Published: 07/02/2019 By Natalie Stone
As a director, do you know the risks of trading whilst insolvent and the laws surrounding the repayment of director’s loans?The Insolvency Service recently released a press release describing a recent case where a director was banned by the Court for 6 years as a result of continuing to accept client payments whilst knowing the business was insolvent. The Company began incurring losses and was placed into Creditors’ Voluntary Liquidation. During the course of the Liquidator’s investigations it was found that the company had continued to accept advanced payments from clients after the point where the company was deemed to be insolvent. At the same time, the director used these funds to repay a loan he had previously made to the company. In relation to this matter The Insolvency Service have said:
“Directors who favour themselves over the interests of their creditors when their company is in financial difficulty, as well as removing company funds for their own personal benefit leaving customers high and dry, are in clear breach of their directorship responsibilities.
This ban should serve as a warning to other directors tempted to help themselves before others that we have the necessary powers to investigate what has happened and seek to stop you from running a company for a significant amount of time.”
Therefore, if you think your Company may be at risk of trading whilst insolvent or if you are confused about repaying your director’s loan, take action NOW and call us on 020 8661 7878.