When a company enters insolvency, one of the first steps taken by an insolvency practitioner is to assess the value of the company’s assets. These assets form the foundation of any potential repayment to creditors, and understanding what qualifies as an “asset” is vital for directors and business owners alike.
At Aurora Recovery, we help business owners navigate the complex world of insolvency and understand what their responsibilities and options are when assets are at stake.
💡 What Is an ‘Asset’ in Insolvency?
In insolvency, an “asset” is anything of value that a business owns or is owed, which could be sold or collected to help repay its debts. This includes tangible items like equipment or property, as well as intangible rights like outstanding invoices or intellectual property.
📋 Common Types of Assets Considered During Insolvency:
🏢 Physical Assets:
- Commercial premises (owned, not leased)
- Vehicles
- Machinery and tools
- Office furniture and IT equipment
💰 Financial Assets:
- Cash in bank accounts
- Outstanding invoices (accounts receivable)
- Company investments or shares in other businesses
🌐 Intangible Assets:
- Intellectual property (patents, trademarks, copyrights)
- Company goodwill or brand value
- Licences and permits
📦 Stock & Inventory:
- Raw materials
- Finished goods awaiting sale
- Work-in-progress items
🔐 Secured vs. Unsecured Assets:
- Secured assets are pledged against loans (e.g., a building with a mortgage).
- Unsecured assets are free of claims and more easily available for general creditor repayment.
⚠️ Assets Directors May Overlook
Some directors unintentionally underestimate what can be classed as an asset in insolvency. Examples include:
- Directors’ loan accounts (money owed back to the company by directors)
- Prepaid expenses or refunds due
- Deposits (rental, utility, supplier accounts)
- Insurance claims that may pay out during the insolvency process
It’s crucial to disclose everything—intentional non-disclosure can lead to serious consequences, including disqualification or legal action.
🔄 What Happens to the Assets?
During an insolvency process—such as liquidation—assets are independently valued, sold, and the proceeds are distributed to creditors according to a strict legal hierarchy. If you’re unsure what qualifies or how it will be treated, seeking advice early can minimise risks and maximise control.
✅ Protecting Yourself as a Director
To remain compliant and avoid penalties:
- Keep accurate, up-to-date asset records
- Disclose all business interests and assets
- Avoid transferring or disposing of assets without legal advice
- Work with insolvency professionals early to ensure everything is handled properly
Need Advice? Aurora Recovery Is Here to Help
If your business is facing financial difficulties and you’re unsure what qualifies as an asset—or how it may affect you—get in touch with Aurora Recovery today. Our team offers confidential, practical support tailored to your situation.
📞 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 assets in insolvency on the Government’s website, here:
https://www.gov.uk/guidance/technical-guidance-for-official-receivers/25-assets-identification-protection-and-realisation
