The Key Issue
Our client, the director of an engineering company, sought our assistance when his business had ceased trading. With the company in an insolvent position, it was crucial to address the complex financial situation to prevent a domino effect on the director’s other interconnected businesses.
The client’s personal guarantees (PGs) within each of these companies added further urgency, as their bankruptcy would be imminent if swift action was not taken. The client was days away from appointing a well-known liquidator. This formal business insolvency action would have triggered the PGs and made him personally liable for all debts.
Why The Client Came To Us
The client somewhat understood his situation in terms of the business but had no idea about the personal consequences for him. He found us whilst researching the impact of personal guarantees for directors. Recognising the urgency of the situation and seeking an alternative solution, he approached us to review his case.
What We Did
Understanding the high stakes involved, we took charge of the situation, formally notifying all creditors of the company’s ceasing of trading, and assuming responsibility for all creditor and employee correspondence. Our primary objective was to protect the director from bankruptcy and mitigate the risks to their interconnected businesses. This involved:
Forensic Financial Investigation: Recognizing the interconnected nature of the director’s eight businesses, we conducted a meticulous forensic investigation of each entity. This comprehensive analysis aimed to prevent the liquidation of one company from setting off a detrimental chain reaction. This was crucial to safeguard the director’s personal position and preserve the stability of his other businesses.
Working with the Liquidator: Working closely with the appointed liquidator, we facilitated a smooth handover and transition into liquidation. We addressed all queries regarding the company’s affairs and provided assistance to our client in completing the director’s questionnaire and cooperating with the investigation.
Lease Novation: To enable our client to continue trading, we negotiated with creditors to transfer the lease agreements from the insolvent company to one of their other businesses. This strategic move ensured business continuity and preserved valuable contracts and relationships.
The Outcome
Despite facing aggressive creditors, threats of legal action, and even bailiffs at the client’s business premises, our experience and knowledge allowed us to navigate these challenges and reach a favourable resolution.
The liquidation process proceeded without any major issues, safeguarding the director from personal bankruptcy and preserving their position as a director in their other company.
The successful outcome of this case study is evidenced by the growth of the director’s other businesses. Having taken on numerous new contracts in the current year, business is better than ever.
This case shows the critical importance of swift and strategic intervention in business insolvency situations. By effectively managing all moving parts and employing our expertise, we successfully protected the director’s interests, ensuring the continued success of their businesses.
