Here is when you could be made personally liable in a liquidation
If you’re a director who has spent their Bounce Back Loan on living costs then watch this video.
Many ltd company directors slipped through the net of Government support and were not deemed eligible. This left thousands of people excluded from government support with bills and living costs still to pay.
Directors who used their Bounce Back Loan on things like mortgages, school fees, and general expenses are now starting to realize they have overdrawn director’s loan accounts and are being asked to pay the money back by an insolvency practitioner.
You were allowed to use the bounce back loan for salary but this needed to be paid through the PAYE scheme.
If you have not taken money through PAYE and have essentially used the business’s money as your own personal cash machine, be careful as you may be asked to pay the cash back.
If your company did not make a profit last year then you are not allowed to take a dividend. If you have continued to take dividends and then look to liquidate then there is a high chance that you will have an overdrawn directors loan account – This will be asked to be repaid after liquidation!
It’s critical that you understand exactly what your position is BEFORE you appoint an insolvency practitioner.
The earlier you take advice the more options are available to you.
Whatever you do, DON’T let the company bank account drain to zero so there is no money to pay creditors or an insolvency practitioner’s fees.
Justin Barker
I’m Justin Barker, the Managing Director at 1st Business Rescue. I have over 25 years of experience providing insolvency advice to business owners.
I understand how challenging it can be when dealing with financial difficulties within your business. It’s easy to ignore the problem and hope that it disappears, but this is often the worst thing you can do. Our dedicated team is here to provide honest, valuable advice to help UK directors deal with their personal situations in the most appropriate way.
No case or circumstance is the same, but I can guarantee that I am there to give you the best advice.
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