- February 26, 2023
- Posted by: Gill Hadley
- Category: Uncategorized
What happens following the demise of a firm?
“A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?”
It’s not real! This is just a way to show the fact that people create nonsense often about subjects they are not familiar with. Because of this kind of nonsense many directors in distress are worried about the possibility of liquidating their business because they fear it could be detrimental to their personal lives. What do you think? The bar-room experts, accountants with no experience, marketing professionals or lawyers could impede the making of decisions and this inability to make the right decision could put your in trouble.
How do I feel about liquidation and how long will it take?
A limited liability company means that directors face very little risk (or only limited liability) in the event that the company fails and they fail, so long as they’ve performed their duties correctly and at the right time. What is more when, as director, you’ve been employed for a number of years, then you may be able to get redundancy from the government just like any other employee. However, however, and this is a huge but when you don’t perform your duties in a timely manner or act with prudence or keep proper documents and books, and keep accepting credit knowing that your company will not be able to pay it back, then you are in danger of financial loss, or even worse, like losing your home. Take action now to receive help for your company and, more importantly, start reducing the risk you face.
The actions described above could be classified as wrongful trading If a liquidator is able to demonstrate that there was a fraudulent trading, you’re at a greater risk for personal injury. Personal liability could be imposed for debts owed by your company. One of the most common examples of illegal trading is getting credit from a vendor or obtaining deposits from customers when you are aware that it’s highly unlikely you’ll be able to pay them back.
The voluntary liquidation process is the fastest and most effective method of dealing with a bankrupt company that does not have a future. As the director of a bankrupt company you’re in danger when you don’t take action. This risk grows when you do not take action to place the company in liquidation.
If you do not act , and in the event that the company is dissolved by lenders (compulsory liquidation) then the Official Receiver (OR) is appointed to liquidate the company and review the activities of directors as well as the business in the past two years. This is referred to as a conduct report for every director.
Do you realize that the OR discovers that directors have intentionally engaged in trading while they were insolvent and did not perform their duties, accepted credit with no realistic prospect of paying back the debts, or did not submit their accounts, or commit other infringements, it’s possible that you’ll be facing PERSONAL actions? Have you heard that directors could be personally responsible for the company’s debts prior to the insolvency date?
It is also known by”lifting of the veil” or “lifting of the veil of incorporation” which protects directors who are liable only in a limited way. If this happens , then you could be held accountable for VAT, PAYE and monies owed to creditors from the time you should be aware that the business was not likely to being able to overcome the challenges it faced.
In addition, director could be subject to disqualification as per the Companies Directors Disqualification Act, 1986 which can run for 15 to 20 years. they may be fined, and face losing of personal assets, such as your house, or even personal bankruptcy.
Take note that if you , as director, have been reckless, you may not realize that you’ve violated these laws. But now you know that it is essential to safeguard your position as director, by taking actions promptly to end trading and put the business into voluntary liquidation. You can also think about a voluntary company arrangement when the business is in trouble if the issues have been resolved.
What exactly is creditor’s Voluntary Liquidation? And what do I get from it?
In essence, liquidation refers to the fact that the company’s trading stops and assets are transformed to cash, or “liquidated”.
Any other liabilities including employment obligations such as landlord’s rent, or lease payments are halted. This is really ending the line for the business however this “business” may survive if the phoenix is organized. Liquidation is an effective method to END the pressure on creditors and allow you to move moving on with your life.
What happens if I’ve personally signed guarantee?
If you’ve given personal assurances and indemnities for lenders liquidation could result in them being rescinded when the bank is unable to get their money from its company. There’s not much to do regarding this issue, but you shouldn’t delay your decision regarding liquidation in order to keep from the possibility of a PG being re-called in simply think about what all of the company’s liabilities that fall on your shoulders could do. Also , it is important to note that HMRC is now over floating charge holders for liquidations that have been in place after December 20, 2020. Therefore, this could result in lenders you personally guarantee will receive less money, thereby making you more vulnerable.
Each bank will sign that they will repay the PG in time – in exchange for working with the bank to limit the risk.
A great piece of free tips – make sure that all tax returns as well as VAT returns and annual returns are filled out and returned and that any other “compliance” issues are dealt whenever it is possible. These are crucial processes that will safeguard you as directors. This shows that you’ve acted in a professional manner.
I’ve heard of directors being eligible to claim redundancy when in liquidation
If you were hired by an employer and have made payments using PAYE then you’ll be eligible to claim unemployment benefits from the government. it’s actually quite simple to do (20 minutes to complete a form and we’ll help you in this) therefore there is no need to work with a third party to claim. This procedure is vulnerable to fraud, so the HMRC are focusing on those who claim they can recover money when there’s no “paperwork”. It’s not worthy of the risks. If it seems too good to be real the chances are it is!
It is important to know more about your alternatives. This is a broad guide, so if you are concerned whatsoever contact us immediately and we’ll walk about the issue for without charge and provide expert advice on your specific circumstances. Contact an advisor from our team, or alternatively, you can call the IPs (insolvency practitioners) right now:
A single call will ease the burden and help you get free from the chaos.
Call 03333 397944 or 07888 689339 right now?
We can help you begin the liquidation process now.
And lastly, keep in mind that no business can be worth risking your health and relationships, your marriages, or even your children. Be responsible, follow the suggestions, get the issue addressed and then move back to your normal life. After a while, the stress will ease and you can concentrate on things which matter more.
Are you looking for more information about liquidation? Take a look at our 2021 Experts Complete Guide to the Voluntary Liquidation of Creditors which covers Bounce Back Loans
We have a wealth of experience of liquidation. We also offer voluntary liquidation administration, pre-pack management, corporate rescue, business rescue and rescue for companies, we are able to help you solve your issues but only if you speak with us. Contact us at 03333 397944 or 07888 689339 to get help.