Protect Director
Protect Director

WRONGFUL TRADING

The point of limited companies is to protect owners and directors against personal risk and liability, in practice it is not that simple!

When fighting off threats, Directors can sometimes break insolvency rules. Unfortunately this can turn the Company debts into a personal liability and lead to disqualification as a Director.

If a Director helps the Company by injecting temporary cash, its repayment can unexpectedly become a fraudulent preference. By “maximising sales to trade out of difficulty” they can instead move unwittingly into trading while insolvent and if they “pay today’s Peter instead of yesterday’s Paul” to manage tight cashflow, they can cross the line to wrongful trading !

DIRECTORS AND SHAREHOLDERS’ LOAN TRAP

This can be the worst risk of all. Some accountants encourage Shareholding Directors to pay themselves advance monies during the year to become a charge on year end profits as Dividends. But, what if trading collapses and there can be no Dividends? All this income becomes an illegal Loan with repayment demanded by the Liquidator.

EXPERT DEFENCE

Insolvency Solutions client is the Director and our first priority is to review all aspects of their personal involvement to minimise potential liabilities.

If the company is not insolvent, a charge on company assets can secure repayment of financial injections, or underpayments of salary ;alternative financing can be used to remove PG’s, and safer recording of financial and trading decisions can protect against claims of wrongful trading.

Where there is already an insolvency threat, we take action urgently to assess risks, minimise vulnerabilities and defend against any potential claims..

Demands under PG’s may be pre-empted with pay- plans. Apparent wrongful trading can often be countered by an analysis report, explaining how the Director was acting in the general interest of creditors.

With the “Loan Trap” it may be possible to submit validly revised accounts which correctly reclassify all the Directors’ income as PAYE, with the company incurring the added NI/Tax liability and Director dealing with the personal tax. Where it is simply too late for that approach, we can review the Director’s inability to pay the sum owed and apply professional expertise to negotiate a minimised settlement.

Do you wish to avert claims for wrongful trading? to have closing accounts better presented? to mitigate an overdrawn directors account? or to effect reduced settlement of PG’s?  – contact us today for no obligation advice, or active assistance !

Do you wish to avert claims for wrongful trading? to have closing accounts better presented? to mitigate an overdrawn directors account? or to effect reduced settlement of PG’s?  – contact us today for no obligation advice, or active assistance !

Free, confidential, expert, advice.

0800 313 4331

Free, confidential, expert, advice.

0800 313 4331

Insolvency Solutions Ltd

Forum House – Stirling Rd – Chichester – PO19 7DN

1 Bromley Lane – Chislehurst – BR76LH

Insolvency Solutions Ltd

Forum House – Stirling Rd – Chichester – PO19 7DN

1 Bromley Lane – Chislehurst – BR76LH