Director Protection When A Company is Facing Liquidation or Insolvency Proceedings: T: 01425 600129 (local rate)
“That will never happen to me. My business and my team are far to strong and organised for that to ever happen“.
There’s no company director out there who is exempt from a business failure. People build their businesses over time and often sign personal guarantees with banks, take advice from accountants and other professionals, yet still fail. This might not always be their fault: the accountants might have provided inappropriate advice and business partners default on promises. It happens all the time.
The facts are that 80% of new businesses fail in the first 2 years. Entrepreneurs that start up businesses do so on the basis that they believe that they can make a success of a product or service, and ‘set up shop’.
If you are a director who is heading for the rocks or who has hit the rocks and all kinds of new administration and litigation processes are visiting you, then you need to take action. This is what we see a majority of the time. See if you recognise any familiarities with yourself.
We are in late March 2017. Things have changed.
Not so long ago, you had an effective team and you could reach out and get what you needed at any given moment in time. You led your business from the front.
But since that time, certain staff members have slacked off and allowed the mangers to take the lead. You might have offered your accountant a share in the business. There might have been a sudden change in your personal life and it has become common knowledge. Suddenly, the focus of the team has shifted and there is more concern about your personal issues than keeping the team strong. The team no longer finds solutions to problems, but instead approaches you for solutions. Apathy has set in with all of its malignancies.
Remember, people are selfish. You might have thought that your team was 100% committed to you, but the only reason they are committed is that you are paying them to be. Would they walk with you if you couldn’t pay them? Definitely not is your answer. If this is your thinking then you are deluded. The most important time for making the right decisions in your 40s and 50s, as time ‘is running out’. You would have built up considerable business experience over the years and would have a good idea of what works.
The pressure is on to get it right, so making the right choices is important. There’s no time to hide behind the people that you have employed and who are already proving themselves to be part of the problem.
The time has arrived to take positive action, if you to avoid losing the business altogether. Administration is a good way of guiding your company through troubled waters and this is generally undertaken by an Insolvency Practitioner. Provided you find a dynamic one, someone who shares your vision and who can demonstrate a strategy for the future, an administration is a proven way of recovering the company’s position.
The alternatives are:
CVA – Company Voluntary Arrangement – Providing 75% of the total amount of debt owed can agree to the proposal then this can be liberating for the company or business.
Company Liquidation – When the business has no recovery position, a Director’s liquidation should be more advantageous. The reason is that you will go through the process of shutting the company down properly. All difficult areas will be covered. This is where Director Protection is critical and will make the absolute difference between a good result with no or marginal complications or you have chosen the wrong liquidator and your world and life as you know it is going to significantly change.
Don’t be afraid of alienating people if its those very people that have contributed to the current position. I would say that it is critical to make your own decisions. You are the one thats responsible for your company director obligations despite how much you had thought that it was sorted and under control via a 3rd party. Its you.
Here’s the important bit:
If your company is facing liquidation and you believe that you have left yourself open and exposed and may need director protection. Then delaying isn’t going to help.
The process with both involuntary and voluntary company liquidation is that reports need to be prepared and submitted to the Secretary of State.
If you lined up 10 Insolvency Practitioners and gave them the same liquidation to manage you would find that they would all have a varying way of dealing with it. Often is the case that they are afraid to speak openly.
They could help and assist you by explaining to you varying options that will help you personally but are unlikely to suggest things that will really help you because they are looking at what is in it for them most of the time.
If you are feeling browbeaten by the process then its critical that you pick yourself up, brush yourself down, figure out a plan and go through the problem areas and speak to someone that can afford the time to give you to ensure you understand everything and the implications of certain actions.
In a nutshell you need a pro active accountancy firm or Insolvency Practitioners. A face to face meeting, a contact telephone number where you can speak to them when you need to.
23rd March 2017