Advice from Family and Friends

Published on : 3rd August, 2017

Table of Contents

  • Health Warning for Directors – Well-Meaning Advice from Friends and Family
  • So what sort of poor advice are we talking about?

Health Warning for Directors – Well-Meaning Advice from Friends and Family

This page has been difficult to write because all too often we see that directors of companies turn to members of their family for advice when they realise that their business is in a tricky financial situation. Unfortunately this advice is quite often completely wrong and potentially damaging.

Family members offer advice about what to do but they are too close to the situation and, to be honest, are unlikely to have any actual expertise or experience of how best to act when a business is facing severe financial difficulty.  All too often, family members and loved ones will tell directors what they want to hear!

The danger is that directors in a stressed frame of mind will not necessarily act rationally and such advice from family reinforces the illogical thinking. What’s more, friends and family may not have the same exposure personally and therefore actions taken probably won’t affect them as much.

So what sort of poor advice are we talking about?

Borrow more money!

Often money is seen as the cure. Of course, normally the people who advise this are not the ones having to guarantee the loans!  Most loans direct to businesses often need to be personally guaranteed.  Is more money the answer? Really?  You have to look at the reasons why the business is running out of money? It might be the fact that the director(s) are incompetent on the financial side and need help. Fancy saying that to your nearest and dearest?

Just put more personal money in

This advice is better than borrowing money but only if you can afford to! Remember that any money that is put in to a struggling business is at serious risk. Take out security if you’re prepared to put more money in. It costs a little bit more as you will have to register a debenture at companies house but if the company fails then you will rank above trade creditors and HMRC when it comes to getting paid.

You will be disqualified if the business fails

This is completely wrong. Only if you have been fraudulent or deliberately misled creditors knowing the business is going to fail will you face disqualification or be personally liable for the debts (note that if you have personally guaranteed loans then yes you will be liable ). This worry tends to make directors “freeze up” and take no action out of sheer panic.

You can’t be a director again if the company fails – Completely wrong again (see above).

Your credit rating will be shot if the company goes into liquidation – Only if you have personally guaranteed loans to creditors and are unable to pay (see above about taking on more debt). Know the difference between creditors voluntary liquidation and compulsory liquidation. A compulsory liquidation will look worse on your record than a voluntary one if an extended credit check is done (sometimes these are requested if you are working in defence, financial services, insurance and other sensitive areas).

You must pay creditor X before creditor Y 

This is a minefield.  Paying one creditor over another can be construed as granting a “preference” and can be reversed by the court or a liquidator if the business fails as a result of the preference or it was insolvent at the time.  What is more this can still happen up to 2 years after the transaction.

Move some of the assets to another company for a £1 and start again?

Careful as any transaction that is not deemed to have been done at fair value can be reversed by the court. In fact there are lots of Insolvency Practitioners who make a living getting these cases to court on behalf of creditors that feel they have been stitched up.

HMRC will not negotiate and will just wind the company up

HMRC enforcement are tasked with collecting 100% of the debt.  If this is simply not possible then they can negotiate on a reduced pay out over a period if the company proposes a CVA.  This is handled by another department of HMRC ( the voluntary arrangement service ) and they will take the case off enforcement.

Don’t do a Company Voluntary Arrangement (CVA) as they don’t work

Oh really?  They are often the only chance that a business has and for the record the majority of them do.  The ones that fail are poorly put together or the company has not changed sufficiently to meet the rigours of paying back debts over a 3-5 year period.

So if you are close to a director of a distressed business the best advice you can give is GET ADVICE from SOMEONE ELSE WHO IS AN EXPERT!

This all sounds quite blunt but we want to help directors. We are currently dealing with a company where the director’s brother gave such poor advice that the director is now likely to lose everything; His house and a £1m business.  This inspired me to write this page as a warning to others.

Kane’s Foods Goes Into Administration

A total of 662 jobs have been lost after Kane’s Foods in Evesham entered administration. PwC has been appointed as administrators and is now liaising with the town’s MP Nigel Huddleston and the Department for Work and Pensions. This is to ensure affected employees receive appropriate support and advice. Kane’s Foods was one of the largest employers in Evesham and had been a major part of the local economy for many years. Mr Huddleston had visited the business on a number of occasions. He said the closure would have a massive impact on local families and the wider community. “The closure of Kane’s Foods is devastating news for the Vale of Evesham and, most importantly, for the hundreds of people and families who have lost their jobs. “I was contacted by PwC this morning, who have been appointed as administrators, and they confirmed the company has entered administration with the loss of 662 jobs.” He added, having spoken to many of Kane’s employees over the years, he knew just how many local families have relied on it for their livelihoods. Mr Huddleston added: “My thoughts are very much with all those employees who have been affected, and with their families, at what will be an incredibly difficult and worrying time. “Understandably, many will have questions about redundancy payments and will want help finding alternative employment as quickly as possible. “It is not yet clear whether any parts of the business may be sold, and I am also conscious that the collapse of such a significant local employer could have a knock-on impact on other businesses in the supply chain. “I will continue liaising with all relevant stakeholders, and my team and I will provide whatever practical support we can to constituents affected by this devastating news.” He added further updates would be given as more information became available, including on support for employees and the future of any remaining parts of the business. Administrators appointed Timothy Andrew Higgins, Edward Williams and Helen Wheeler-Jones of PwC were appointed Joint Administrators of Kanes Foods Limited. Kane’s is a short-shelf-life food manufacturer producing pre-packaged salads, stir-fry products and sauces from a refrigerated manufacturing site in Evesham. It supplied a number of major UK supermarkets. Kanes Foods experienced financial difficulties in the period leading up to the administration. In June 2025, the failure of its wastewater treatment plant resulted in significant one-off costs and increased ongoing operating costs. This was followed by drought-related supply chain disruption during summer 2026, which further impacted trading. The directors explored refinancing and new funding options, and an accelerated sale process was subsequently undertaken. However, the company’s ongoing losses, negative cash flows and funding requirements meant that a solvent solution could not be achieved. The joint administrators will now manage the affairs of the companies and take steps to maximise realisations for the benefit of creditors.

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Kane’s Foods Goes Into Administration

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