FAQ’s 2023-02-13T11:17:53+00:00
What happens about personal guarantees in a Liquidation? 2023-02-13T11:37:21+00:00

If you have signed a personal guarantee and at the time of a company going into Liquidation there is an amount outstanding, you will be called upon to satisfy this debt under the terms of your personal guarantee.

It is always advisable to make sure that you have details of any personal guarantees that you have given, in order that you may have them checked for validity and understand the terms of repayment.

Personal guarantees come in all sorts of forms and therefore, it is important that proper advice is taken as to whether a guarantee has been entered into correctly by all parties in establishing its validity.

Some lenders and asset providers may insist on personal guarantees before they will contract with the company and the onus is on the person signing the guarantee to make sure they understand what they are signing and the implications that may arise if the guarantee is called upon.

In addition, it is important that the party requesting the personal guarantee makes sure that they adhere to the strict regulations required in requesting a person to sign a personal guarantee.

It is always advisable to take legal advice when entering into personal guarantees and you should be aware of what you have signed and who you have given guarantees too.

If in doubt, speak to the insolvency practitioner and he will be able to give you an indication of where you should go to obtain the advice that you need.

The worst thing that you can do is ignore a personal guarantee and let yourself be chased by the Creditor, as this will result in interest mounting up and potentially, aggressive debt collection procedures following on.

If you are proactive and contact the Creditor who has the personal guarantee, there is often the ability to come to a reasonable settlement that is both affordable and sustainable in satisfying the outstanding debt.

Again, speak to us, as we have a lot of experience in assisting people in resolving personal guarantee positions.

Will a Company Liquidation affect my personal credit rating? 2023-02-13T11:34:36+00:00

The answer is no, it should not do, however, there are certain things that you should be aware of.

It may show on a personal credit search that you were a director of a company that has gone into Liquidation.

You and the company are two separate legal entities, therefore, it should not affect your personal credit rating.

You should be aware that if you have given a personal guarantee in respect of a company debt and this guarantee is called upon, your personal credit rating may be affected if you do not make the payments that you are liable for.

You can always check your personal credit rating by paying a small fee to a credit reference agency and obtaining an up to date credit report about your own personal circumstances.

Can Creditors claim retention of title to goods? 2023-02-27T16:21:12+00:00

To claim retention of title, a Creditor must have informed you, at the commencement of your trading relationship, that if you do not pay their invoices, they are entitled to claim retention of title over any goods of theirs that you hold that are unsold.

To claim retention of title, a Creditor must be able to identify each item that remains unsold to a particular invoice and this is usually done through unique reference numbers or specific serial marks that are easily identifiable.

If a company goes into Liquidation or Administration, Creditors who have retention of title will generally be put in touch with the agent, that the Liquidator or Administrator has instructed, to assist him/her with the company’s assets.

The verification of a retention of title claim is a two-stage process.

Stage one is a physical inspection to identify assets that belong to a Creditor that may be subject to retention of title.

Stage two is verification of the appropriate documentation that establishes the retention of title claim is valid.

Thereafter, any validly approved items may be returned to the Creditor and offset against the amount that is claimed in the insolvency.

Can I re use my company’s name? 2023-02-13T11:31:34+00:00

There are very strict rules in reusing a company’s name if the directors of the new company are the same as that which has gone into Liquidation.

Section 216 of the Insolvency Act 1986 is the relevant legislation that covers this particular subject and can be summarised as follows.

If you have been, in the last 12 months, a director of a company that has gone into Liquidation, you may not use the same or similar name if you are a director of a new company for a period of up to 5 years.  This includes trading name.

If you are found to be in breach of this legislation, you may be liable for a criminal conviction that results in either a fine or imprisonment.

There are, however, certain exceptions to this rule and providing that you comply with the terms of the exceptions, then it is possible to be able to use the same or similar name in a new company going forward.

Depending upon your circumstances, it is suggested that you either take legal advice in respect of this from a solicitor or from an Insolvency Practitioner, to ensure that you do not fall foul of these particular conditions and end up facing prosecution.

Can I start a new company if I go into Liquidation? 2023-02-13T11:31:04+00:00

Yes, you can start a new company and there is no restriction in which areas of business you may trade in, so it is possible to start a new company in exactly the same line as the one that has gone into Liquidation.

