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“.
Theres no company director out there who is exempt from a business failure. People built their businesses with the best intentions in mind at the time and more often than not will have signed personal guarantees with banks, taken advice from accountants that they thought they could trust and believed that these specialist would prove invaluable in saving money, retaining incomes and no matter what happened in the future would be able to steer the business through anything it was to ever encounter. During down times may have accrued an overdrawn directors loan. There’s also a very good chance that a business partner who you thought would be a perfect fit turns out to be the total opposite of what you had hoped for.
The facts are that 80% of new businesses fail in the first 2 years. Entrepreneurs that start up businesses and companies do so on the basis that they believe that they can make a success of a product or service they believe in and have decided to ‘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 really need to take action. This is what we say 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 a fully equipped team and could reach out and get what you need at any given moment.
Not so long ago you lead your business from the front. But since certain staff and team members proved themselves you have taken a bit of a step back and let the manger/s lead. You may have given or offered your book keeper or accountant a share in the business. Theres been a sudden change in your personal life and you have spoken about it in confidence to certain members of your most trusted circles. But now are aware that perhaps you should have kept your personal business to yourself because in speaking about it has made that sore subject matter a talking point which makes you feel as though the attention has moved onto your problems instead of knuckling down on a professional basis and keeping the business and the team strong. Forcing the team to provide solutions to problems instead of coming to you with the problems.
Remember that people are selfish. You may have thought naively that your team were 100% committed to you. But the only reason they are committed to you is because you are paying them to be. Would they walk with you if you couldn’t pay them? Definitely not is the answer. So if you are under any illusions of anything different then you must without hesitation remove the rose tinted spectacles that you are viewing the world with!
Observationally the important times for making the right decisions in is between your 40’s and 50’s generally. The reason is that theres a very good chance that you have significant years of business experience behind you and have now been able to prove that concepts work or don’t work. The years of experience are important because you can apply your wisdom to present and future situations.
Providing you are blessed with good physical and mental health during your 20’s and 30’s then theres time for rebuilding and moving on from a situation that went or goes wrong. (Providing you have the right attitude of course)
40’s and 50’s are a different matter. The pressure is on to get it right! Theres not many chances left and if you are in this position and have every intention of continuing the future years as an entrepreneur then you’ve got to get it right.
So making the right choices and creating the right moves is pretty important. Theres no time to hide behind people that you have engaged and paid for who have already proved themselves to be the problem.
This is the hard bit.
Your instincts are there for a reason. If you feel that they are and have been the problem or contributed in any way to the decision making process that has placed you in your current position. But you feel that they owe you. Or you feel if only that they could just finish this that and the other. Then take control yourself and do whats needed to navigate your way out of this predicament.
We know why some accountants do this. we see it time and time again.
Your company and business if it has any life in it at all and is a worthwhile concept that needs reform then administration is a good way of handing the wheel over to generally an Insolvency Practitioner. (make sure you find a dynamic one, and one who can share your vision and who can demonstrate what the strategy is going to be). An administration is a great way of recovering the companies 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 is over and theres no recovery position then a Directors 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