Your company is in trouble: the options, before it's too late
Every insolvency practitioner will tell you the same thing: the businesses that survive are the ones whose directors picked up the phone early. The ones that don't are usually the ones who waited, hoping next month would be better.
By Robert Festenstein, Head of Legal
Updated 29 July 2026
7 min read
The short version
- When a company is in difficulty, a director's duties shift towards protecting creditors — and personal risk rises.
- There are real rescue options: refinancing, informal deals with creditors, a company voluntary arrangement, or administration.
- Where rescue isn't realistic, an orderly closure is far better than trading on and making things worse.
- The single biggest factor in a good outcome is acting early — the options narrow the longer you wait.
First, protect yourself
If your company is struggling, understand something before you do anything else: once it's insolvent or heading that way, your legal duties as a director shift towards protecting your creditors, and decisions you take in this window can carry personal consequences. Trading on with no realistic prospect of recovery can expose you to a wrongful trading claim. So the first move isn't a clever restructuring — it's taking proper advice, holding and minuting board meetings, and keeping a clear record that you acted responsibly. That paper trail is your protection.
The rescue routes
A struggling company genuinely has more options than "carry on and hope." Depending on the situation:
- Refinancing or new investment — sometimes the problem is cash flow, not the underlying business, and fresh funding buys the time to fix it.
- Informal arrangements with creditors — many suppliers and HMRC will agree time to pay if you engage early and credibly.
- A company voluntary arrangement (CVA) — a formal, binding deal with your creditors to pay off debts over time while continuing to trade.
- Administration — a formal process that gives the company breathing space (a moratorium that stops creditors taking action) while an administrator tries to rescue the business or get a better result for creditors than immediate closure.
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When rescue isn't realistic
Sometimes, honestly, the business can't be saved — and recognising that early is itself a responsible act. Where that's the case, an orderly closure (typically a creditors' voluntary liquidation) is far better than limping on, running up more debts and deepening the hole for everyone, including you personally. Closing a company properly, at the right time, protects creditors and directors alike. Trading on in denial helps no one and increases your own exposure.
Why timing is everything
If there's one thing to take from this, it's that every option above has a shelf life. A CVA needs a viable business underneath it. Administration needs something worth rescuing. Refinancing needs a lender who believes there's time. Leave it too late — until the cash is gone and the creditors are at the door — and one by one those doors close, until liquidation is the only room left. The directors who come out of this best are almost always the ones who sought advice while they still had choices. If your company is under pressure, the most valuable thing you can do is talk to someone now, not next month.
Frequently asked questions
My company is struggling — what should I do first?
Take advice now, while you still have options. Once a company is or may be insolvent, your duties as a director shift towards protecting creditors, and decisions made in this period can carry personal consequences. Document that you're acting responsibly, and get proper advice early — it's the single biggest factor in a good outcome.
What's the difference between a CVA and administration?
A company voluntary arrangement is a binding deal with your creditors to repay debts over time while you keep trading. Administration is a formal process that puts the company under an administrator with a moratorium protecting it from creditor action, while they try to rescue the business or achieve a better result than immediate closure. Which fits depends on the situation.
Is it better to close the company or keep trading?
If the business genuinely can't be saved, an orderly closure at the right time is far better than trading on, running up more debts and increasing your personal exposure. If there's a viable business underneath the cash-flow problem, a rescue route may be right. The honest answer depends on the specifics — which is why early advice matters so much.
Sources & further reading
This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 29 July 2026. Buzz Solicitors is a trading name of AD Solicitors Limited, a recognised body regulated by the SRA (no. 8011228).
A solicitor with more than two decades' experience in commercial law, dispute resolution, insolvency and judicial review. Robert acts for businesses, directors and individuals on the matters that carry real consequence — and leads Buzz Solicitors.
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