There are certain things that you should be aware of, that you may wish to take into consideration.

It is an offence, under Section 216 of the Insolvency Act 1986, to re-use the same or similar name of the company that went into Liquidation, if you are a director of both the company that went into Liquidation and of the new company that has just been formed.

There are exceptions to this rule and if you wish to use the same or similar name for a new company, you should take advice from either a solicitor or an Insolvency Practitioner in relation to the restrictions.

Some suppliers may not be too keen to grant you lines of credit, especially if they were Creditors in a previous insolvency that you were involved with.

Frequently, this will mean that you will either have to pay up front for goods, or, may be given restricted credit terms if you need to trade with the same companies.

It may be more difficult to obtain items on finance, such as hire purchase or lease, because a new company has very little in the way of a track record and this could result in you having to sign personal guarantees or lodge some form of security if requested to do so.

Can I buy back my company’s assets if I go into Liquidation? 2023-03-06T16:21:36+00:00

The Liquidator of a limited company has the duty to realise the maximum value of the company’s assets for the benefit of Creditors.

In doing so, the Liquidator will want to achieve the highest price that is possible for the sale of the company’s assets to any third party.

Once your company has gone into Liquidation, you will no longer hold the office of director of that company and therefore, you as an interested party would be able to make an offer to purchase assets of the insolvent company.

Generally, Liquidators will employ the services of an independent valuation agent who will agree any proposed sale and that would be the person that you will deal with.

An independent valuation agent is used to ensure impartiality and generally, through their expertise, obtain the highest price for the company’s assets.

If you are unsure of what you can or cannot do, you should discuss this with the Insolvency Practitioner involved, who will be able to explain to you, the appropriate routes and procedures that you will need to follow if you are interested in purchasing the company’s assets.

Can I be a director again if my company goes into Liquidation? 2023-02-13T11:28:39+00:00

The answer is yes, providing that you have not been disqualified from acting as a director or given an undertaking that you will not act as a director.

You can be the director of as many companies as you wish to be, providing that you act in a proper manner and in accordance with the Company’s Act 2006 and its subsequent amendments.

It is always good practice to take advice from accountants, solicitors and professional business advisors in relation to setting up and operating limited companies.

If you have been disqualified from acting as a director of a limited company or have given an undertaking that you will not hold the position of director, then you must be very careful that you do not breech these conditions, as doing so could result in criminal action being taken against you.

What redundancy can a director claim? 2023-02-13T11:28:07+00:00

Providing a director has a contract of employment that is either written or implied and has worked over 16 hours per week, he/she will be eligible to make a claim for redundancy.

The director has to be on the company payroll and does not owe any money to the company.

A director should request to make a claim to the Insolvency Practitioner handling the company’s affairs if it has not already been suggested and the claim will be processed through the National Insurance Fund.

A director is entitled to claim for arrears of pay, wages, in lieu of notice, holiday pay and redundancy.

Wages in lieu of notice may be claimed for at 1 week per full year worked, up to a maximum of 12 weeks.

Redundancy claims are subject to a maximum of 20 weeks at 1 week per year, with an uplift to payment of 1½ weeks per year for those aged 41 years and older.

The current maximum weekly limits that are claimable from the National Insurance Fund are £571 per week and this is reviewed by the Fund on an annual basis.

What happens to my employees if my company goes into Liquidation? 2023-02-13T11:38:51+00:00

If a company goes into Liquidation and the employees are owed outstanding money for wages, notice pay and holiday pay, this will be satisfied through claims from the National Insurance Fund, who will then put a claim into the Liquidation for the amount that they have paid out to the employees who have put in a claim.

If the company holds sufficient money to satisfy employees claims prior to entering into insolvency, then payments will be made by the company and there will be no need to make application through the National Insurance Fund.

Employees are also entitled to make a claim for redundancy if they have been employed for over 2 years on a full-time basis and have worked in excess of 16 hours per week.

Redundancy payments are also paid out through the National Insurance Fund and a claim is made by the National Insurance Fund to the Insolvency Practitioner appointed.

There are statutory maximums that employees are allowed to claim per week for any outstanding monies due.

