Posts Tagged ‘liability’

LIMITED COMPANY FAILING? – EXPOSURE?

Before we start this blog on ‘Limited Company Failing – What’s my personal Exposure?’, we are pleased to announce that we have settled for our client, Personal Guarantee at c25% of the amount Demanded by the Creditor. Our client was asset rich and when asked to comment he said “chuffed”.  A man of few words! 

If a company is approaching Insolvency, Directors can be faced with several issues on a personal level.

Firstly, there are fiduciary duties that an Insolvency Practitioner would need to consider in terms of the Directors conduct.  

To all intents and purposes, this blog is not considering these fiduciary matters. But concentrating solely on the monetary issues/exposure that could arise. These are: 

1) SECURITY OFFERED 

2) DIRECTOR’S LOAN ACCOUNT (DLA) 

3) WRONGFUL DIVIDENDS 

“Limited Company Failing – What’s my personal exposure and what should I do next?”

If your limited company is failing and one or more of the three points above apply to you (call Bell & Company!). 

It is imperative that you know your facts and we suggest the following as a basic plan of action:- 

  1. Do your own ‘housekeeping’. By this we mean look at your own Asset and Liability statement and be ruthless with it. To sum up, you should check your last couple of years of tax submissions to clarify your average income. 
  2. Ensure you have all the contractual documents required in respect of your PG’s etc. 
  3. Keep your management accounts for the business up to speed. This will particularly be relevant in terms of the fiduciary duty, but more importantly, establishing any correct DLA balance and or dividend exposure. 
  4. And finally, if any of the above are going to be ‘triggered’, determine the monetary amount and you need to settle these issues. 

 

Even if you do not call us, we implore you if you face such issues, to make sure you use third party representation.  

The reason for this is that you could try and do it yourself. However, you need to be fully versed with the facts and the tactics required.  Plus, you only get one chance…so do not mess it up! 

Are Directors personally liable for company debts?

Directors Personal Guarantee

Are Directors personally liable for company debts? To begin with, at the height of the business boom, banks were often very happy to provide loans to companies.

This agreement stated that in the case of the company being unable to repay these loans:

For instance, with Coronavirus and lockdown procedures:

What if I can’t pay?

Going straight to an Insolvency Practitioner, you will find they are legally obligated to get the best deal for your lenders.

What do I do next?

Most importantly, there are always options therefore you don’t have to face the stress and uncertainty of being liable for repayments by yourself.

In addition to the above, Bell & Company, as pre-insolvency consultants, specialise in helping people like you.

As an example, we have numerous success stories helping clients who were being pursued beyond aggressively by lenders and creditors start fresh.

To conclude this weeks blog, check out our latest webinar regarding the issues surrounding Personal Guarantees and the exposure to many SME business owners.

Especially now more than ever because of this current Coronavirus / COVID-19 pandemic.

Hosted by our Chairman Terry Bell who has provided:

CLICK HERE TO WATCH.

Are Directors personally liable for company debts

PEER 2 PEER LENDING PRESSURE

HERE THEY COME – PEER 2 PEER LENDING PRESSURE.

We are hearing from more and more businesses with Peer 2 Peer Lending Pressure from Peer 2 Peer/Fintech lenders.

Coronavirus and its terrible effects are now filtering into the business communities as loans issued, in some instances with poor due diligence, start to Default.

It genuinely gives me no pleasure in saying this is going to be ‘a car crash’

We had an enquiry from a client last week and the precis was:

  1. x6 Peer 2 Peer loans all secured by Personal Guarantees, totalling c£180,000,
  2. Stat Demands and legals ‘flying’ in.
  3. The director’s share of equity in the home is c£100k,
  4. The client was really struggling here, and
  5. Homelife was not great.

Our client fears bankruptcy however our advice is to seriously consider it as:

  1. It will create only one problem and that is dealing with the Equity in home and the Trustee,
  2. Negotiating with Trustees is our forte,
  3. All Peer 2 Peer funds have different approaches to debt recovery. There will be a swathe of proceedings.
  4. Most are very aggressive and they will get worse as they try to protect their position.
  5. If a lender obtains a CCJ they can then move to secure their debt because even in Bankruptcy the Charge will stand and they can look to force the sale.

The next couple of years will be difficult here, but our advice is:

If you’re facing Peer 2 Peer Lending Pressure, give us a call: 0330 159 5820 and for more information on Personal Guarantee exposure issues – check out our website:

Get ready – prepare – know the facts – get the right of advice – THAT’S WHY WE ARE HERE.

BAD DEBTS – CASH FLOW PROBLEMS

Bad debts can very often cause a perfect storm for any SME business owner, especially those which are totally unexpected i.e the client was ‘good for it’.

This will be a relatively short blog but what we will do is comment on our viewpoint on bad debts here as:

  1. We are at the front end of business issues and find ourselves receiving increasing enquiries across the board, and
  2. Being a business owner is a lonely carry-on and hopefully, this will show its not just you struggling with this issue.

