Businesses can become insolvent when they are unable to pay the creditors to whom they owe money. In these cases action needs to be taken by qualified individuals who can better arrange matters with the people or businesses to whom that business owes money. These individuals have a profession,and are known as commercial insolvency practioners. They are authorized and licensed so that they can take all the actions needed for organisations that are in trouble financially.
Cash Flow Insolvency
Cash flow insolvency occurs when they have the assets required but cannot for some reason able to pay their creditors. This is a big difference to ‘balance sheet insolvency’,this being the case where a company does not have the assets (that could be realised) to pay off their outstanding debts. The main focus of works of insolvency practitioners,who are licensed and qualified accountants and are monitored by the law,is to save a business that has this sort of financial problem.
If the Insolvency Practitioner cannot find a way of coming to an arrangement with those who are owed money,then they will then move on to sell the assets of the company as well as starting to collect money from those who owe money to the company. They will also discuss the claims of creditors,and agree to pay monies,from the money they obtain for the company,(from the sale of assets etc). These professionals do have to deal with the competing interests of those involved. But through all this their main job is to look after the needs of the creditors (those that are owed [funds