Insolvency and corporate recovery
To contact us and ask for our services click here
|
Going bust ! When an individual or a business is unable to pay its debts
– or in common parlance when it goes bust, there is a very complex area of
law to deal with the problem. The problems can also be quite different from the
perspective of the person who goes ‘bust’ ( the debtor) and the persons who
are owed money ( the creditors).
Creditors can include employees, suppliers, the tax authorities and
banks and other lenders. The interests and concerns of the debtors and the
creditors are often in conflict. Both parties have rights and obligations,
and sometimes there has to be give and take on both sides to achieve the best
result for all concerned. Often different creditors have different rights,
and these can sometimes be in conflict with each other. There can be many different situations. The problem may be caused through simple bad luck – say
an unforeseen accident. It may be caused through bad management and
incompetence. It may be caused by dishonesty. The situation may be terminal and beyond redemption. On
the other hand, it may be that there is a core business that can be helped to
survive if a particular problem can be surmounted. The law has developed to cover all these
different possibilities. Firstly, the law seeks to apportion blame if there is
blame, or to establish whether nobody is to blame. If there is wrongdoing
there are mechanisms in place to punish the wrongdoer. Secondly, the law seeks to protect the innocent,
usually the creditors who stand to lose money owed by the business. Thirdly, the law provides methods by which survival can
be achieved even in the most difficult circumstances. The law is complex and continually evolving. Anybody
involved with any aspect, whether as a debtor or a creditor needs to act very
carefully and under professional advice if they are to protect their own
interests and those of others. Major changes in the law were made by Parliament in the
Enterprise Act 2002. These changes are being brought into operation over a
period, and the law that might apply to a particular situation may be the old
law or the new law, depending on the circumstances. Peter Brown and
Co are able to assist and advise both debtors and creditors as to their
rights and responsibilities. Because of the obvious conflict we could never act
for both a debtor and creditor in the relation to the same insolvency. The sections below contain
links to some of the specific services that Peter Brown & Co is able to
offer . |
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
To contact us and ask for our services click here
|
If you or your
company owe money it is vital that you know both your rights and your duties.
If a business or
an individual is in difficulty, the law has very specific requirements relating to the behaviour it expects from
debtors. They must be careful about the nature of the transactions they enter
into, and they must be able to explain their actions to the authorities.
Proper professional advice is necessary in order that your actions are not
open to criticism. On the other
hand, debtors have rights. They must be dealt with fairly and according to
strict procedures. And some of their property is not available to meet the
claims of their creditors. Again, proper advice is essential. The first port
of call might be the Citizens’ Advice Bureau whose services are free of
charge, but for more complicated cases professional advice can be helpful See also :-
|
To contact us
and ask for our services click here
|
If an individual
debtor (not a limited company) goes ‘bust’, then the assets of the debtor
pass under the control of the court. The Court , or the creditors,appoint a trustee
in bankruptcy, whose duty it is to dispose of all the assets for the highest
sum possible, and pay what he receives to the creditors, after deducting fees
and costs. The debtor (or
bankrupt) has very specific duties to co-operate with the trustee, but also
has rights against the trustee, particularly with regard to a family home . Advice can often
be desirable for a bankrupt, and the first port of call might be the
Citizens’ Advice Bureau whose services are free of charge, but for more
complicated cases professional advice can be helpful.
|
To contact us
and ask for our services click here
|
Liquidation is
when an insolvent company is ‘terminally ill’. This compares with a receivership
or administration, where the company is ‘in intensive care’ and may
recover. If a limited
company goes ‘bust’, by going into liquidation, then the assets of the
company pass under the control of the court, if it is a ‘Compulsory
Liquidation’ . If it is a ‘Voluntary Liquidation’ the assets fall under the
control of the creditors. The Court or creditors appoint a liquidator, whose
duty it is to dispose of all the assets for the highest sum possible, and pay
what he receives to the creditors, after deducting fees and costs. A
liquidator in a voluntary liquidation also has duties of investigation into
the affairs of the company to see if there has been any wrongdoing. The directors of
the company have very specific duties to co-operate with the liquidator, who
has, under certain circumstances, the right to apply to the court to make the
directors personally liable for the debts of the company.. Advice can often
be necessary for a director of a
company, and the first port of call might be the Citizens’ Advice Bureau
whose services are free of charge, but for more complicated cases
professional advice can be helpful
|
To contact us
and ask for our services click here
|
Liquidation is
when an insolvent company is ‘terminally ill’. This compares with a receivership
or administration, where the company is ‘in intensive care’ and may
recover. If a limited
company goes into ‘Administration’ , the control of the company transfers to
an Administrator appointed by the Court or by the creditors. An Administrator’s
duty is to effect a better disposal of assets than would be the case in a
liquidation, or to attempt to secure the survival of the underlying business
as a going concern, or to come to some arrangement with the creditors. For a business
that has hit troubled times, the appointment of an administrator may not
necessarily be a bad thing. It may provide the breathing space to allow a
business to recover. On the other hand, if the administrator is not
successful, the company may eventually go into liquidation. If you are a
creditor who is owed money by a company that goes into administration, you
may need professional advice about your position, your rights to recover
money or goods, and what you are entitled to expect from the administrator.
