Car garage director, Russell Gwyn Williams, has been banned as acting as a director for seven years after failing to act in the creditors’ best interests while his company, Bets Centres Ltd, was insolvent.
The Insolvency Service investigation found Williams was continuing to trade between January 2013 and August 2013, creating a further debt of £106,097 (£89,134 owed to HMRC). It was also revealed Williams personally profited in transactions that were under value and lost money for creditors.
Trading whilst insolvent is a complex situation when directors are running a struggling company. Directors may become personally liable if provisions of the Insolvency Act 1986 are breached. These include:
- Wrongful trading
- Preference (one creditor is paid more than another, or before)
- Transaction at under value
It’s important to seek legal advice if you’re unsure how best to act. Keep on top of accounts, cash flow and records to ensure transparency within the business.
Continue reading our Trading Whilst Insolvent page for further advice on the insolvency process and directors’ duties.