What are the main insolvency procedures available to UK companies?

UK businesses facing financial distress have several formal insolvency procedures available under the Insolvency Act 1986. The most common options are administration, company voluntary arrangements (CVAs), creditors’ voluntary liquidation (CVL), compulsory liquidation, and in some cases informal restructuring deals negotiated directly with creditors. Administration provides immediate protection from legal action by creditors, giving a company breathing space to restructure or sell the business. CVAs allow businesses to reach binding repayment deals with creditors while continuing to trade. Voluntary liquidation is typically chosen when directors know the company cannot survive, and they wish to close it in an orderly manner. Compulsory liquidation, on the other hand, is imposed by a court order following a creditor petition. Informal arrangements and refinancing are also possible, though they offer less protection because they rely on creditor cooperation. The right solution depends on the severity of debt, the company’s underlying viability, and the directors’ objectives. Seeking expert advice early is crucial to understanding which path gives the best chance of business survival and minimizes risk to directors.