Time to Pay arrangements instead of entering formal insolvency?
Yes — HMRC may agree to a Time to Pay (TTP) arrangement that allows you to spread tax arrears over a longer period.
We can help you prepare the proposal and negotiate with HMRC to improve your chances of approval.
Need confidential advice?
Our licensed insolvency practitioners are here to help you find the right path forward — whether that’s saving your business, closing it safely, or resolving personal debt.
Get in touch for a free, no-obligation consultation.
