One of our contractors passed away suddenly and is owed a days pay. He traded as a limited company and was the sole director and shareholder. His son has asked us to pay into another bank account as the limited account has been frozen. I've said I can't do this, has anyone come across this? What do I do, just hold the money as a creditor?
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Sorry, yes, I didn't say what I meant. The debt remains owed to the company, the company forms part of the estate. The son, acting as executor, needs to get the company in order first, then you can pay the debt.
I would not, in your position, pay the debt directly to the son, at least not until he is in some official capacity acting for the company, ie appointed as a director. This will be necessary anyway if he is to either carry on the company or wind it up.
If it were me I would pay the money directly to the limited company right away, as per normal. You can then finalise matters at your end and leave the son to worry about getting the money out of the company.
Surely the executors can, as long as they control the shares, appoint a new director who can then have the account unfrozen.