When a director contacts us for advice, it is nearly always because of the financial difficulties being experienced by their company.
However, we are often asked if we can also advise the director personally because he has built up personal debts with banks, loans, credit cards and household expenses because the company had not been able to pay his usual salary for some time.
We do provide advice and assistance to individuals, as well as companies and partnerships, and the personal finances of a director are not always totally separate from that of the company.
Directors have often guaranteed some of the company’s debts, particularly bank borrowings, and there may be a director’s loan account, and therefore our advice always takes into account how the director’s finances will be affected by what may be the best course of action for the company.
Our initial advice is provided free of charge and without any obligation whatsoever, so even if we are not advising you on your company’s financial position or, the company is already the subject of formal insolvency proceedings, why not take advantage of our extensive knowledge.
We are able to provide advice on your personal financial position as well as the matters that arise as a result of the company’s financial situation, as briefly mentioned below.
Directors Loan Accounts
When the director merely receives a salary or dividends there will be no balance on the directors’ loan account but there can be money owed to the director if they have invested money into the company or paid expenses on behalf of the company.
There can also be a debt owed to the company if the director has borrowed money from the company or the company has made payment of some of the director’s personal expenses.
We will always take this into account and provide advice on how he director’s loan account will be treated in the various options available to resolve the company’s financial difficulties.
Quite often a director will have guaranteed one or more of the company’s debts or ongoing financial commitments.
Guarantees may have been given to the company’s bankers, premises landlord or finance agreements for equipment and motor vehicles.
When we provide advice on the options that are available to resolve the company’s financial difficulties, we will advise on how it will affect the director that has given the personal guarantee and how this could be handled.
When the company cannot afford to make the final payment to employees for their unpaid wages and holiday pay, the Government will make the payment and then make a claim against the company.
The employees will also usually receive a payment in lieu of any notice period they should have been given and redundancy pay if they have been employed long enough.
Claims from directors are not always as straight forward nor as readily accepted in the same way as claims from employees.
Directors are nearly always the longest serving employee, unless they were appointed more recently, and therefore can have substantial claims for redundancy.
Even if we did not deal with the insolvency of your company, we can provide you with advice and assistance to progress your claim.