About

Two quick tests tell you most of what you need to know. First, can the company pay its debts as they fall due? If it can't, that's the "cashflow" test failing. Second, do its liabilities, including money it will or might owe later, outweigh its assets? That's the "balance-sheet" test. Either one can tip a company into insolvency, and so can an unpaid statutory demand once 21 days have passed. Two things worth knowing: there is no neat definition in the Insolvency Act, and each company is judged on its own, so one company in a group can be insolvent while the others are perfectly healthy. If you think you're near either line, treat it as your cue to get advice, not sit tight.

More routes are open than most directors expect, but they close one by one as the cash drains away, which is why the timing of your first call matters more than almost anything else. You might negotiate quietly with your lenders, use a court process such as a scheme of arrangement or a restructuring plan, propose a CVA, take a moratorium to buy breathing space, or sell the business through a pre-pack. Which one fits depends on your size, the shape of your debt and how much runway you have left. Get someone to look at the whole picture first, ideally weeks before you think you'll need to.

A scheme is a way of getting a deal with your creditors over the line even when a stubborn minority won't play ball. It's a court-approved arrangement under the Companies Act, and because it isn't an insolvency process, solvent companies use it just as often as distressed ones. Once 75% by value and a majority in number of a class vote in favour and the court approves, everyone in that class is bound. You can do almost anything commercially sensible inside one, from swapping debt for equity to releasing guarantees or resetting terms. That flexibility is why it's the workhorse of big cross-border restructurings.

The restructuring plan is the newer, more powerful cousin of the scheme, and people often call it the UK's answer to Chapter 11. Two things set it apart. It can bind secured creditors, not only unsecured ones. And it comes with "cross-class cram-down": even if a whole class votes the plan down, the court can still push it through, provided no one in that class ends up worse off than they would be in the likely alternative. There's no majority-in-number hurdle either, just 75% by value in each class. One word of caution: the courts have grown a lot stricter about fairness over the past couple of years, so a plan has to be built carefully to stand up.

A CVA lets you agree a deal with your unsecured creditors to pay back part of what you owe, or otherwise reschedule it. You need more than 75% by value, and over half by number, of the creditors who vote to agree, and an insolvency practitioner supervises the whole thing with very little court involvement. Its main limitation is that it can't touch secured debt unless those lenders agree. In practice, it has been used most often to reshape retail leases.

A pre-pack is a sale that's lined up before the company formally enters administration and completed the instant it does. The point is speed. You lock in the value of the business, the jobs and the customer relationships before the news gets out and suppliers take fright. It's entirely legitimate and widely used, with real safeguards attached: the insolvency practitioner has to report to creditors under a standard called SIP 16, and any sale to a connected party, such as existing management, needs either creditor approval or an independent evaluator's sign-off. Staff normally transfer to the buyer automatically under the TUPE rules. One thing to test early: if your employment costs are the actual problem, a pre-pack may not fix it.

Administration puts a licensed insolvency practitioner in charge, with a clear order of priorities: rescue the company if that's realistic, and if it isn't, get creditors a better result than they'd see in a straight winding-up. The moment administration begins, a "moratorium" drops into place. Think of it as a legal shield that stops creditors suing you, enforcing their security or repossessing goods while a solution is worked out. There's also a standalone version, introduced in 2020, that gives a struggling company an initial 20 business days of breathing space with the directors staying in charge under a monitor's eye. Take-up of the standalone one has been modest, but it's there if you need room to think.

You can, and the risk is real enough that it pays to understand it before trouble arrives. The two big exposures are wrongful trading, where you become personally liable for carrying on after you knew, or ought to have known, the company couldn't avoid insolvent liquidation and you didn't act to limit creditors' losses, and fraudulent trading, which is more serious still. Deals done in the run-up that unfairly favour one creditor, or sell assets off cheaply, can also be unwound afterwards. Take advice early, and write down why you made each decision at the time you made it.

Once your company is insolvent or heading that way, your job changes. You have to start putting creditors' interests ahead of shareholders', a shift the courts confirmed in the Sequana and West Mercia cases. These days it also means not simply nodding through a lender-driven deal that quietly favours one group over the rest. Whatever the pressure you're under, do the same three things every time: get independent legal and financial advice, insist on fairness opinions where the numbers are being fought over, and keep a clear record of your reasoning.

This is core work for us. We advise funds, family offices and private-credit investors across distressed situations, whether that's buying distressed debt, providing rescue or "new money" finance (which usually ranks ahead of the rest), structuring a backstop or reserve-based facility, or running a fast "fatal-flaw" review of a target so you know exactly what you're buying before you commit. If you're weighing up a distressed opportunity, get the capital structure looked at early.

Yes. As lending documents have loosened, we've seen a wave of aggressive LMEs, things like drop-downs, uptiering and priming, where one group of lenders shores up its own position at everyone else's expense. Majority lenders have plenty of room to act in their own interest, but that room isn't unlimited, and recent cases have shown courts will step in when a deal crosses the line. If you think you're being primed or quietly left behind, don't wait to see how it plays out. Get your position reviewed while you still have moves available.

Yes. We help people buy, sell or rescue businesses against the clock: distressed M&A, accelerated sales, and pre-pack or asset deals where moving fast is what preserves the value. We put together the right debt and equity team quickly and run the negotiation with the lenders and other stakeholders.

Yes. Restructuring has a habit of throwing up disputes: enforcing security, challenges to a scheme or plan, intercreditor fights, claims against directors, and the flashpoints where stakeholders' interests collide head-on. We take these on directly, and where a matter needs heavyweight litigation support we bring it in through our network so you're still dealing with one team.

Yes on both. A lot of our clients sit outside the UK, US funds among them, and foreign companies use the English courts to restructure all the time, as long as they have a "sufficient connection" here, such as English-law debt or a genuine shift of their main operations. English restructurings dovetail with US Chapter 15 recognition, and English and New York law remain the two languages most cross-border finance is written in. Wherever you're based, we work alongside local counsel so nothing slips between jurisdictions.

A large firm comes with a web of other clients, relationships and revenue targets. We don't. So the advice you get is pointed squarely at your interests, from a senior lawyer, with no quiet calculation about who else it might upset. When a situation turns stressful and everyone's interests start pulling in different directions, that independence is usually the most valuable thing in the room.

Yes, and we're asked to do exactly this often. Distressed situations tend to be crowded: a sponsor, a lender group, the existing advisers, each with their own stake in the outcome. Frequently one party, a board, a single creditor, a stakeholder, needs advice from someone who isn't tangled up in any of it. That's the role we step into: clear, independent counsel for one party when everyone else at the table is conflicted.