When a business becomes insolvent, one of the most important documents prepared during the process is the Statement of Affairs. This document plays a central role in helping creditors, insolvency practitioners, and other stakeholders understand the financial position of the company. For directors, understanding what’s involved and how to contribute is vital to ensuring the process runs smoothly and transparently.
At Aurora Recovery, we guide business owners through every stage of insolvency, including the preparation of this essential report.
📘 What Is a Statement of Affairs?
A Statement of Affairs (SoA) is a formal summary of a company’s financial position at the point of insolvency. It provides a snapshot of the company’s:
- Assets and liabilities
- Amounts owed to creditors
- Estimated realisable value of assets
- A list of secured and unsecured creditors
- Any other significant financial obligations
This document is crucial during insolvency as it helps determine how much creditors might expect to receive.
🧑💼 Who Prepares the Statement of Affairs?
The responsibility for preparing the SoA typically lies with the company’s directors. However, they do not have to go it alone. An insolvency practitioner (IP) will guide them through the process, provide templates, and assist in collecting and verifying the required information.
It must be prepared honestly and accurately—deliberate omissions or misstatements could result in legal consequences for directors.
📋 What Is Included in the Statement of Affairs?
A comprehensive SoA will include:
- 📂 Details of all company assets – e.g., cash, stock, property, equipment, vehicles, and intellectual property
- 📊 Breakdown of debts – including amounts owed to suppliers, HMRC, banks, and other creditors
- 🔐 Information on secured and unsecured creditors – including those with fixed or floating charges
- 📑 Estimated realisable values – a realistic estimate of what each asset could fetch if sold
- 📌 Details of any connected parties – such as loans from directors or related entities
🧠 What Does the Director Need to Do?
As a company director, your input is essential to the accuracy and completion of the Statement of Affairs. You’ll need to:
- ✔️ Provide access to financial records
- ✔️ Supply copies of recent accounts and tax filings
- ✔️ Disclose company assets and liabilities
- ✔️ Work closely with the insolvency practitioner to answer questions and validate information
- ✔️ Sign the final SoA declaration confirming the information is true to the best of your knowledge
❓ Why Is It So Important?
The SoA helps stakeholders—including creditors, the court, and regulatory authorities—understand the financial health of the company and assess the decisions made by directors prior to insolvency.
It also forms the foundation of future actions, such as creditor claims, investigations into director conduct, and the overall insolvency strategy.
Failing to produce a complete and honest SoA can have serious implications, including potential director disqualification or personal liability.
🤝 Let Aurora Recovery Help You Get It Right
At Aurora Recovery, we don’t just help you through insolvency—we help you understand it. Our team will work with you to ensure your Statement of Affairs is accurate, complete, and legally compliant, giving you peace of mind during a difficult time.
📞 Call us: 01134 800 397
📧 Email us: hello@aurorarecovery.co.uk
🌐 Visit: https://aurorarecovery.co.uk
Contact us now to see how we can help you: https://aurorarecovery.co.uk/contact/
Read more about the Statement of Affairs in insolvency on the Government’s website, here:
https://www.gov.uk/guidance/technical-guidance-for-official-receivers/18-statement-of-affairs
