If you are unable to pay your debts as and when they fall due then you may be insolvent. This could be due to a contingent liability in the business which arises in the future or if the total amount of your liabilities exceeds your assets and the Cash Flow test.
It is important to take the proper steps once your business becomes insolvent. The consequences can in some cases be serious and could affect you personally whether you are a sole trader or a director of a company.
Obtaining the appropriate advice at the onset of the problem from a professional specialising in insolvency, to ensure that you minimise your personal exposure is crucial. Continuing to trade in the hope that you will be able to trade out of the situation can lead to significant costs being incurred.