Debt options for companies
The business is in difficulty - what are the debt options for companies?
A limited company is a separate legal entity from its directors and shareholders.
A company is deemed to be insolvent when it is unable to pay its debts either as they fall due or where the value of its assets is less than the amount of its liabilities including contingent and prospective liabilities.
Directors owe a duty of care to the company, its shareholders and employee´s; and where there is doubt as to its insolvency, also to creditors.
Generally a director (or someone acting as a director) is not personally liable for the company´s debts. However you can be personably liable for the following:
- Your own personal PAYE and NI deductions which are unpaid
- Any unpaid income tax arising where you have taken cash drawings from the company
- Any personal guarantees given on behalf of the company, most commonly to banks, finance companies, landlords and occasionally major trade creditors
- Any liability arising as a result of trading whilst insolvent prior to the company ceasing trading and/or being put into liquidation. This is known as "wrongful trading"; any liability where you have benefited from a transaction at an undervalue and/or preference
- Any liability resulting from fraudulent trading
You will therefore need to be very careful when you are trading if there is any doubt as to the solvency of the company. It is important to get advice if you are in any doubt about this. Access Debt Solutions are experts in this field - for free confidential advise complete our business health check form or call us now on 0114 244 6200.
For further detail on the debt options for companies see:
Or for debt options for sole traders and partnerships click here.