Business Recovery & Insolvency Newsletter - November 2025

In this edition, we share practical guidance for directors, creditors, and employees navigating liquidation, along with insights into bankruptcy and Company Voluntary Arrangements (CVAs).

We also delve into key topics such as charity solvency, recent changes to MVLs, the effectiveness of Protected Trust Deeds, and the growing issue of insolvency scams – why paying to “save” your company can sometimes be a costly trap.

Finally, we cover important updates on the government’s efforts to tackle phoenixism and the latest developments surrounding the Bounce Back Loan Scheme.

Quick links:

A Business Owner’s Guide to CVAs (Company Voluntary Arrangements)

The article outlines how a Company Voluntary Arrangement (CVA) helps viable businesses restructure debt while continuing to trade. It explains the key steps, when a CVA is suitable or not, and highlights the importance of early professional advice to find the best recovery option.

Phoenixism: Six Months On from Spring Statement 2025

The article explains phoenixism, where directors start new companies after insolvency, sometimes to avoid liabilities or defraud creditors. It outlines recent government measures, including new guidance, a 2026–2031 enforcement strategy, and annual commitments to improve director awareness and strengthen enforcement. While there are signs of tougher action, including criminal cases, practical enforcement remains limited despite the scale of the problem.

Insolvency Practitioners & Bounce Back Loan Recovery

The article explains how Bounce Back Loans (BBLs) are treated when a company becomes insolvent. UK Insolvency Practitioners (IPs) investigate director conduct, recover misused funds, challenge undervalued transactions, and can pursue disqualification or criminal action if fraud is detected. Directors who used loans responsibly face little risk, but misuse can lead to serious consequences, including personal liability and legal action.

Liquidation: FAQs from Company Directors

When a company faces insolvency, directors must understand their legal responsibilities and potential personal liabilities during liquidation. Directors cannot simply walk away from company debts, as failure to cooperate with the liquidator or engage in wrongful or fraudulent trading can result in fines, disqualification, or even criminal charges.

Liquidation: FAQs from Creditors

The article explains what creditors need to know during company liquidation, including how repayments are handled, the liquidator’s role, and the statutory order of priority. Creditors must submit claims and stay informed, as repayment depends on available assets. While directors aren’t usually personally liable, misconduct can create personal responsibility, and larger creditors can influence the process through committees or approvals.

Liquidation: FAQs from Employees

The article explains employees’ rights during company liquidation, including what happens to their jobs, how to claim unpaid wages, holiday pay, notice pay, and redundancy. Most employees’ roles end when a liquidator is appointed, but the Redundancy Payments Service (RPS) can help recover owed payments. Employees must submit a claim to receive entitlements, and the liquidator facilitates the process. Knowing your rights and acting promptly ensures you can access the support available.

Bankruptcy FAQs

The article explains bankruptcy (sequestration) in Scotland, clearing up common misconceptions about debts, assets, and the process. It covers who can apply, which debts may remain, the impact on property and income, and the typical duration. Bankruptcy doesn’t last for life, but it has legal and financial consequences, including disqualification from acting as a company director. Understanding the process and seeking professional advice helps individuals make informed decisions and manage the impact effectively.

Closing a Charity Solvently in Scotland: Key Advice

The article explains why some charities choose a solvent closure, outlining how early professional advice allows trustees to plan an orderly wind-down, protect beneficiaries and staff, and comply with legal duties. Case studies show that early planning prevents insolvency and reputational harm, while late action can lead to bankruptcy. It stresses that trustees must monitor solvency, model closure costs accurately, and follow the correct OSCR or Charity Commission procedures to ensure a compliant and responsible closure process.

Insolvency Scams: Why Paying to Save Your Company Can Be a Trap

The article warns directors about fraudulent “business rescue” companies that claim to keep firms out of insolvency for a fee. These scams, often called Atherton-type schemes, mislead directors into transferring ownership, leaving them personally liable and creditors unpaid. The Insolvency Service is cracking down on such operators, and the piece stresses that seeking advice from a qualified insolvency practitioner is the only safe and legal route to genuine business recovery.

Protected Trust Deeds – How Effective Are They?

Protected Trust Deeds (PTDs) are a formal Scottish debt relief option designed to help individuals manage unaffordable debts, but recent findings from Money Advice Scotland highlight growing concerns. The report points to high failure rates, low returns to creditors, and questions over the suitability of PTDs for those with smaller debts. It calls for stronger regulatory oversight, improved access to impartial advice, and policy reforms to ensure PTDs deliver fairer, more effective outcomes for both debtors and creditors.

Time to Act: Consider an MVL Before Changes Hit

Scottish business owners planning to wind up their companies are encouraged to consider a Members’ Voluntary Liquidation (MVL) before upcoming tax changes take effect. Acting early can help ensure a smoother, more tax-efficient exit and allow owners to make the most of available reliefs. Seeking professional advice now can help clarify options and secure the best outcome for your business.