Have you been asked to personally pay the costs of liquidating your company?

A day doesn’t go by without me seeing at least one instance of a director being asked by an insolvency practitioner to personally pay the costs of putting their company into creditors’ voluntary, ie insolvent, liquidation.

If this is you, here’s a few questions for you…

What’s the insolvency practitioner said about your responsibility for paying those costs?

Were all of your options explained to you?

The answer to these questions is typically ‘not a lot’ and ‘I don’t know’, all that was said is ‘a CVL is quicker and more convenient way for you to close down the company’.

It might be, it might not be, but let me ask you another question, and this is the knub…

Can you do something better with your money – typically £2,500, £3,000 or £5,000 – like finance your new business, pay down personal debt, or even take a well earned break – than pay an insolvency practitioner’s fees?

Of course you can, because whatever way you look at it, spending your hard earned money – and I’m even seeing directors who go into personal debt on credit card to pay such fees, even after losing their sole source of income – on dealing with a historic issue isn’t great value for money.  Yes, there are low cost alternatives to a formal insolvency process.

So why is this happening?  Why am I being told that CVL is the best option?

Well, there are 2 reasons.

Firstly, insolvency is a incredibly complicated and grey legal area, it’s ever so easy for an insolvency practitioner to say ‘a CVL is the right route for you’ without that statement really being put to the test.

Secondly, many insolvency firms depend on selling directors what I would argue are bad solutions to survive themselves – unless they pile small CVLs high and sell them cheap, the insolvency firm would itself be bust!

It is time for some uncomfortable truth...

There is nothing in the law that says any director has to use his/her own money to personally pay for the liquidation of their company.

Let’s repeat that so it hits home…

There is nothing in the law that says any director has to use his/her own money to personally pay for the liquidation of their company.

Find any such reference either in statute or case law and I’ll pay you £500.

You see the law only says you have to stop making the creditors’ position any worse.  In most instances you can do that by simply ceasing to trade.

But there’s a problem…

You still you need closure.  You need to close down the business and the company.

The secret that many IPs would like to keep from you is that can be achieved without you throwing your money down the drain.

Entrepreneurs’ Relief and a Solvent Liquidation can see you keeping 90% of the money in your business

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Entrepreneurs' Relief and a Solvent Liquidation can see you keeping 90% of the money in your business

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Haven Credit Union Final Administrator’s Report

To download a copy of my final progress report as administrator in the administration of Haven Credit Union, issued soon after the credit union went into liquidation, please click on the following link…

Final Progress Report of the Administrator of Haven Credit Union

If you have any problems downloading the report – give it some time to download as it is a large document! – email me at paul@midlandsbusinessrecovery.co.uk or call me on 01902 672323.

Regards

Paul Brindley

Liquidator of Haven Credit Union Limited

 

Haven Credit Union Final Administrator's Report

To download a copy of my final progress report as administrator in the administration of Haven Credit Union, issued soon after the credit union went into liquidation, please click on the following link…

Final Progress Report of the Administrator of Haven Credit Union

If you have any problems downloading the report – give it some time to download as it is a large document! – email me at paul@midlandsbusinessrecovery.co.uk or call me on 01902 672323.

Regards

Paul Brindley

Liquidator of Haven Credit Union Limited