Limited company directors take on a range of legal duties associated with running their business and must comply with strict regulations. A company’s financial health is at the heart of these responsibilities and directors are expected to be aware of its financial status at all times. This is because, if the business becomes insolvent, their legal duties change. The team at HM3 Legal is experienced at spotting contract red flags that can prove costly and resolving disputes (including between shareholders) which can derail a business.
A company can be cash flow insolvent, which means it is unable to pay its bills when they become due, but it can also be balance sheet insolvent, and this means the company’s liabilities are greater in value than its assets. If you have cash flow questions, a lawyer can help facilitate prompt payment and put in place measures to protect the business from late payments.
Unfortunately, research shows that the number of companies in England and Wales ceasing to trade in 2023 in hit a 30-year-high, recording 25k company insolvency registrations.