Minimising Personal Risk In A Creditors’ Voluntary Liquidation
For fear of stating the obvious, we find that Directors that we deal with are rarely intentionally insolvent!
It is usually the case that Directors have done nothing wrong in the build-up to Liquidation and as such we want to be sure that nothing is done wrong during the Liquidation process or in relation to any future business.
With this in mind we are always keen to make sure that any unintentional implications of actions taken in the best interests of the business are explained and reviewed.
By identifying potential personal risk areas a strategy can be adopted to minimise or eliminate risk. We will explore all risk areas with you.
Let us explain the implications to you
Please do be careful of unlicensed advisors that say there is no need to address any of these issues prior to liquidation, as the likelihood is that they are not going to be your liquidators themselves so can fill you with whatever nonsense they fancy and walk away leaving you to deal with the problems by yourself!
If you have any concerns over any of the matters raised in this section please feel free to give us a call and speak to one of our Insolvency Practitioners.
Common Risk Areas For Directors In A Creditors’ Voluntary Liquidation Include;
S.216 – Re-use of company name
If you’re looking at starting again you need to be aware of the restrictions placed on you by this section of legislation.
We can advise you on how to follow the legislation correctly and to stay free from fear of the penalties of getting it wrong.
Directors Conduct Report
A report on the conduct of all directors of a company in CVL liquidation is submitted by the liquidator to the relevant government department.
This report will include the director’s questionnaire completed by the director at the request of the liquidator, a copy of the pack prepared for the S.98 creditors’ meeting along with any unresolved matters raised by creditors during the liquidation and any resolved matters highlighted by the liquidator’s investigation into the closure of the company.
If a lease is in the name of an individual or an individual has guaranteed a lease on behalf of the company then personal liability for the lease may exist.
There is often scope for negotiating with the landlord in these circumstances.
Check, check and triple check whether a personal guarantee is in place on company borrowing. This might apply to a loan, an overdraft, a factoring agreement, an asset finance agreement, a supplier or a lease.
A personal guarantee may mean that in the event of a liquidation of a company the responsibility for paying the guaranteed debt may pass to you.
Director’s Loan Account
A Director’s Loan Account can often show a position where a director owes money to the company.
It’s important that the company’s accounting records are bought up to date to ensure that all usual annual entries into the Director’s Loan Account are made.
If significant payments have been made to associated parties in the period leading up to liquidation then there is a risk that these payments might be automatically reversed upon liquidation.
Poor Advice From Unregulated Advisors (Ambulance Chasers / Brokers)
If you are not talking to the person that will be you Liquidator, who are you talking to?
No one can speak on behalf of a liquidator.
There is no recourse for a Director who has been advised by a unregulated, unlicensed advisor. Such advisors don’t always say what they mean and will make a fee for selling you on to a Liquidator.
We do not use ambulance chasers and we do not have any commissioned sales agents.