Typically, bad debts arise in a range in differing forms:

The bad debt situation causes real knock-on problems across the board with:

Bad debt wallops cash flow as we all know. My senior partner, when training to be an accountant, said: “CASH FLOW IS THE 7TH WONDER OF THE WORLD”

He added even Robert Maxwell had cash flow, only it wasn’t his, as he pillaged the Mirror Group’s, Pension Fund.

If you are suffering from cash flow issues or looking to avoid customer issues, we would offer the practical tips in terms of assessing someone’s credit risk and or viability:

  1. Always use a credit agency on the person and or company,
  2. Push for PG’s, and
  3. A big one for us is what information is out there using:

So that’s this week’s blog…we would implore you, if you are suffering alone here, Bell & Company are here to help.

Personal Guarantee Settlement £175,000 – £32,000

We recently had a Personal Guarantee Settlement £175,000 – £32,000 for our client.

£175,000 Personal Guarantee called upon by the Bank and proceedings were underway.

If there was a Judgement secured, then our client’s personal assets, including home, could be under serious threat.

We met with the lender. Questioned the validity of the Personal Guarantee and started to negotiate with the legal proceedings held.

Eventually, after full representation the lender accepted full and final payment of £32,000.

Personal Guarantee Settlement £175,000 – £32,000.

HAPPY CLIENT!

If you or anyone you know is facing these issues, don’t hesitate to get in touch with our specialist team who will provide you with the best options available to your specific situation.

If our initial review indicates you have a sound case, and we agree to move forward together, then you are in remarkably safe hands with Bell & Company. We are proud to say that we have the highest success rate in our industry, a record we intend to keep.

Your first consultation with us is completely free and you are under no obligation to proceed with us. However, it involves a thorough financial review and a tactical assessment of your various alternatives. We can assure you, you will leave the meeting with a clear understanding of your options and possible outcomes.

Deals with HMRC

can we do deals with hmrc

The key is to understand deals with HMRC and speak to our friends at HMRC to see what they envisage as the way forward.

Knowing the age and profile of the debt is imperative. So the question asked is – Deals with HMRC?

Undoubtedly over the years, HMRC have become more empathetic but they do not suffer fools or BS!

The worst scenario for us is if a client ‘is less than truthful’ with us, as to the extent of the amounts due and/or the dialogue to date. Usually, our input with HMRC is welcomed as we bring realism to the situation.

Whilst HMRC can be receptive and assist in terms of payment programmes etc, they do not and will not waste time with what they sometimes refer to as…‘serial offenders’.

This becomes apparent whenever clients, either as individuals or in a corporate manner, seek protection from their creditors, with the use of IVA’s or CVA’s. HMRC consider these approaches and look thoroughly at:

  • Compliance along the way i.e. not serial offenders,
  • The age of the debt and history of payments,
  • The magnitude of the debt and the return offered via the IVA/CVA, and
  • Ensuring that if they are to vote for such arrangements, they will seek to impose stringent terms, e.g.
  • a Supervisor must ensure are fully complied with.

At Bell & Company, we act for 300+ clients at any one point and negotiate with all types of creditors.

All differ in their approach but most are pragmatic when it comes to a final decision of some return versus a situation of little or no return.

This is because the decision-maker must ensure they maximise the return for their stakeholders.

Most Government bodies do not entertain this stakeholder return concept…..especially HMRC.

Any number of times we have commented when dealing with HMRC that the offer being made is in the best interest of the stakeholders i.e. the Chancellor of the Exchequer and YOU & US! but they are in the main never interested.

Very often HMRC are one of a number of debts in a struggling business.

Whilst we believe most trade creditors can be pragmatic in their approach, the HMRC typical rigid stance will usually scupper any plan, and this, in turn, hits the other creditors’ chances of some recovery.

HMRC are looking at increasing their recovery of debts and powers including:

  1. Becoming preferred in the event of liquidation in the future as was the position 10+ years ago,
  2. Looking at going behind the Corporate ‘veil’ in ‘phoenix’ newco’s….a very different approach being fought ‘tough and nail, by the Insolvency organisation – R3, and
  3. Increasing use of Walking Possession’ Orders, to secure assets to their favour.

Anyway that’s our opinion and whilst it seems negative, it’s important to know the real position here. Reliance on hope, misplaced advice and delusion will only make the position worse.

We at Bell & Company take a complete overview of every enquiry and whilst business may have a myriad of problems – it’s knowing and deciphering the priorities and HMRC ARE VERY OFTEN THE PRIORITY.

As ever in debt-fuelled circumstances ‘know the worst – achieve the best from there’. 

Regards

Terry Bell
Director

Personal Guarantee Exposure – Savings of £300K

Building Industry Client with Personal Guarantee Exposure – Savings of £300K.

Clients, operating within the Building Industry, instructed Bell & Company regarding their Personal Guarantee Exposure of £350,000 – Savings of £300K.

At the time of instruction:

The health of our Clients and their partners had been affected.

This held serious consequences and so the case was sensitive because of this.

The subject Bank had been ruthless and their pursuit continual.

The Clients feared that they would lose the assets they had remaining which had equity associated

We came on record immediately upon appointment and soon after concluded the matter with a settlement payment of £50,000

Personal Guarantee Exposure – Savings of £300K

Call us today if you or anyone you know is experiencing financial issues | all our initial consultations are free of charge.

