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.
Any questions let me know.
All the best,
Chris
I'm Chris Worden, Managing Director at 1st Business Rescue. With over 7 years of experience, I help UK directors navigate the complex world of UK corporate insolvency. We offer free and independent advice to UK directors and advise them about what options may be available to them if their limited company starts to struggle.
I am passionate about helping other directors overcome their business challenges and get back on their feet, as I was once in the same position as them. I had a business that became insolvent, and the advice out there was confusing and overwhelming. I am here to provide honest and valuable advice to UK directors.
I am proud to say that we are one of the only 5-star corporate insolvency companies on Trustpilot with hundreds of 5-star reviews, and we publish videos weekly on our YouTube channel. Our channel is designed to educate UK directors about insolvency and debt advice. Check it out here:
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