creditors voluntary liquidation
Many people experience cash flow issues or creditor pressure when operating a limited company. It is essential you understand when these events put you into an insolvent position, if you fail to act responsibly in these circumstances and continue to trade whilst insolvent, you could be breaking the law and this may result in the directors becoming personally liable for the debts incurred.
If you have tax liabilities or debts which you are unable to settle when they fall due, then you could be in this situation.
Corporate debt can be managed in a number of ways and if tackled in a timely way it remains distinct from the directors.
We are able to provide practical advice detailing the options you have available. If you are unable to trade out of the positon we can instigate and manage a Creditors Voluntary Liquidation which allows a company to be closed in a professional and official manner without leaving any enforcement action or unwanted commitments hanging around that are common among companies that are not formally closed down through a company liquidation procedure.
The most important point to remember is that a limited company exists in the eyes of the law independently to that of its company directors or shareholders. A limited company is referred to as having a separate legal entity.
Crucially this means that a limited company can own assets, be owed money and perhaps most importantly owe money independently of its shareholders and directors. So the law allows for a company to be closed down even if it is insolvent.
What this means is that in generality a company director or shareholder will not be personally liable for the money that is owed by the company unless they have specifically personally guaranteed any element of the money owed by the company.
If you are experiencing cashflow issues and cannot pay your tax liabilities or any other liability when it falls due, you should call us as soon as possible to ensure the best results, not only for the board and shareholders, but also for your creditors.
We have Chartered Accountants in Essex and Chartered Accountants in Canary wharf waiting to take your call. Contact us for a free appointment and resolve your debt issue by Christmas!