Your first consultation with us is completely free and you are under no obligation to proceed with us.

We are confident you will leave the meeting with a clear understanding of your options and possible outcomes.

If our initial review indicates you have a sound case, and we agree to move forward together, then you are in remarkably safe hands with Bell & Company.

We are proud to say that we have the highest success rate in our industry, a record we intend to keep.

Your steps to a debt-free future

Dispute Resolution – Farming Client, Local Creditors

Our latest settlements is a case concerning dispute resolution – farming client, local creditors.

Dispute Resolution – Farming Client, Local Creditors

***SUMMARY: SAVINGS OF £110,000, FARM PROTECTED ENTIRELY

From the outset, we establish clear bottom lines with our clients, so we understand what their priorities are and what must be protected. We then create a strategy to navigate the way out of corporate and personal debt with impartial advice and rigorous action.

Your steps to a debt-free future

A Guide to a Directors Personal Guarantee

What is a personal guarantee? Why would I need one?

At the height of the business boom, banks frequently provided loans to companies. But, banks often required that the directors of these businesses sign an agreement, A Personal Guarantee. If the company is unable to repay these loans, the signer, or guarantor, would be personally responsible for the repayment.

A Personal Guarantee is only problematic if the business has breached the terms of agreement of the loan. Although, they have become more of an issue since the 2008 financial crash. Therefore, companies now find themselves in difficulty, and lenders are entitled to pursue bankruptcy against the guarantor if… the guarantor cannot repay the terms agreed when the original agreement was signed.

Limited company vs. sole traders/partnerships

Personal Guarantees are generally signed by directors of limited companies. Sole traders or those who work in a business partnership will often have been issued loans in their names. These loans can put individuals at risk of losing personal assets or even being declared bankrupt if repayment fails.

What if I can’t pay?

If you signed a Personal Guarantee for your limited company and you fail to keep up with repayments, your lenders will pursue you, to recover the outstanding debt. If you go straight to an Insolvency Practitioner, you will find they are legally obligated to try and get the best deal possible for your lenders. Moreover, if your bank account is overdrawn, your creditors can take legal action, and you could potentially be investigated.

What do I do next?

There are always options and you don’t have to face the stress and uncertainty of being liable for repayments alone.Bell & Company are pre-insolvency consultants who specialise in helping people affected by Personal Guarantees.

If a loan has been sold off by your original lenders to a ‘vulture’ fund, the ‘vulture’ fund will pursue debt repayment aggressively. However, Bell & Company’s involvement will help, when dealing with ‘vulture’ funds.

Call Bell & Company on 0330 159 5820. Alternatively, read our brochure or visit our website

Personal Liability and Busines Debts

A question that many will ask as their business begins to fail is…

“Am I Personally Liable for my Business Debts?”

SOLE TRADERS/PARTNERSHIPS

Many people in business will operate as an individual, Sole Trader or Partnership. If this is your chosen trading style. It is likely that any borrowings from Lenders, will have been issued either in your personal name or that of the Partnership. That being the case, you will not benefit from limited liability status. Subsequently, you are liable to be pursued for the full amount of monies borrowed.

Where a secured business facility has been issued to an individual(s). Partnership debt falls into difficulty, the subject Lender will work through the sale of any security held and seek to reduce the balance owing.

However, once this has been completed, the individual(s) are fully exposed. The individual(s) can be pursued for the crystallised shortfall, up to and including Bankruptcy. In which case, personal assets can be at risk.

LIMITED COMPANIES AND PERSONAL GUARANTEES

It is important that anyone in this position prepare themselves to maximise protection. Home and other assets of importance could be materially exposed.

If you operate as a Limited Company, then it is likely that any business debt will be taken out in the Company name, i.e. an entirely separate entity from the individuals operating the business

HOWEVER
In the event that a Personal Guarantee was signed, for a business loan or property lease, and the Company is unable to meet its obligations. Under the terms of the agreement, the Guarantor will be held personally responsible, if the payment schedule/terms and conditions of the agreement aren’t met.

The Lender, whether a Bank, Landlord or other, will pursue you personally for the debt and will take whatever action required to recover the full amount due under the Personal Guarantee.

OVERDRAWN DIRECTOR’S LOAN ACCOUNT WHEN A COMPANY ENTERS LIQUIDATION

If there is an overdrawn Directors’ Loan Account when a Company goes into liquidation, the Directors(s) will be held personally liable. In this case, an Insolvency Practitioner(IP) is appointed. The IP will demand and pursue repayment on behalf of the Creditors.

The IP is fully entitled to take legal action against the Director(s). Which could also lead to Bankruptcy, if repayment cannot be facilitated.

Having an overdrawn Director’s Loan Account in a liquidation situation can also lead to personal Revenue liabilities and investigation, if over a certain level.

MOVING FORWARD 

Our expert Corporate Debt Strategists team can provide impartial and tailored advice to suit your needs.

Call us on 0330 159 5820 or contact us. Where we can asses your situation and give you impartial advice.