A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
What Is a Statement of Affairs?
A Statement of Affairs is a formal document prepared when a company enters an insolvency procedure. It sets out the company's assets and liabilities - what the company owns, what it owes, and to whom.
It is a critical document: it gives the liquidator (or administrator) and creditors a clear picture of the company's financial position, and it underpins the whole process.
What It Contains
A Statement of Affairs typically includes:
Assets
- Cash at bank
- Book debts (money owed to the company)
- Stock and work in progress
- Plant, machinery, and equipment
- Property and vehicles
- Intellectual property
For each asset, the document shows the book value and an estimate of the realisable value - what it might fetch in a sale.
Liabilities
- Secured creditors (with details of their security)
- Preferential creditors (certain employee claims)
- Unsecured creditors - trade suppliers, HMRC, and others
- Contingent liabilities - debts that may arise depending on future events
The Result
The document shows whether the company is solvent or insolvent, and if insolvent, the estimated deficiency - the gap between assets and liabilities.
Who Prepares It
The Statement of Affairs is prepared by the directors, usually with the assistance of the insolvency practitioner. It must be accurate and complete - directors who provide misleading information can face serious consequences.
Why It Matters
- It gives creditors a clear picture of the company's position
- It helps the liquidator plan the realisation of assets
- It supports the directors' account of the company's affairs
- It is the basis for any distributions to creditors
Speak to a Licensed IP
Preparing an accurate Statement of Affairs is essential. Our Manchester-based practitioners will guide you through it clearly and ensure it is complete and correct.