|
|
A bankrupt must fully disclose his or her affairs
to the trustee. He or she must keep the trustee informed about his sources of
income , even after becoming bankrupt. He must assist the trustee and the
Official Receiver with their enquiries in the past history. He or she cannot
incur credit, except for very small amounts (currently under £250) without
disclosing the bankruptcy. This will include such items as household expenses
such as electricity bills. There are a number of restrictions on what the
bankrupt can and cannot do. On the other hand, the bankrupt may have
rights in any pension funds, and under new legislation may have rights in a
matrimonial home. A bankrupt has the right to keep the basic tools of his
trade, without them being seized by his trustee. They must be dealt with fairly and
according to strict procedures. Proper advice is essential. The first port of
call might be the Citizens’ Advice Bureau whose services are free of charge,
but for more complicated cases professional advice can be helpful
|
|
An individual becomes insolvent when he or
she is unable to meet his debts as they fall due, or when liabilities
exceed assets. Many individual in such circumstances struggle on, living from
hand to mouth. This is unwise, because not only may they be breaking the
criminal law by so doing, but the stress and pressure of living under the
burden of a mountain of debt is good neither for the health of the individual
or his or hers personal relationships. The law has developed over the last few
centuries in a way that both protects creditors from dishonest debtors, but
on the other hand gives a way out that will enable the debtor to reconstruct
his life. In the past, there was extreme stigma attached to bankruptcy, but
the climate is changing as it is recognised that many individuals do not
arrive at the position as a result of blameworthy actions, but rather through
force of circumstances. The Enterprise Act 2002 has continued that
trend. To individuals with debt problems there are
effectively three routes they may choose to follow . The first is an informal agreement with his
creditors. This is an area that a Citizens’ Advice Bureau is well placed to
deal with, free of charge. This is recommended as the first port of call. After that , an individual voluntary
arrangement might be considered . This is a formal agreement with creditors
sanctioned by the court. It very much
depends on the circumstances whether
this is the appropriate way forward. The third step is the more drastic one of
bankruptcy. It is in these last two areas that
professional help can be of assistance.
To contact us and ask for our services click here |
To contact us and ask for our services click here
|
Companies do not go bankrupt – that is a
legal term in the UK that is applied only to individuals. A company can be liquidated – which means
it ceases to exist, and the liquidator is a professional who is similar to an
undertaker. A company can go into administration or
receivership, which is more akin to somebody going into intensive care. There
is always a possibility that a company in administration or receivership can
rise from the ashes. Administration is a process that attempts
to save the worthwhile parts of a business that has fallen into dififculties. The law relating to companies that are in
financial difficulties is complex and there can be criminal sanctions if the
directors of such a company do not take the correct steps. Professional advice is essential. |
To contact us and ask for our services click here
|
Receivership is a situation where a secured
creditor, such as a bank, has rights to enforce his security. The law relating to companies that are in
financial difficulties is complex and there can be criminal sanctions if the
directors of such a company do not take the correct steps. Professional advice is essential. |
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
The rights of spouses of bankrupts
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
The rights and obligations of creditors
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
Insolvency offences and penalties
To contact us and ask for our services click here
|
This section is being updated – please
return shortly |
The creditor’s perspective ( ie if somebody owes you money)
To contact us and ask for our services click here
|
If you are owed money, then professional
advice can help to guide you through the legal minefield and even if it does
not get your money back, it may help bring to account those whose perhaps
reckless or criminal activities have caused your losses. |
The duties and responsibilities of directors of insolvent
companies
To contact us and ask for our services click here
|
The directors of
a company that is insolvent can, in certain circumstances, go to prison.
Their prime duty is to the creditors of their company and to the comopany
itself. It is vital that
every decision taken by a director of an insolvent company is the correct
decision, and the law gives such directors specific protection if they have
sought proper professional advice and have acted on that advice. Professional
advice in these situations is almost like an insurance policy. |
The
statutory demand
– a cheaper alternative for
collection of undisputed debts
To contact us and ask for our services click here
|
Statutory demands
are a process allowed for under the Insolvency Act. They may be issued
against individuals or against companies, with slight differences in
procedures for the two types of entities. Statutory demands can only be used
if the debt is undisputed. If there is a bona fide dispute, then the normal
methods of debt collection should be used. In essence, if a
form demanding payment is left at the residential or trading address of an
individual or at the registered office of a limited company, the debtor has
21 days in which either to pay the debt or to come to a binding agreement
with the creditor on how the liability should be met. Any binding arrangement must be to the
satisfaction of the creditor. The debtor may apply to the Court within 18
days to have the demand set aside on technical grounds or on the basis that
there is no undisputed debt in excess of £750. If application to
the Court to have the statutory demand set aside is not made within 18 days,
or if the debt is unpaid within 21 days, then the creditor has the right to
present a bankruptcy petition to the court and to apply for a bankruptcy
order in the case of individuals or a winding up order in the case of
companies. Usually the individual or company will have no defence to those
proceedings, and it will result in the automatic bankruptcy or liquidation. Issuing a
statutory demand must be done carefully and precisely to meet the legal
requirements, but it is a very low cost method of ensuring a debt is paid. Peter Brown &
Co offer a service that enables a statutory demand to be issued from as
little as £30 , with any further work after the issuing of the demand being
charged for on a time basis. Very often there is little further work to be
done after the demand is issues, as most debtors pay up immediately upon
receipt of a demand. Anybody receiving
a statutory demand should always seek immediate professional advice,
and Peter Brown & Co would be able to advise. |
Peter Brown & Co is a trading name of Undershot Ltd, registered
in England , no 4114468. Director :-
P.Brown FCCA, FCIE,DchA,BSc.The registered office is Acomb Grange,
Grange Lane, York, YO23 3QZ.
Last modified