Insolvency Advice for Company Directors

Options for Limited Companies

If your company is suffering from cashflow problems, the options are:
Voluntary Liquidation,
Administration or


Voluntary Arrangement (CVA),
or a Members Voluntary Liquidation (MVL) or alternatively Business Finance, 

Business Development or 

Sale of Company.

Findlay James provides Directors of Limited Companies with a full range of Advisory and Insolvency Services.

Principal Alisdair Findlay is a Chartered Accountant and Licensed Insolvency Practitioner with extensive experience in the SME market. Trading as Findlay James Chartered Accountants for nine years, Alisdair fully understands the pressures faced by running your own business, and relishes the opportunity to be of assistance.


If you feel the need for advice in relation to your company’s position, and/or your position personally as a Director, we can assist.

Initial consultations with Alisdair Findlay or Michael Davey are in confidence. We do not charge for a consultation, to avoid any possible conflict of interest, and of course to encourage you to take up the offer of advice. In the event Findlay James are instructed to act in relation to your company, our fees are agreed by creditors at a later stage.


We seek to combine the old with the new, in that we aspire to the highest standards of professional service, combining technical knowledge, integrity, empathy and old fashioned commercial acumen, while seeking ongoing productivity gains with a strong focus on technology and software in our operations.



Insolvency is an opportunity – it might not feel like that when it is happening to your company, there are winners, as well as losers when a Company seeks the protection of the court due to Insolvency. Getting the right advice at the right time is vital, especially when you are new to managing a business under financial stress.

Free consultation

We do not charge for a consultation and are happy to call at your premises, to meet in one of our regional offices, at a Hotel, our head office in Cheltenham, or to simply have an initial chat on the telephone to establish whether a meeting would be worthwhile for you.

We are happy to call at your premises, to meet in one of our regional offices, at a Hotel, our head office in Cheltenham, or to simply have an initial chat on the telephone to establish whether a meeting would be worthwhile for you.

We look forward to taking care of your business.


Frequently Asked Questions

Q. What are my personal liabilities?

Directors as a rule are not personally liable for the debts of the company. This is the main reason for setting up a limited company in the first place, in order that shareholders and directors liabilities are limited.

The company is known in law as an artificial person, and is an entirely separate, distinct legal entity which owns the business assets and is liable for the business debts. Shareholders are only liable for any unpaid share capital, which is usually neither here nor there.

Q. What about personal guarantees?

Directors can often be faced with Personal Guarantees, usually to the banks and asset finance companies, landlords and certain types of trade creditors, such as building merchants. Basically if you have signed a guarantee you will be liable for whatever shortfall the creditor suffers in the Liquidation. Where guarantees have been given by more than one guarantor, on a joint and several basis, the guarantor with the most personal assets, is the one who stand to lose more, as any of the guarantors are potentially liable for the total debt. They may then be faced with trying to recover the shares of the other guarantors from them directly, which is not always possible if they have no personal assets left.

Directors who are on the hook for potentially large guarantees can be motivated to keep trading in order to prevent these personal liabilities crystallizing and the subsequent debt enforcement action that would follow. This can lead to the company trading whilst insolvent.




What is the likelyhood of being banned as a director?

While the Liquidator will not, in the majority of cases, be in a position to pursue an insolvent trading action under s214 Insolvency Act, he is required to report the matter to the Disqualification Unit who will then consider going after the Director for a ban of around 2 -- 5 years in smaller cases (it can go to 15 years, the highest I have dealt with was 11, the lowest 2). Again Directors Disqualification proceedings are at the High Court and are scary expensive, Directors are looking at around £100k in legal fees. Hence when the BERR Disqualification unit offer the director the alternative of an undertaking pretty much nobody can afford to fight it through the High Court, because if the Directors lose, they are liable for the Governments legal fees. All in, the potential cost of fighting and losing is around a cool quarter of a million quid on a good day. Who can afford that?

The alternative is that for no legal costs a Director gives an undertaking to resign his or her directorships for an agreed period of generally not more than 5 years for smaller companies, and the whole thing goes away. Apart from insolvent trading, other issues of unfit conduct that can be reported to the disqualification unit include: Misuse of Crown money, Making preferential payments, Transferring assets at an undervalue, Failing to maintain proper accounting records and make statutory returns, Breach of Fiduciary Duty to act in the best interests of the company, Misfeasance, Retention of company property, The extent of the director’s responsibility in the company failure, Failure to cooperate with a Liquidator.

You can have look at the most recent undertakings given by directors on the insolvency service website, the most common reason for being done is misuse of crown monies. The reality of insolvent trading is that the real risk is it could lead to a ban as a director, therefore deciding when to “pull the plug” is paramount.

Can I be made personally liable for any debts?

By incurring additional trading losses and increasing the liabilities significantly (often to the Crown for PAYE/NIC/VAT -- who tend to take a dim view of such behaviour), the Directors are potentially exposed to personal liability for some of the debts.

This personal exposure risk is due to the powers of the Liquidator to take action against a Director to make a personal contribution to the Liquidation, if there is evidence of insolvent trading and that the Director knew the company was insolvent, but instead of ceasing to trade, carried on and the situation got worse, not better.

However, in reality, for directors of small companies, the risk of an insolvent trading action is low, as funds are often not available for the legal costs of an application to the High Court. In many cases, Directors can point out to reasons why they genuinely believed they could trade out of the insolvent position, such as the prospect of a cash injection from a new investor, or a profitable new contract in the pipeline.

Only in extreme cases, where the Directors have clearly acted recklessly will action proceed.




Insolvency Services for Companies

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It will depend on the situation your company is in as to which option is the best for you. We recommend speaking to an experienced insolvency professional as early as possible. Don’t leave it too late!


Liquidation

It is cheap, easy and fast. When a limited company is placed into liquidation, the shareholders and directors are not personally liable for the debts of the company, unless personally guaranteed. Once the company is in liquidation, creditors cannot take legal action against either you or the company (except for any P.G.’s). Only a licensed insolvency practitioner is legally able to act as liquidator.



CVA

cva

What is a CVA -- The company voluntary arrangement is a formal arrangement with the company’s creditors typically being paid over a 5 year period, repaying a fixed amount which is lower than the actual outstanding debt, which allows a business to continue to trade whilst repaying its debts at an agreed rate.


Sample

A highly successful recovery tool. The administration process allows the reorganisation of an insolvent company while protecting it from its creditors, within the administration the company’s plans are formulating the rescue of the business and maximising the assets realisation to maximise the outcome for the company’s creditors.



Get in Touch

Please contact us via phone at 01242 576 5550 or request a callback