Understanding Insolvency
Insolvency occurs when a person or business is unable to pay their debts as they become due. In Northern Ireland, there are several options available to individuals and companies facing financial difficulties.
Options for Individuals
* Bankruptcy: This is the most formal and severe insolvency procedure for individuals. It involves surrendering assets to an official receiver, who sells them to repay creditors. After a certain period, the individual may be discharged from bankruptcy.
* Debt Relief Order (DRO): This is a simplified procedure for individuals with low incomes and limited assets. If approved, a DRO can help individuals avoid bankruptcy and repay their debts over a set period.
* Individual Voluntary Arrangement (IVA): An IVA is a formal agreement between an individual and their creditors to repay debts over a set period. It involves making regular payments to an insolvency practitioner, who distributes the funds to creditors. Options for Companies
* Voluntary Liquidation: This is a process where a company voluntarily winds up its affairs and distributes its assets to creditors.
* Compulsory Liquidation: This is a court-ordered process where a company is forced to liquidate due to insolvency.
* Administration: This is a process where a licensed insolvency practitioner takes control of a company’s affairs to restructure its debts and allow it to continue trading.
* Company Voluntary Arrangement (CVA): Similar to an IVA for individuals, a CVA is an agreement between a company and its creditors to repay debts over a set period. Key Factors to Consider:
* Financial Situation: Assess your or your company’s financial situation to determine the most suitable insolvency option.
* Assets and Debts: Consider the value of your assets and the amount of your debts.
* Future Prospects: Evaluate your or your company’s chances of recovering financially.
* Legal Advice: Seek professional advice from an insolvency practitioner or solicitor to understand your options and navigate the process.
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Seeking Professional Help
It’s important to seek professional help early if you’re facing financial difficulties. An insolvency practitioner can provide guidance, assess your situation, and help you choose the best option for your circumstances. Would you like more specific information about a particular insolvency option or have questions about your specific situation?
Kevin Neary BCL TEPISolicitor INotary PublicIDNDLAWI1 Downshire Road, Newry
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