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Insolvency advice is one of the most expensive professional services there is — yet much of what you pay for is document preparation you can do yourself, to a professional standard, before you ever appoint anyone. This hub maps every route, who it is for, and exactly what you can do yourself versus where a licensed insolvency practitioner (IP) is legally required.
Is the company actually insolvent? The two tests
A company is insolvent if it fails either the cash-flow test (it cannot pay its debts as they fall due) or the balance-sheet test (its liabilities exceed its assets) — the tests in section 123 of the Insolvency Act 1986. Once you are in that zone, directors’ duties shift to protecting creditors, and continuing to trade up debts can expose you to a wrongful trading claim. Act early: the earlier you take a route below, the more options you keep. See the 12 director tips for financial distress and the directors’ guide for when the company can’t pay its debts.
Rescue routes — keep the company alive
- Time to Pay (HMRC) — an informal instalment arrangement for tax arrears; no IP needed, you negotiate it yourself.
- Informal arrangement with creditors — a negotiated standstill or reduced-payment deal; you can draft and propose it yourself.
- Company Voluntary Arrangement (CVA) — a binding deal to repay a proportion of debts over time, approved by 75% of creditors by value. A nominee (an IP) is required, but you can build the proposal and figures first — see the CVA self-help guide to cut the fees.
- Moratorium & restructuring strategy — a Part A1 moratorium (CIGA 2020) gives breathing space from creditor action while you restructure (a monitor, who is an IP, oversees it).
- Administration & pre-pack administration — an administrator (IP) protects the business from creditor action while it is rescued or its business and assets are sold, sometimes via a pre-arranged (pre-pack) sale.
Closing routes — wind the company down properly
- Creditors’ Voluntary Liquidation (CVL) — the directors choose to liquidate an insolvent company. A liquidator (IP) is required, but you prepare the statement of affairs yourself.
- Members’ Voluntary Liquidation (MVL) — a solvent wind-up to extract value tax-efficiently; needs a declaration of solvency and a liquidator (IP).
- Strike-off (dissolution) — the cheapest close for a company that has stopped trading with no debts. This one is genuinely DIY (Form DS01) — but creditors can object, so it is not a way to walk away from debts.
- Winding-up petition — compulsory liquidation forced by a creditor through the court; if you have received one, respond fast.
Directors: duties, defence and a lawful fresh start
- Liquidation & restructuring strategy for directors — how to choose between the routes above and protect your position.
- Director disqualification defence (CDDA 1986) — responding to disqualification proceedings.
- Phoenix companies — done lawfully — starting a new company from the ashes of the old is legal, but section 216/217 of the Insolvency Act restricts re-using a prohibited name, and wrongful-trading rules still apply. Do it the right way or face personal liability.
- Restore a dissolved company — administrative restoration or a court order to bring a struck-off company back.
For individuals and sole traders
- Individual Voluntary Arrangement (IVA) and the IVA proposal — a binding personal-debt deal (a supervisor IP is required).
- Debt Relief Order (DRO) — for low debts and minimal assets, applied for through an approved intermediary.
- Bankruptcy and annulment under section 282.
- Statutory demand — the formal pre-bankruptcy/winding-up demand (and how to set one aside if you have received one).
Not sure you even need one? Read Do I need an insolvency practitioner?
Choosing an insolvency practitioner — and keeping fees down
A formal liquidation, CVA, administration or moratorium legally needs a licensed insolvency practitioner — but you can prepare and draft most of the groundwork yourself first (the statement of affairs, the background, the proposal narrative), which is where the real fee savings are. If you do appoint one, consider a smaller, local, independent practitioner rather than a large national firm: you typically get more personal service, clearer communication, fewer conflicts of interest and more competitive fees — and you deal directly with the person handling your case, not a production line. Always ask for a written fee estimate and check the practitioner’s regulatory record with their licensing body before you appoint.
Frequently asked questions
Can I do a liquidation myself without an insolvency practitioner?No — a CVL, MVL, CVA, administration or moratorium each legally require a licensed IP for the formal step. But you can do the preparation and drafting yourself (the statement of affairs, the proposal, the correspondence), and a striking-off (DS01) for a debt-free dormant company is genuinely DIY. How much does a CVA or liquidation cost — and can I cut it?
Most of the bill is document preparation and case admin. Prepare the groundwork yourself and choose a smaller independent IP, and you can materially reduce the fee. See the CVA self-help guide. The company can’t pay — what should I do first?
Confirm whether it is insolvent (the cash-flow and balance-sheet tests), stop taking on new credit, and pick the right route early. Start with the directors’ guide. Is a phoenix company legal?
Yes, if done correctly — but section 216/217 restricts re-using a prohibited name and wrongful/fraudulent-trading rules apply. See the phoenix strategy guide.
See also: How to complain about an insolvency practitioner — the free Complaints Gateway, the time limit, and what it can achieve.
Contains public sector information licensed under the Open Government Licence v3.0.
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