Many company directors are lured into believing that, because the company they direct is a separate legal entity, they are therefore immune to any potential claims upon the winding up of that company. This is not the case. It may be that the Liquidator the directors choose to use to facilitate the winding up of the company then, in fact, starts to pursue the directors themselves for any payments they feel the directors made that preferenced themselves over other company creditors. Hewetts have a great deal of experience in dealing with such claims and with defending directors against Liquidators. We are based in Reading but operate a national service.
For Initial Free Advice Call
Geoff Kew on 0118 955 9604 or Oliver Kew on 0118 955 9612
Liquidators have the power to look back over a significant period of the history of a company in order to try and determine whether, as the end of the company approached, the directors continued to perform their duties in the best interests of the company or instead began to prefer themselves over other company creditors. The Liquidators are then entitled to bring a personal action against the directors for the recovery of that money, as well as being obliged to make a report to Companies House, who may then consider whether or not there is justification to ban that director from acting as a director of another company in the future.
The Liquidators will look over the entire accounting history of the Company and will likely require the directors to explain any payment into their account over at least the last two years of the life of the company. As well as needing to prove that each payment was for a legitimate purpose, the director must also prove that such payment was not made as a preference to himself over other creditors of the company.
There are numerous ways attempt to defend claims by liquidators, and we can negotiate with them on your behalf, looking at:
We often see such claims levelled against directors where the director has operated a small company, but has chosen to mingle his own personal money with the money of the company, effectively using both accounts as ‘personal’ accounts. In such a situation, each and every transaction is required to be justified to the Liquidator, and this can of course be an incredibly large undertaking. In order to avoid this situation ever arising, it is always advised that directors keep both their personal and company money completely separate from each other at all times. However, if this has not occurred, Hewetts are more than happy to help in fighting a claim bought by a Liquidator.
We are also experienced in speaking with the Insolvency Service on any potential application they may be considering to ensure that the director is barred from acting as a director of a company in the future.
If a claim is being bought against you as a Director by a Liquidator then please contact us.