Written ByKeith Steven
Managing Director
Keith is the author of the content on this comprehensive rescue, turnaround and insolvency website. He is the managing director of KSA Group Ltd - a specialist firm of turnaround and licensed insolvency practitioners. Keith was nominated for Turnaround Practitioner of the Year 2014 at the National Insolvency and Rescue Awards in 2014.
When you cannot pay creditors debts, bailiffs (enforcement officers) get involved. A Controlled Goods Agreement (CGA, also known as a Walking Possession Agreement) secures the debtors goods to the debt, when the bailiffs demand immediate payment and you cannot do so. HMRC are the most common users of this particular method of debt collection.
When you cannot pay your debt, the bailiff will come to your registered office or home and take a look at all of the assets inside and make a list of ‘inventories’. This is a list of items they believe to add up to the value of the debt you need to pay. A detailed record will be made of these, with specific and accurate descriptions.
No. There are limits. Not all assets are able to become a part of the list. The following are excluded;
You should ensure that the list includes only assets your company owns, and ensure it matches up to the same value as the debt. If you believe the bailiff is taking too many items, or they do not match the correct value, you should say so immediately.
After the list of inventories has been created, a regular payment plan is to be made. This is a measure of repayment to the creditor. They will want the amount to be repaid as soon as possible, however it should be a plan for the amount to be repaid over time with regular (weekly or monthly) instalments. You have the choice of how much to pay, so it is worth reviewing your finances and other costs, to see how much you can be sure to commit to. It is highly important to choose an amount that is viable and achievable.
After the repayment plan has been made, it should all be documented in a CGA, which outlines the:
The enforcement agent (EA) should sign the CGA, along with the debtor (if not the debtor, then a person the debtor has authorised or the person in apparent authority).
Once the CGA has been signed, if the agreements are breached, the EA has every right to reinspect. If you fail these payments, the bailiff can re-visit and take some of the goods of the inventory list. These goods will then either be kept in storage by the bailiff until you can repay, or it will be immediately sold to cover the instalment you failed paying.
It should be noted that if you do not sign the CGA, the EA can remove and sell any of the goods from the inventories list immediately. It is also illegal for you to interfere with any ‘controlled goods’ (those on the inventory list). Therefore, you cannot sell any of those goods, during the process, once the CGA is signed.
If you need any help with CGA, dealing with bailiffs or other ways of paying debts, please contact us on 0800 970 0539 today.
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"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"Actually, this statement is entirely false! Misconceptions like this frequently arise from individuals with limited understanding of the subject matter. Such misinformation can cause undue anxiety for directors considering liquidation, fearing it might personally affect them. Guess what? Listening to bar room experts, inexperienced accountants, or no insolvency specialist lawyers can stop decisions being made, this failure to make a decision is really what could land you in trouble. So how will liquidation affect me and how long does it take? Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. What is more, if as a director, you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk of personal financial loss or worse such as losing your house. So, act now and get help for your company and more importantly start reducing your own risks.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years. This is known as a conduct report on each director. If the OR can prove there was wrongful trading where, for instance, you have taken credit from a supplier or took deposits from customers when you knew that it was highly unlikely that you could pay them back, then you could be made personally liable.This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. 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In short, liquidation usually means, the company's trading stops and it's assets are turned into cash or "liquidated".All other possible liabilities, like employment liabilities, landlord's rent or payments to lease companies are stopped. It really is the end of the company, but the "business" may survive if a phoenix is organised. Liquidation is a powerful way to END creditor pressure and let you get on with your life. What if I have signed personal guarantees? If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in: just think what ALL of the company's debts landing on your shoulders would do. Also it should be noted that HMRC now rank ahead of floating charge holders in any liquidation since December 2020. Consequently, this may well mean that lenders that you have personally guaranteed will get less recovery hence exposing you more.All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.One great piece of FREE advice - always make sure that ALL tax returns, VAT returns and annual returns have been completed and sent in and that other "compliance" issues are dealt with wherever possible. These are important processes and will help protect you as individual directors. It shows that you have been acting properly. I have heard about directors being able to claim redundancy in liquidation If you have been employed by the company and made payments via PAYE then you will be able to claim redundancy from the government and this is in fact a very simple process (20 minutes to fill out a form and we can help with that) so there is no need really to employ a third party to make a claim. This process has been open to fraud so the HMRC are cracking down on operators that claim to be able to get money back when there is not enough "paperwork". It isn't worth the risk. If it sounds too good to be true then it probably is!You need to learn more about the options. This is clearly a general guide so, if you have any worries at all, please, just call us and we will talk you through the situation free and with expert guidance for your situation. Call one of our advisors or if you prefer, call our IPs (insolvency practitioners) now:Just one CALL will help relieve the stress and get you out of the mess.Why not call 08009700539 or 020 7887 2667 now?We could help you start the liquidation process today.(8.15am till 5.00pm; Out of hours call on 07833 240747, Wayne Harrison (IP) or Eric Walls (IP) on 07787 278527)Finally, please remember this: NO BUSINESS is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go and you can focus on other things that are more important.Want more information on liquidation? Get our new free 2023 Experts Complete Guide to Creditors Voluntary Liquidation that covers Bounce Back LoansWe are experts in liquidation, voluntary liquidation, administration, pre-pack administration, business rescue, corporate rescue and company rescue, we can help solve your problems but only if you talk to us. Call 0800 9700539 for help.or email us your worries at help@ksagroup.co.uk
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