Managing bankruptcy

Failing to keep on top of your business' debt can eventually lead to your bankruptcy and the business having to close.

As individual circumstances will vary, it's best to use this article on bankruptcy as general information only. Seek expert advice from one of the organisations mentioned in the “Additional information” section, such as Business Debtline. They can refer you to an insolvency practitioner, if necessary.

Also note that there are differences in the way bankruptcy is treated in England and Wales, compared to Scotland.

You can learn more about the devolved elements of corporate insolvency in Scotland on the Accountancy in Bankruptcy website. Business Debtline also has a Scottish edition.

What is bankruptcy?

Bankruptcy is a type of insolvency that applies only to individuals, such as sole traders and members of partnerships. The equivalent for limited companies is a process known as liquidation.

However, the term “bankruptcy” is often used loosely to define any type of financial failure. Typically, it means there's little chance of creditors - people or organisations to whom the business owes money - getting their money back.

Bankruptcy options

If your business is unable to pay its debts, there are various options that you or your creditors (the people or organisation you owe money to) can consider. Which option is right for you depends on any assets your business has and its business status.

Bankruptcy, or closing the business, is just one option available.

Learn more about your business status, and why it's important, at the Business Debtline website.

Bankruptcy and closing the business

If you're considering going bankrupt or closing your business, you should seek advice.

For a more detailed overview of your options (in relation to your business status), visit the Business Debtline website.

Personal bankruptcy

Learn more about personal bankruptcy in:

• England and Wales
• Scotland
• Northern Ireland

The website of the debt charity StepChange has a useful video on personal bankruptcy

Partnership bankruptcy

You can read more about partnership bankruptcy in the Company Rescue website's 'Guide for Partners'.

There is also information on Business Debtline for partnerships that are having difficulty with debt.

Closing a limited company

The way you close your limited company will depend on what it has in assets.

Learn more about closing your limited company on the Business Debtline website.