If your business is starting to struggle or has been under some financial strain for some time then it normal for the directors to feeling under pressure. A lot of directors have sleepless nights worrying about what their responsibilities are during a liquidation so I'm going to try and explain them simply to you.


The key thing to remember here is once the company becomes insolvent your responsibilities shift from the company and the shareholders to the creditors of the company.


Acting responsibly when your company becomes insolvent is essential if you want to ensure that you don't get held personally responsible for company debts.


Firstly - are you insolvent?


If you can't pay your debts when they fall due then technically your company is.


If your insolvent this is what you need to do:


Don't make the creditor's positions worse - if you knowingly run up further debts knowing that the company will never pay them back you could land yourself in hot water.


If you are thinking of starting again and entering into a pre-pack liquidation you must have your assets values independently by a valuer. If you try to squirrel your assets to a new company undervalue and you do your own valuation then this could be reversed by a liquidator. If your thinking of this gets in touch with me today to discuss the procedure in more detail, it's not to be done on a whim and needs some serious thought behind it.


Remember the money in the company bank account is not yours, it's the company's. Even if the company owes you money that doesn't mean the assets are yours or you can take the money out of the bank account, this could be seen as a preferential payment and again could land you in trouble.


if your company is struggling there are still options available to save it, you could look at a CVA to restructure the company debts and continue to trade, you may want to consider a pre-pack liquidation and started the business again in a new vehicle.


If it's sadly the end of the road and you have no appetite to start again a creditor's voluntary liquidation would be the formal closure of the company.


This can be stressful stuff to think about, I know because I have been there and helped hundreds of either business owners through these times as well.


Don't suffer in silence, 1st Business Rescue offer free and independent advice to ltd company directors across the UK.


If you have found this useful please give me a like and a share, if you have any comments please drop them below or send me a DM.


Thanks ,


Chris


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