How to Check If a Company is Insolvent?

There are several ways to check if a company is insolvent. One way is to look at the company’s financial statements. If the company is losing money and its debtors exceed its assets, it is insolvent.

Another way to check is to look at the company’s cash flow. If the company does not have enough cash to pay its bills, it is insolvent.

Finally, you can check with the company’s creditors. If the company is not paying its bills on time, it is likely insolvent. If you are unsure whether a company is insolvent, you can consult with an accountant or financial advisor.

This article will explain those in detail, if you’re here as a company director and worried that your own company maybe insolvent, there are different steps to take. You should use our free insolvency test here to gauge the severity of your situation.

Ways to Check if a Company is Insolvent

All Limited Companies or Limited Liability Partnerships have to register their details at Companies House. This organisation is responsible for maintaining a register of all active companies, as well as registering the information companies are legally required to supply, such as annual returns and annual accounts. Companies House then makes this information available to the public.

Search companies house offers an online search facility here where you can check the trading status of a company. The search will show you whether the company has ceased trading, entered some form of insolvency or dissolved. If it’s already dissolved you will see it listed as ‘struck off‘ but if things haven’t reached that stage, Companies House is unlikely to give you concrete information on whether the company is insolvent.

There is no official Companies House insolvency register unlike the insolvency register for individuals, for that you should use the government’s own portal mentioned in the next paragraph

For sole traders, you can also visit GOV.UK and search the Individual Insolvency Register.

Has a Provisional Liquidation been Appointed?

The most accurate resource on provisional liquidations is the government’s on page. This page will show you an updated list of companies who have received a Winding up Petition (a final warning letter to settle debt before enforced liquidation), or who are in provisional liquidation (this is where the government appoints its own liquidator, provisionally, as a way to safeguard company assets etc).

Check the London Gazette Insolvency Notice

When a company goes into administration, liquidation or recievership, the appointed Insolvency Practitioner is required to post announcements in the London Gazette. Because all Notices of Appointments and Creditors Meetings have to be placed in the Gazette within 7 days, news about the company will be here first.

The Gazette has its own search which is a great resource but because it also covers changes to registered office address or ownership, personal bankruptcy notices along with a range of other announcements such as the New Year’s honours list and government announcements it can be difficult to find your way around.

Search for Bankruptcy and Debt Relief Restrictions

Again, this is not relevant for limited companies but, but the government’s updated list of bankruptcy restrictions is one potential area to check. This page details individuals who have broken the terms of a bankruptcy or Debt Relief Order

Carry out a Credit Check

You probably will have carried out a credit check on the company before you started to trade with them, but this could be a few years ago, and the business credit check may not be up-to date.

There are many online companies who offer credit reports – some are even free – but bear in mind that most of these only offer repackaged information that’s available from Companies House, so is no more up to date than that.  

We recommend ones like Redflag alert that offer reports with CCJ information that is imported directly from the registry trust.

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