Trading with an insolvent company

Once a company is in financial difficulties, the chances of arrears being recovered reduce substantially. The degree to which this happens depends on many factors, including what sort of process the company is in, what security is in place for the creditor, what the intentions of the company are going forward and what the company's market position is.

Trading with a distressed company

When a company is in difficulties, but not yet in a formal insolvency process, there are more options for a creditor and supplier. Through good communication with the company, continued support of the company may lead to a greater recovery of arrears and more secure terms going forward if negotiated properly. Creditors and suppliers must however tighten up their terms with any distressed company in order to reduce risk and maximise recovery. For details, see Practice Notes:

•
A creditor’s guide to dealing with a company in financial difficulty
•
Directors’ duties: companies in financial difficulties
•
Shareholder’s guide to dealing with

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