company loss, Can he start again??

company loss, Can he start again??

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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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By Manraj Mand
10th Dec 2013 15:15

Does the old co have any assets?

Was the wife a director or shadow director of the former company?

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Stepurhan
By stepurhan
10th Dec 2013 15:23

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?

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By johngroganjga
10th Dec 2013 15:24

Unintended consequences

Beware of unintended consequences of closing down an insolvent company in order to evade creditors.  Client needs an insolvency practitioner to advise.

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By Manraj Mand
10th Dec 2013 15:36

More info

Evidentially we need more information before any one can advise.

 

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By Dawnmacca
15th Jan 2014 12:46

Hi.The company has minimal assets and no the wife was never a director. yes trying again in the same company and although morally wrong I need reasons to why they shouldn't do this rather than me just saying " just because "  What would be the unintended consequence s of closing down an insolvent company in order to evade creditors  Johngroganjga?? ( as this is unfortunately what he is doing )     I think an insolvency practitioner may be needed but any further help would be appreciated.. Thank you

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By johngroganjga
15th Jan 2014 12:54

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,

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By Dawnmacca
16th Jan 2014 11:04

Thank You very much for your help.  I think I need to get  an insolvency practitioner involved so as to avoid these consequences. thanks 

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