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Archive for June, 2018

Liquidator of a Company – Do I have Personal exposure?

liquidator of a company

The failure of any company is distressing enough, and all company debts would be dealt within the liquidator’s work. There could be elements of the liquidation that cause personal exposure and put your assets such as your home, car or savings at risk.

Personal Guarantees

This is an area we specialize in. Personal Guarantees may have been given banks, on leases, on HP or to trade creditors to name a few.

Overdrawn Directors’ account

If you took money from the business, not covered by PAYE salary and/or dividends, the liquidator will seek to recover these very quickly as it is seen as potentially “lowest hanging fruit” for the liquidator. Technically and legally such amounts are recoverable and you are obviously liable.

Trading Insolvently

If you continued to trade knowing the business was insolvent – you could be deemed liable for losses to creditors that could have been avoided.

If money owed to the company exceeds its creditors, then an investigation would show that there was no intent to act irresponsibly. On the other hand, a company that simply cannot and will never be able to pay its creditors in a timely manner may well be guilty of trading insolvently.

Trading Insolvently is a serious offence because the directors know their company is insolvent and have no plans of how they will pay their creditors.  It is even worse if the directors allow the level of creditors to increase during this period. 

Director’s Disqualification

The liquidator must report to the Official Receiver in many ways not least how the directors conducted themselves. To merely say “I know nothing” is not a defence, ignorance is not bliss in this situation. Knowing the personal exposure here vital.

The Appointment of a Liquidator

This may help resolve pressure but be very aware the liquidator can and will turn on you if you are deemed to have either extracted funds and/or not conducted yourself diligently.

In conclusion – know the risks here and take them on with our help!

For a free initial consultation Call Bell & Company today on +44 2895 217 373 –  Face your debt crisis with professional help.

Personal Guarantee – Now I’ve received a Statutory Demand!

Personal Guarantee

Personal Guarantee

A call on a personal guarantee can be very stressful but it may be managed with meaningful, professional engagement with the creditor.

If it is ignored or the wrong representation is made, often by ‘misplaced help’, then the situation can quickly deteriorate.

Statutory demand

Very often the creditor will issue a Statutory Demand, the precursor to potential Bankruptcy proceedings.

If a Statutory Demand is not engaged in any way within 21 days, the creditor can move to next step and a Bankruptcy Petition may be issued.

Stating the obvious, this brings everything into focus and everyone pays attention!

Seeking expert guidance

If you have more than enough assets to cover the personal guarantee, it should be entertained in full. The integral point in such a case is to minimise the costs, as the issuance of Petitions will see costs ‘mushroom’. Offers in this instance can still be made but need to be supported by full representation and detailed explanation, the presentation is crucial.

Alternatively, if you cannot honour the personal guarantee in full, engagement is as important coupled with correct professional advice.

This seems a very logical thing to say, but we have seen many instances of ‘professional advice’ given by an advisor, who does not have expertise in this niche field of work.

Reiterating presentation is the key as you don’t want to create any misconceptions at this stage. It’s all about engaging and managing the creditors’ expectations. Delivery of the information that will facilitate a decision is imperative.

We would respectfully suggest that you do not rely on the ‘family friend/good old’ accountant or solicitor here. This is a pressurized debt situation with defined time constraints and the strategy and its application is vital.

We are experts in this niche!  As ever we offer a free initial consultation, so we know that the cases we take on can be successful.

Call Bell & Company today on +44 2895217373.

Retail World – FRI leases, the devil’s spawn

Retail World – FRI leases, the devil’s spawn

 

We hear on a weekly basis, at the moment, of the demise of retailers with a headline involving House of Fraser, Mothercare, any number of restaurants and most recently Poundworld* availing themselves of CVA’s. The sole reason for this approach allows these ‘mega-retailers’ to excuse themselves of onerous leases.

FRI leases or full repairing and insuring leases are onerous and not fit for purpose in today’s world tenancy agreements. Most commercial tenancies are based on these and are at best inflexible and our statement that “they are not fit for purpose” revolves around the ever-changing, fast-moving commercial environment we exist in today.

So, the ‘mega-retailers’ can avail themselves of the Insolvency Act and the CVA rules to clear and renegotiate their lease. However, SME’s cannot usually take this approach because of the insistence of personal guarantees to support any lease.

If a business therefore struggles, the biggest personal exposure could be the lease of the business premise, be it retail, individual or office in nature.

Typically, a landlord will have funded his property by way of traditional institutional funding linked inextricably to the FRI, upward on review 15+ year lease. To this end, their hands are tied.

However, if a business is struggling and the lease is supported by a personal guarantee then it is vital to engage with professionals and seek advice. As we often say, ‘know the worst and work from there’.

Whilst every case is different, this issue of onerous leases is becoming more prevalent. If you face this dilemma talk to Bell & Company now and call +44 (0) 2895 217 373 for a free consultation. You do not have to face this issue alone.

*STOP PRESS: Poundworld has just entered into administration as of 11 am 11th June 2018.

https://www.bbc.co.uk/news/business-44436435

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