Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA.
The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders.
Worried Director What Will Happen To Me After Liquidation?
I am a worried director of a limited company, how will liquidation affect me personally?
What happens after liquidation of a company?
"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"
Actually, NO it is not true! This nonsense just highlights that people make things up all the time about subjects they have little knowledge of. As a result of this rubbish, many struggling directors worry about liquidating their company as they think it might seriously affect them personally. Guess what? Listening to bar room experts, inexperienced accountants or lawyers or marketing people 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. So act now and get help for your company and more importantly start reducing your own risks.
The action described above can be regarded as wrongful trading; if a liquidator can prove there was wrongful trading then, you are at much increased personal risk. You may face personal liability for company debts. A classic example of wrongful trading is taking credit from a supplier or taking deposits from customers when you know that it is unlikely that you can pay them back.
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 if eventually 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.
Did you know that if the OR finds that the directors have knowingly traded whilst insolvent and they failed to act, took credit without reasonable prospect of repaying the debts, failed to submit accounts or a number of other offences, then it is possible you will face PERSONAL action? Did you know that the directors can be made personally liable for the debts of the company from the onset of insolvency?
This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. If this happens then you could made liable for PAYE, VAT and creditors monies from the time that you should have known the company had no reasonable prospect of surviving the problems it faced.
Additionally, the directors may face disqualification proceedings under the Company Directors Disqualification Act 1986 for up to 15 years, they can be fined and may face the loss of personal assets like your home, or even personal bankruptcy.
Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved.
What is Creditors Voluntary Liquidation and what does it mean for me?
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.
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!
"What should I do now"?
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 (or insolvency practitioners) now:
Just one CALL can solve your problems.
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) on 07879 555349 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 Experts Complete Guide to Creditors Voluntary Liquidation
We 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.