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Business Recovery & Insolvency
CREDITORS VOLUNTARY LIQUIDATION
During the twilight
period directors are potentially at risk of incurring personal
liability through the provisions of the Insolvency act 1986.
This, together with the general fiduciary duties directors owe
to a company, is usually the catalyst for the directors to make
the decision to place the company into Creditors Voluntary Liquidation.
Directors are urged to seek advice quickly to determine the
best course of action for them. If a liquidation is considered
the most appropriate way forward we will assist in every way
possible to ensure the directors are aware of their responsibilities,
understand the implications and timing of the liquidation, and
guide them through the legislation to ensure it is conducted
in the interests of all parties.
Maximising the value of the company’s assets and distributing
the cash to creditors is a complex area. Our specialists in
insolvency and corporate recovery have extensive experience
to achieve the right results
For more information or to arrange
your initial FREE consultation please telephone Mark Botwood
on (01902) 393007.
QUESTIONS
How does the liquidation affect a secured
creditor?
If you hold a mortgage, charge or other form of security properly
registered at Companies House then you enjoy secured status
during the liquidation. This enables you to take hold and realise
those assets secured by way of fixed charge, subject to the
conditions of your security document. If after realising those
assets your indebtedness is not paid in full or if you do not
hold a fixed charge then you have the right to payment out of
assets you have secured by way of floating charge subject to
prior payment of the preferential creditors and certain liquidation
costs and expenses. If any balance remains then you have a right
to claim as an unsecured creditor.
Can I reclaim my goods under
retention of title?
Yes provided your retention of title clause is valid. The liquidator
has a duty to realise the company’s assets for the benefit
of the general body of creditors and therefore will not allow
you to remove goods supplied until he is satisfied that your
claim is valid. The liqudiator will ask you to supply contractual
evidence of your retention of title.
I’m an unsecured creditor.
Where do I stand?
As an unsecured creditor you have a right to submit a proof
of debt to claim for your indebtedness together with interest
up to the date of liquidation provided you have a contractual
right or have given appropriate notice. The liquidator will
adjudicate your claim and submit it into the liquidation for
dividend purposes to rank equally with other unsecured creditors.
Are the directors personally
liable for the company’s debts?
Generally speaking no, unless the directors have personally
guaranteed individual debts or are found to be in breach of
their duties as directors or have undertaken acts which are
in breach of the various provisions of the Insolvency act 1986
e.g. wrongful trading, fraudulent trading, amongst others.
How long can a director be disqualified
for?
The period of disqualification is subject to the discretion
of the court taking into account the directors own degree of
responsibility subject to a minimum period of two years, where
the disqualification is based on unfitness of the director,
and a maximum of 15 years. The court may also give consideration
of mitigating factors for instance a person’s good reputation,
age, health and whether others influenced him.
Please select an area you are interested
in from the list below.
To find out more, please explore
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