 The Insolvency Act 1986 ( updated in 2000) states that the directors of an insolvent company produce at the creditor's meeting a sworn Statement of Affairs and a list of the insolvent company's creditor's . The Statement of Affairs would actually be compiled by a suitably experienced insolvency accountant along with a report detailing the cause of the insolvency.
A Statement of Affairs is required at the first meeting of creditors in a Creditors Voluntary Liquidation. Similarly the Official Receiver may require a Statement of Affairs to be presented by the directors in a compulsory liquidation. An administrator or administrative receiver will also require a Statement of Affairs.
The following is a 'summary' of the detailed statement compiled by the directors and accountants.
A contentious area, for creditors of insolvent companies or individuals, is the 'Book Value' to 'Estimate to Realize' value. For instance, stock and finished goods, of say bathroom suites, are as likely to be sold at auction or/and to an entrepreneur (like Arthur Daley) for what you may consider to be a poor return, than to a competitor in the bathroom industry for a fairer price. If you are the insolvent party, and you have stock, why not try and find a suitable purchaser: with the insolvency practitioners involvement. You can apply the same thinking to your machinery.
If you are a creditor of the failed company, you may know of assets of value that are not listed on the statement. You can bring this up at the creditors meeting.
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