In every case we will explore options to make the liquidation of a company self-funding. If the company has no future and very little cash or assets, putting the company into liquidation BEFORE it runs out of cash and assets will help make the process easier.
This is often referred to as a “Phoenix” and many think this is illegal but in fact, carried out correctly; it is an effective means to preserve an insolvent company. A pre-pack sale is a process co-ordinated by the existing management of an insolvent company where the business and assets are sold at market value to a new or related company or to the existing directors, who then re-employ the existing staff and produces the same goods or services, often from the same premises.
Anyone undertaking the duties of liquidator (administrative receiver, administrator or supervisor of a corporate voluntary arrangement) must be a qualified insolvency practitioner (IP).
When the liquidator is appointed he assumes the role of the directors and their powers are transferred to him. He will carry out investigations and report to the Companies House Registrar, interview the directors of the company and recover money to repay creditors and if possible, shareholders and dismantle and deregister the company officially.
You are also entitled to claim these sums. However, in some instances, where a director is also the controlling shareholder, a claim may be challenged by the Department of Trade and Industry
Very often directors come to us having used the last of company’s funds to pay staff wages when in fact a legitimate claim can be made to the Redundancy Payments Office.
No. The Company is a separate legal entity and holds contracts with people or companies in its own right. Unless a director has acted outside of his authority, or has given personal guarantees, that director will not as a rule be liable for the debts of the Company.
Most will be fairly pragmatic about the whole thing as it’s unlikely that they will see much of a return of their debts. They are entitled to attend the creditors meeting but unless the conduct of the directors is shown to be fraudulent or neglectful of their fiduciary duties then they cannot take any further action.