Statement of Affairs.
Rule 7.41 “Statement of Affairs” (company winding-up).
Insolvency (England and Wales) Rules 2016.
A “Statement of Affairs” (SOA) provides an overview of the company’s assets and liabilities of a company at a given time.
Once produced, it then allows the “Insolvency Practitioner” the opportunity to evaluate what the company owns and then see details of fixed or floating charges.
The “Statement of Affairs” then requires filing at “Companies House” by the” Insolvency Practitioner”.
Its primary use remains for creditors and shareholders. Interested parties though who then wish to buy the company, may also then use it.
Information required for Statement Of Affairs.
The information then must be ACCURATE AND HONEST.
The “Statement of Affairs ” must, therefore, include:
- Independent valuations of assets;
- Up To Date balance sheet and management accounts;
- List of employees;
- Trade creditors, with balances owed;
- VAT Liability or repayment;
- PAYE owed;
- Corporation Tax owed;
- Bank Deposits;
- Bank Loans;
- Loans owed to Shareholders;
- Loans owed to or owed by Directors;
- Asset Finance;
- Any existing debts.
Creditors Agreeing with Balances.
Creditors of the company proposing an insolvency process, therefore, receive a copy of the S of A document. They then are allowed to amend changes to the amount of debt owed. Subject to the process of insolvency, the debtor proposing. The licensed insolvency practitioner and the court will ascertain which assets are sold and then the distribution to creditors.
“Statement of Affairs” is used in: –
In “Compulsory liquidation“, the “Official Receiver”, “liquidator” or the appointed “Insolvency Practitioner” will, however, prepare the “Statement of Affair“.
When the company enters into “Administration“, the Directors then produce the “Statement of Affairs” which then forms part of the Administrators‘ “Statement of Affairs“.
When a “Voluntary Liquidation“. The company’s financial position is discussed therefore, at the creditors/shareholders’ meeting.
In a “CVA“, the “SofA” then forms a section of the Proposals to creditors.
Refusing to Produce an S of A?
Failing to submit the “S of A” without a plausible explanation, the nominated person is then liable to a fine of £5,000 and a daily default fine set by the court (£500).
Once you have completed it?
Once completed and signed, then the Insolvency Practitioner files it at Companies Houses, to become public record.
Differences Between a “Balance Sheet” and a “Statement of Affairs”?
While the “Statement of Affairs” provides information on assets and liabilities. It need not be precisely accurate. But reflect the best-estimated figures available at the time.
A “balance sheet” then forms part of a financial statement. It contains no estimated figures as it must then show the company’s exact financial position.
- A Qualified “Licensed Insolvency Practitioner” prepares it;
- It describes a company’s financial situation, assets and liabilities;
- Filed at “Companies House”;
- Various insolvency proceedings use it.
HMRC’s central Insolvency Service hub: https://www.gov.uk/government/organisations/insolvency-service.
HMRC Page on the Insolvency Act 1986: https://www.legislation.gov.uk/ukpga/1986/45/contents