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Check: A Pre-Insolvency Due Diligence List

4 min read

A sharper, more crisis-focused list than our general storm checklist — the questions worth asking the moment things start to feel tight.

1. Check your personal guarantees on any account forms, loans, or lease accounts.
2. Check your creditors' accounts to see if you've given personal guarantees, or if they contain a “caveat of interest” clause that could allow a caveat on your property.
3. Check who has PPSR's registered over your business, for your own consideration.
4. Check any long-term hired equipment. It will most likely carry PPSR registrations — people commonly register PPSR's over their own equipment.
5. Check who paid the bond on your lease — factory, office, or any rental property.
6. Check your contracts for insolvency clauses. An act of insolvency could mean losing contracts you're currently working on.
7. Prepare a list of work in progress.
8. Check related-party payments. Have your group of companies, personal friends, or family been paid recently by the company?
9. Are your mobile phones owned by the company or by you personally? If they're owned by the company, they'll typically be turned off in the event of a liquidation.
10. Be prepared to formulate a director's statement explaining what caused the insolvency.

Prefer to work through this interactively? Run the Pre-Insolvency Check on our Resources page, or contact us directly if several of these apply to you right now.