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Change to personal injury claims could put businesses at risk

Osborne announced in last week’s Autumn Statement there will be a ban on general minor damages and a limit of £5000 for small claims, coming into force in 2017. 

While this is expected to reduce premiums for customers and eliminate the ‘whiplash claim culture’, businesses specialising in small claims will be at risk of going bust and customers with legitimate minor injuries could miss out on compensation. Many customers will be unable to get legal advice if their claim is anything below £5000.

Jonathan Smithers, president of the Law Society, commented, “The Law Society is gravely concerned that these proposals will completely undermine the right of ordinary citizens to receive full and proper compensation from those that have injured them through negligence.”

He further added, “Personal injury claims, even lower value claims, can include serious injuries arising from the fault of an employer or other road traffic accidents where legal rights can be very complex and the injuries caused debilitating. A new limit of £5,000 will mean personal injuries including facial scarring would be considered as "small claims". This is totally unacceptable.”

If you are concerned these future changes may impact your business and need help to restructure or pay off debt, please call us on 0800 9700539.

Director of loans company banned for nine years

David Gary Drysdale of Welcome Loans Limited has been disqualified for nine years after failing to provide accurate company accounts and benefitting himself ahead of customers and HMRC. 

He repeatedly failed to assist an insolvency practitioner and the Insolvency Service during investigations after the company went into liquidation in July 2013. Welcome Loans acted between customers and lenders to arrange loans, charging upfront fees.  

It was discovered HMRC was owed over £287,000 in taxes while Mr Drysdale took over £683,000 for himself over several years. He also deliberately prolonged investigations so he could try to release company money held in an offshore bank account for personal use. The amount of £271,544 was very difficult for the insolvency practitioner to retrieve, leading to further problems.

Prior to the liquidation, there had been hundreds of complaints from customers about unfair charging and high fees which led to the Financial Ombudsman Service (FOS) issuing a warning. He failed to address customer complaints and provide refunds (even though he assured the FOS he would), and instead paid himself around £10,000 a week and bought a new Bentley!

Mark Bruce from the Insolvency Service commented, “Mr Drysdale has shown himself to be exactly the type of businessman who should be removed from the business area. His cavalier attitude to his customers and the various regulatory bodies he faced was seen as extremely serious by the court in handing down a lengthy disqualification.”

Can a company going into liquidation affect the director personally?

A limited company is its own legal entity. Therefore, if a company goes into liquidation, the debt involved belongs to the company, not the directors. 

It is also a myth that directors can never be company directors again. Many successful directors have had previous failed businesses for a number of different reasons but are now running profitable and viable companies. 

Directors Duties

Directors can be made personally liable, however, if they have not acted in the creditors’ best interests or have been involved in fraudulent activity. One example could be if the company continues to take credit even though the director knows there is no way to repay this. 

It is the director’s duty to act properly when a company is insolvent or there is the risk of ‘wrongful trading’ as defined in the Insolvency Act 1986. 

When a company goes into liquidation, the Insolvency Practitioner or Official Receiver will investigate the director’s actions to ensure all procedures have been correctly followed. If there has been any wrongdoing, this will be looked into and a case could be made against the directors. 

It is crucial to seek advice if you’re running an insolvent business and you’re unsure how to proceed. There may be a more suitable solution than liquidation. You can call us on 0800 9700539 to talk through your options.  

Notice of Intention to Appoint (NOI)

Often we hear in the news about companies filing a notice of intention to appoint an administrator. This is usually arranged to protect the company if creditors are taking legal action, like a winding up petition, against the business. 

A document is filed at court to show the company intends to go into administration if no other solution can be found. Creditors are then prevented from issuing any legal proceedings for ten working days, giving time for the company to secure a restructuring plan or seek a suitable buyer for the business. 

A further ten day extension can be granted if there is good reason, perhaps if a deal is about to happen.

For detailed guides, including the pros and cons of going into administration, visit our NOI and administration pages. 
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