We were approached by a director who feared that his company was facing financial difficulties. We advised him in relation to his duties as a director, namely that under normal circumstances a director should act in the best interests of the company, its members and employees. However, when a director becomes aware that the company is heading towards insolvency or is insolvent, then he is under a duty to protect and act in the best interests of the creditors. We also advised him on issues concerning wrongful and fraudulent trading. We then put him in touch with an Insolvency Practitioner who was able to advise him on his options and the company was placed into liquidation.
We were approached by a director of a company who had received a winding up petition that had been issued by one of their creditors. We provided detailed advice concerning the implications for the directors and the company if it was wound up. Through our discussions, it became apparent that in order to preserve goodwill and maximise the potential for realisations, the company should probably be placed into Administration, rather than Liquidation. We therefore put the directors in touch with an Insolvency Practitioner who agreed with our analysis and an application was made for an Administration order.
We were approached by the director of an insolvent company who had been advised elsewhere that he could put his company into liquidation, set up a new company with the same name, and carry on trading. We advised him that there was a general prohibition on the re-use of company names by former directors of a company in liquidation and that acting in breach of the prohibition was not only a criminal offence, but the directors of the new company could become personally liable for the debts of the new company. We advised the director on the various exceptions to the general prohibition and assisted him in complying with the relevant rules. He was then able to act as a director of the new company without fear of prosecution or personal liability.