The Company has received a Statutory Demand. As a Director what should I do?

Seek professional advice immediately. An unpaid Statutory Demand is deemed to be primary evidence of the insolvency of the Company and can lead to the issuing of a Winding-Up Petition. Even if you can pay the Demand and especially if you cannot, professional advice should be sought as there are plenty of issues, when the Company is in an insolvent situation, of which the Directors should be made aware including prospective personal liability.

The Company is in financial difficulties. What procedures or assistance other than Liquidation are available?

Businesses may be rescued without the requirement for any formal insolvency procedures. It may be possible to arrange a Scheme for the restructuring or refinancing of the company with the agreement of creditors including making agreements with the Company's Bankers, Asset Financiers, Crown Creditors and Factors. The degree of complexity required for these Schemes will depend upon the circumstances prevailing at the time.

Company Voluntary Arrangement - This may also permit the reorganisation and restructuring of corporate debt and can allow a Company to continue trading whilst maintaining a structured repayment plan with its creditors. The procedure may also allow the Company to compromise its debts.

Administration - This is a Court driven procedure that provides a moratorium against action by Creditors. The purposes for an Administration must be the survival of the Company and the whole or part of its undertaking as a going concern; or the approval of a Company Voluntary Arrangement or a Scheme of Arrangement; or a more advantageous realisation of assets than would be achieved in a Winding-Up.

Receivership - The appointment of an Administrative Receiver may also permit the continuance of trade, the restructuring of the business and potentially the sale of the business assets and undertaking.

As a Director can I become personally liable for the debts of the Company?

If the Company goes into insolvent Liquidation and you are found guilty of wrongful trading, fraudulent trading or the misapplication of Company funds you may be required to make payment. Even actions undertaken in good faith or honestly may still lead to a director being guilty. It is extremely important to take professional advice as to when, and if, the Company should stop trading or when by continuing you may become personally liable.

If you have guaranteed any of the Company's debts it is likely that once the Company cannot pay, the creditor will demand payment from you under the terms of the Guarantee.

Although you may not actually become personally liable for certain transactions entered into before a formal insolvency you may become guilty of an 'Insolvency Offence' which may lead to legal action or possibly may form the basis of a Director Disqualification application. Such offences are:-

I am a Director of a Company that has gone into Liquidation, can I still be a Director of other companies? Can those companies purchase the assets of the Company in Liquidation?

You can act as a Director of another company provided that you are not the subject of a Disqualification Order or are an undischarged Bankrupt. In either of these cases the individual must obtain the permission of the Court to act as a Director or to be concerned in the promotion, formation or management of a company.

You are not permitted to be a Director of another company or be involved in a business which has or uses a name so similar to the Company in Liquidation that it suggests an association. This may also include restriction on logos and business trading styles. The restriction applies for five years after liquidation and applies if you were a Director (or shadow director) of the failed Company in the twelve months prior to Liquidation. The restriction does not apply if the other company had actively traded with that name during the twelve-month period prior to liquidation of the Company in question.

It is possible to make an application to Court for permission to use the restricted name or to gain exemption from these provisions if the business name was purchased with the other business assets from either a Liquidator or Administrative Receiver and the appropriate notice of the intended use of the name has been given within the prescribed time to creditors.

It is possible for companies associated with former directors or the directors, themselves, to purchase assets from the Liquidator.

What are JWD Associates' charges?

Each case presents a different set of circumstances. It is important that you obtain professional advice on all options available to the Company and advice on the duties and obligations of a Director. Some procedures may be charged on a fixed fee basis whilst for others an hourly rate is more appropriate.

JWD Associates will meet with you initially FREE OF CHARGE and once the facts and requirements of your case are established will provide you with a clear indication of the costs involved.