Is Your Business Struggling? Under Pressure From Your Landlord, Suppliers Or Other Creditors?
The perfect storm of the Covid pandemic, the war in Ukraine, the current high inflationary environment and cost of living crisis has inevitably placed many pub businesses under significant financial stress.
Whilst a shareholder’s liability in respect of a limited company is limited to the value of their shares, UK company and insolvency legislation imposes significant obligations upon the directors of a company which, if not complied with, could expose those directors to personal liability, particularly in circumstances where the solvency and prospects of the company are in doubt. Directors can find themselves facing personal claims from liquidators for sums relating to the following in the period prior to the formal insolvency of the company:
fraudulent and wrongful trading (trading to the detriment of creditors when insolvent)
neglect or breach of directors duties resulting in detriment to creditors (also known as misfeasance)
the giving of preferences (intentionally paying certain creditors ahead of others)
entering into transactions at an undervalue (transferring or disposing of valuable company assets for no, or below market, payment or consideration).
Director’s conduct will also be investigated and could result in director disqualification proceedings.
However, help is at hand.
At Summit Law, we have an experienced Insolvency Team who have a wealth of experience of advising companies, directors and insolvency practitioners in relation to insolvency and pre-insolvency matters. Whilst we can of course assist in the defence of claims against directors, prevention is always better than a cure. The risk of director liability can be minimised through a clear understanding of a director’s duties and timely attention and action. Experience tells us that engaging with creditors is important and ignoring mounting problems and failing to act can leave directors significantly exposed. Demonstrating proper, considered and timely action will go a long way to persuading a Court that a director should not be personally liable for the company’s losses.
Therefore we would like to offer you a free of charge (15 minute) video call/telephone Consultation. This will give us the opportunity to help you identify any areas in which action may be required. This could include assistance in dealing with landlords, suppliers and other creditors, helping deal with HMRC and tax issues, evaluating the need for wider professional input, introducing or tightening internal protocols and management, transaction structuring and, in the worst case scenario, insolvency planning. Seeking advice at an early stage, and acting on it, will prove beneficial in the long run for both the business and its directors. It will give the company the best chance of surviving any challenging trading period and steadying the ship (if that is possible) and will also ensure that the directors meet their statutory duties to the company and importantly to creditors, and take all appropriate and necessary steps, which in turn should serve to minimise the risk of criticism, personal liability and censure (disqualification) in the event the company cannot be saved and enters a formal insolvency process.
If you would like to arrange your Consultation, please email Charlotte Walker at firstname.lastname@example.org who will be happy to arrange a convenient time for your Consultation with one of our experienced solicitors.