A client of mine has been making a loss for the last 2 years and he has now decided to shut down the company to get rid of the debts. The wife then plans to start up a new company so they can try again?!?!!?! can anyone tell me what the implications would be please?
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Does the old co have any assets?
Was the wife a director or shadow director of the former company?
Get rid of the debts?
Is this a euphemism for leaving their creditors to go whistle for the money they are owed whilst they blithely carry on?
If the company has made a loss for two years then there is a good chance the balance sheet has been overdrawn for all that time. If that is so, then a creditor could try to lift the veil of incorporation by claiming wrongful trading. This means the director has continued to run the company when it is clearly no longer able to meet its debts and could make him personally liable.
By "try again" I am assuming you mean in the same business. Apart from a desire to evade their responsibilities to creditors, why can't they do that in this company? For that matter, if they have made losses for the last two years, how is that going to change in a new company? Are they not just going to run up more debts they don't wish to pay?
Unintended consequences
Beware of unintended consequences of closing down an insolvent company in order to evade creditors. Client needs an insolvency practitioner to advise.
The unintended consequences I was referring to were the potential for becoming personally liable for the company's unpaid debts, and a possible director's disqualification,