Wrongful Trading - Do we disengage?
We have a construction client that due to various difficulties is now hopelessly insolvent.
Difficulties were first identified in early March and we have been attempting to help in various ways since that point (cash flow forecasts, attendance at meetings relating to contractor disputes and various other support).
It has now become clear (over the last week or so) that the company is now trading whilst insolvent with no real prospect of being able to trade out of it and it is my view that an insolvency practitioner needs to be approached without further delay and I have given this advice.
The MD is carrying on regardless with what appears to be no real care for suppliers. They are incurring further liabilities and I have also heard (second hand) that the company are still applying for credit accounts. It appears his plan is to maximise recoveries from contractors and start a new company. Any report on his conduct would certainly be adverse.
To make matters worse, the MD has now resigned his directorship and a appointed someone else as a 'puppet' director whilst still being in control of the company. County court letters are starting to land along with threats of winding up notices.
What do we do?
Do we simply disengage?
Do we have to report this?
It is only actually reading this back it has now dawned on me how bad this is and I am concerned how this may reflect on my firm.