As from 6th April 2022, the limit was raised to £571 per week for claims in relation to arrears of pay, wages in lieu of notice, holiday pay and redundancy.

Generally, if an Insolvency Practitioner is appointed to assist a company going into Administration or Liquidation and there are redundancies made, they will inform the employees of their rights and indicate to them how they should proceed to make a claim.

There are statutory maximums in relation to statutory notice pay and you’re entitled to claim 1 week per each full year worked, up to a maximum of 12 weeks.

For redundancy claims, there are maximum limits that maybe made and these are specific to each applicant’s length of service and age, and this calculation will be made by the National Insurance Fund when an application is received.

Length of service for redundancy payments, made through the National Insurance Fund, is capped at 20 years and again is subject to the limit of £571 per week, however, there is an uplift of 1½ weeks’ pay for each full year worked when you are older than 41 years.

Redundancy pay, up to a limit of £30,000, is tax free.

How can I pay for help when I am in financial trouble? 2023-02-13T11:38:47+00:00

If your company has financial problems and you need to seek advice, it is perfectly acceptable to make reasonable payments to recognised professionals that may be able to give you assistance.

Typically, these payments will be made to accountants, solicitors, financial advisors and Insolvency Practitioners.

The payment for advice must be specific to the company’s requirements and in its interests, even if it results in a formal insolvency.

Excessive payments may be looked at by any appointed Insolvency Practitioner to ensure that the business received reasonable value for money for the work undertaken.

How do I deal with licenses, agreements and contracts? 2023-02-13T11:38:41+00:00

Look at the terms – can I novate or transfer the agreement?

If you have a personal guarantee on an item, such as a car, make sure that, if it is repossessed by the lender, it is disposed of with your agreement and for fair value.  Alternatively, the lender may let you take over the agreement as guarantor and continue to make the payments and retain the item.  The worst thing you can do is do nothing as then the lender will take the matter out of your hands and you may find yourself liable under any personal guarantee you have signed.

In many cases, contracts cannot be assigned or transferred, however, depending on your relationship with the contractor, they may want you to continue to work on that contract, or under that agreement, because they have no issue with your work, even though your business has financial problems.  This does not mean that you can go around swapping contracts from one company to another, but it may give you an opportunity to have some form of employment in an area that you have plenty of experience in.

Some businesses operate where licenses are required to be able to operate.  Examples of this are in the licensed premises industry, waste management industry and road haulage transport industries.  Great care needs to be taken if contemplating insolvency proceedings, in order that agreed use of these licenses can be retained, as this is often a very time consuming and complicated negotiation.  There are ways that licenses can be protected but usually this will involve a certain amount of planning to ensure organised continuation of a business.

We have experience of all types of licensing issues and are well placed to give you advice that can assist in preserving assets that a business may have.

Every licence provider has different rules and regulations surrounding their issue and maintenance, so it is important that you seek professional advice before embarking on any form of insolvency restructuring, particularly if the licence is integral to the continued success of you and your business.

Do I really need to liquidate my company? 2023-02-13T11:38:36+00:00

Often, directors are not sure whether they should put a company into Liquidation or not, as they are unsure of the consequences and believe that this course of action is going to put them into a worse situation than if they continue.  Directors should be aware that to continue to trade a business, when it is knowingly insolvent, is a matter that any Liquidator, appointed in the future, would have to investigate, to see whether the director has acted in the correct manner.  Here at Company Advice, we can advise you on the present circumstances of your company, as to whether you are creating any problems that you need to be aware of, if your company ceases to trade and goes into Liquidation.  Call us today for a confidential discussion and pick our brains with the questions that you need answers for.

Did you know directors are entitled to claim redundancy? 2023-02-13T11:38:31+00:00

In employment law, directors are treated the same as employees for compensation payments for arrears of wages, wages in lieu of notice and redundancy.  Many directors think that because they are running a company, they are not entitled to claim, however, here at Company Advice, we will be able to guide you as to where to make an effective claim, in order that you can receive the same types of compensation as any employees you have had, if your company has to close.

