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?
The statement of affairs is the formal financial snapshot at the heart of every insolvency: a sworn summary of the company's assets, liabilities, and creditors, prepared by the directors and relied on by the liquidator, the creditors, and the conduct review alike.
What it contains
Assets at estimated realisable values (not book values - the van is worth what the van will fetch); creditors listed by class - secured, preferential, unsecured - with amounts and security identified; employee liabilities; and the estimated outcome for each class, which is the number creditors actually read.
Who prepares it and how
Directors prepare it with the practitioner's help in the run-up to the appointment - it's the centrepiece of preparing for liquidation - and verify it formally; in a compulsory liquidation, the Official Receiver requires one from the directors after the order.
Why accuracy matters
The statement is verified by a statement of truth, and knowingly false entries carry criminal consequences - but the practical point cuts closer: the liquidator reconciles it against the records, and discrepancies (the missing asset, the understated loan account) become the first questions of the review.
The directors who do best treat it as the place to disclose, not to polish - completeness, including the awkward entries, is what a clean process is built on.
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This page is intended for general information purposes only and does not constitute financial, legal, or professional advice. Always take advice from a licensed insolvency practitioner about your specific position.