Understanding Insolvency – What Does It Really Mean?
Insolvency happens when a company is no longer able to pay its debts when they fall due, or when its liabilities outweigh its assets. In simple terms, the business has run out of working capital and can’t meet its financial obligations — whether that’s to suppliers, HMRC, lenders, or other creditors.
Being insolvent doesn’t always mean the end of the road. It’s a sign that something needs to change — fast. Recognising the signs of insolvency early gives directors more options, such as business restructuring, negotiating a Company Voluntary Arrangement (CVA), or exploring company administration before formal liquidation becomes necessary.
At The Insolvency People, we’re here to help directors and business owners understand their position, explore every available solution, and take control of the situation before it worsens. If your company is showing signs of financial distress, speak to one of our licensed insolvency practitioners today for clear, practical advice on the next steps.