What do I do if my company just runs out of money? 2023-02-13T11:38:26+00:00

If your business runs out of funds and there is no forthcoming investment, then you need to speak to Company Advice, who will go through the alternatives available to you.  We have, for many years, given help to hundreds of directors who have contacted us not knowing what to do next.  All our calls are confidential, and we are here to help take some of the pressure away from you.

My Creditors are bullying me! 2023-02-13T11:38:21+00:00

What do you do when your Creditors are constantly harassing you for payment and you cannot afford the amounts they demand?  Often people just stick their head in the sand and think that if they ignore it, the problem will go away, but companies rely on other companies, or customers, to pay them for their existence and generally, these problems do not go away but can be dealt with in a satisfactory manner.  If you believe your business is viable, do not be frightened to ask for some form of payment schedule, over a few months, that will allow you to manage your cash flow effectively.  If the demands for payment are too great, then there are alternatives, such as liquidating your company, or applying for a Company Voluntary Arrangement, that can be used to stop harassment from your Creditors.  Here at Company Advice, we help directors every week find solutions to their financial troubles and get back on their feet and work towards a brighter future.

Has the Covid-19 pandemic destroyed your business and you don’t know where to turn to? 2023-02-27T16:22:02+00:00

Here, at Company Advice, we listen very carefully to director’s company problems and offer clear helpful guidance to find the best way forward.  Sometimes, when you are so close to a problem, you cannot see the wood from the trees and to be able to discuss a difficult situation you find yourself in, an independent third party can offer a greater level of clarity in the way going forward.  If you want to discuss your company’s situation confidentially, please call us and we are there to listen to your troubles and offer guidance to you and a way forward.  Call us today and it may take some of the pressure away.

How can you help me with the stress of debt? 2023-02-27T16:22:53+00:00

Not every business runs smoothly all the time and some businesses suffer because of changes in market conditions or increased competition.  If you have a company that is struggling and you cannot see a way forward, contact Company Advice to discuss with us your options that may allow you to have a fresh start and take away the pressures that you are under.  All our calls are confidential, and we can help guide you to a suitable solution that lets you get your life back on track and your business succeeding going forward.

Can my new limited company have the same trading name as the company that has just gone into Liquidation? 2023-02-13T11:38:06+00:00

There are prohibitive regulations that do not allow the use of the same or similar name for a new company that has common directors with a company that’s just gone into Liquidation.  This is covered in Section 216 of the Insolvency Act 1986.  All is not lost, however, as there are procedures available to allow the re-use of the same or similar name and here at Company Advice, we can offer you guidance and explain to you the correct way to deal with this aspect.  You need to be aware that if you don’t adhere to legislation and you are found guilty of using the same or similar name, in respect of a new company, you may be liable to a criminal conviction.

Can I be a director of another limited company after a Liquidation? 2023-02-13T11:38:01+00:00

The answer is yes, subject to certain constraints.  Provided you have not been banned from being a director, under a Disqualification Order, or given an undertaking not to be a director, you may hold as many directorships as you wish.  If you are unsure as to what you can do in being part of a newly formed limited company, once the previous company has gone into Liquidation, talk to Company Advice and we will be able to explain to you what you can and can’t do, in going forward in business.

What happens to the company’s Creditors? 2023-02-13T11:37:56+00:00

The Creditors of the company will lodge claims with the Liquidator and will expect to be paid out of the company’s assets.  If there are insufficient assets to pay Creditors in full, the director/shareholder is not normally liable for any shortfall, unless a personal guarantee has been provided to the Creditor.  Basically, the debt is written off.

Who pays for the Liquidation and how much does it cost? 2023-02-13T11:37:46+00:00

In most cases, the costs of the Liquidation are met from the company’s assets.  The costs include disbursements (the money the Liquidator has to pay out for advertising, insurance, etc.) and the Liquidator’s own costs (remuneration) are normally paid on a time costs basis.  In the event there are insufficient assets to pay the costs, the company will normally go into Compulsory Liquidation, or in certain cases, the director/shareholder will fund the cost personally.

Can we just close the company and keep the business? 2023-02-13T11:37:40+00:00

No.  If the company has more debts than assets, or it has been trading insolvently on the balance sheet, you must liquidate the company.  It is possible to dissolve the company under Section 252 of the Companies Act, provided there has been no trading for 3 months and the company is dormant.

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