Options for limited companies with debts
The burden of debt
Resolve Financial will help you to make an honest and confidential assessment of where your business is at currently, and where it could be if you were able to restart tomorrow without the burden of debts it has acquired.
If your business is deemed to be insolvent, as a director you can instruct Resolve Financial to assist you in placing the company into Creditors Voluntary Liquidation. This formally closes down the business and deals with all outstanding company debts as part of the process. This process is suitable where the company is beyond rescue. This also allows the directors to move on, and creditors to recover as much money as possible, where there are realisable assets.
Why Liquidate the company ?
Directors have legal obligations to “do the right thing” for the company, it’s owners and its creditors. Accordingly, if you believe your company might be insolvent, or that it will become so, you are legally obliged to take steps to mitigate the impact on your outstanding creditors. Closure of your business may not be necessary, but seeking professional advice will be.
The exact assistance we can provide will depend upon whether your business is a Limited Company or not.
If your company is insolvent
If your company is insolvent, whether you acknowledge that or not, no further credit should be obtained and you should be extremely careful when it comes to making payments to creditors, particularly if you don’t have enough funds to pay everyone you owe. Similarly, any assets or money belonging to the business should be safeguarded and not be sold or otherwise moved out of the company.
Potential legal actions
There are a number of potential legal actions that can be taken against directors of insolvent companies, including limiting your future trading options, and you could find yourself being held personally liable for some of the company debts. Early action and professional advice will lessen the chances of such adverse action, and enhance your options going forwards.
Employee’s right to receive redundancy pay
You may be aware of an employee’s right to receive redundancy pay when the company enters liquidation. However, directors of limited companies are often employees of the business also. As such you may be just as entitled to redundancy pay as all of your other staff, and this can make a huge amount of difference, particularly at a time when your personal finances are stretched.
Where a company is placed into an insolvent liquidation there is likely to be a significant shortfall to creditors, and this is written off as part of the liquidation process. The notable exception is where company debts have been personally guaranteed, possibly by you as a director in which case the outstanding debt will remain with you personally and will not be written off.
It is possible to put a limited company into Liquidation via a Court process, known as a Compulsory Liquidation, however the voluntary route is considered to be quicker, easier, and usually cheaper for a Director to instigate. It is also possible for a limited company to enter a Voluntary Arrangement the same as an Individual director can for personal debts.
However, in many cases a Liquidation will offer a greater level of certainty for directors and result in greater levels of debts being written off. Additional independent information regarding company debts can be found by clicking here.
Other types of business with debts
Business debts for non-limited companies and traditional partnerships can be combined with personal debts.The mechanism used at Resolve Financial is an Individual Voluntary Arrangement.
For information and assistance these types of business click here.
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Your route to debt freedom starts with a confidential, no obligation and no cost assessment of your current financial position.
The exact process we use will largely depend on whether your debts are Personal Debts or Business Debts but the aim is the same, reduce your debt repayments to an affordable level, and give you a debt free future.