Is bankruptcy the right option for me as director of LTD company?

[debtinfo]

This is what you need to read, it explains how doing what toddle is suggesting is unlawful and what the conseuences can be, It is mainly aimed at people that have been given a disqualification order but applies equally to persons disqualified for the reason of bankruptcy.

 

http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/i-am-a-director#2

[alongroadahead]

ok, forgive my lack of knowledge in this area hence seeking advice on here, please bear with me, as its paramount that i understand possible consequences of my action based on decisions i make and the very last thing i want to do is do anything illegal! so let say i have either scenario, what are the consequences for each:

 

a) a creditor has made me aware that they

intend to apply to make me BR, so i re-appoint a new director....

 

b) i feel i need to make myself BR and appoint new director prior to making an application.....

 

c) i am not informed by a creditor they plan to make me BR nor do i have intentions at this point to do it myself and enter into alternative negotiations to deal with the debt but during this time, i appoint new director due to ill health etc.....

[debtinfo]

both thr first two are the same, what matters is what you do during the bankruptcy as that is when you are disqualified, the restriction is specifically designed so that you cant have the protection of limited company status whilst you are bankrupt, you seem to be trying to circumvent this.

 

did you read the link i posted

 

this is the main point from it

 

What am I not allowed to do?

While the order or undertaking is in force, it stops you acting as if you were a director. So you cannot avoid the order or undertaking by simply changing your job description.

 

The order or undertaking also means that you must not get other people to manage a company under your instructions.

[BazzaS]

If I'm reading this correctly, the 2 main things the OP desires are: a) access to the PDQ machine to process payments, and b) the unique name of the company.

 

If the OP doesn't mind being an employee of the company, and at 'the mercy' of any new director / shareholders, then there should be nothing stopping the OP using the company's PDQ terminal as an employee, to generate cash flow for the company, as long as it is as an employee, and not as a 'shadow director'. The new director must be that - directing the company, not a figurehead for the OP "directing in the background".

 

If the (unique?) company name is of value, and the OP isn't a 'shadow director', would this raise queries as to if the is was a 'shadow directorship' if the company was just handed back, free and gratis, once the OP's bankruptcy (if it proceeds) is discharged?. How could the OP avoid the appearance of a shadow directorship, whilst working for the company as an employee, beyond showing that they (and the company) are managed by the new director, rather than the OP doing the management?. New director showing management, OP showing employee status, and need there be an exchange of consideration when the new Director resigns after (re)appointing the OP?.

 

I'm not advocating a shadow directorship, nor how to conceal one ; I'm advocating the very opposite, if there is a way the OP can get employment and comply with the law, and show his/her intent to comply with the law.

 

Given the company sounds as if it is in perilous finances (no assets), if the OP went ahead as described and the company failed, and it was then alleged that the OP was in fact a shadow director, would they become liable PERSONALLY for any company debts? and, if so, would any such debts not be cleared off as part of the original bankruptcy (possibly then prevent the bankruptcy being discharged at a year)?.

 

I'm not an expert, so this may be a false fear, but it is clear the OP is looking at options, doesn't want to commit unlawful acts, and wants to understand the implications of the options before choosing.

[alongroadahead]

I can see both bazzaS and debt info point of view, but is it not about my "intentions" at every stage of the process? I am not wanting to decieve nor avoid "assets" as the company has none but i merely am facing to complication of closing the LTD Co down pre-BR (which is simple as it has not debts!) but the hurdle i have is setting up as sole trader the following week and declaring i am in BR and not being able to get a card merchant account.....

[alongroadahead]

both thr first two are the same, what matters is what you do during the bankruptcy as that is when you are disqualified, the restriction is specifically designed so that you cant have the protection of limited company status whilst you are bankrupt, you seem to be trying to circumvent this.

 

did you read the link i posted

 

this is the main point from it

 

What am I not allowed to do?

While the order or undertaking is in force, it stops you acting as if you were a director. So you cannot avoid the order or undertaking by simply changing your job description.

 

The order or undertaking also means that you must not get other people to manage a company under your instructions.

 

I did, but would suggestion "C" not be perfectly legal and the most responsible action due to the circumstance? (if only i had a crystal ball to end this dilemma).....

[alongroadahead]

If I'm reading this correctly, the 2 main things the OP desires are: a) access to the PDQ machine to process payments, and b) the unique name of the company.

 

If the OP doesn't mind being an employee of the company, and at 'the mercy' of any new director / shareholders, then there should be nothing stopping the OP using the company's PDQ terminal as an employee, to generate cash flow for the company, as long as it is as an employee, and not as a 'shadow director'. The new director must be that - directing the company, not a figurehead for the OP "directing in the background".

 

If the (unique?) company name is of value, and the OP isn't a 'shadow director', would this raise queries as to if the is was a 'shadow directorship' if the company was just handed back, free and gratis, once the OP's bankruptcy (if it proceeds) is discharged?. How could the OP avoid the appearance of a shadow directorship, whilst working for the company as an employee, beyond showing that they (and the company) are managed by the new director, rather than the OP doing the management?. New director showing management, OP showing employee status, and need there be an exchange of consideration when the new Director resigns after (re)appointing the OP?.

 

I'm not advocating a shadow directorship, nor how to conceal one ; I'm advocating the very opposite, if there is a way the OP can get employment and comply with the law, and show his/her intent to comply with the law.

 

Given the company sounds as if it is in perilous finances (no assets), if the OP went ahead as described and the company failed, and it was then alleged that the OP was in fact a shadow director, would they become liable PERSONALLY for any company debts? and, if so, would any such debts not be cleared off as part of the original bankruptcy (possibly then prevent the bankruptcy being discharged at a year)?.

 

I'm not an expert, so this may be a false fear, but it is clear the OP is looking at options, doesn't want to commit unlawful acts, and wants to understand the implications of the options before choosing.

 

yes, thats right....... if i was appointed as a "sales representative" for the Co, i would need to process card payments on a self-employed basis in order to recieve my commission......

[debtinfo]

but simply giving it over on the expectation that they will give it back after a year is exerting control over the company,

 

ypu deciding what job role you are going to be assigned during the bankruptcy is exerting cotrol over the company,

 

would you be happy if the new director decided that you should just scrub the toilets, as he feels that is your best role

 

what would you do if the new director just decided not to employ you and take the name and business contacts for himself

 

if you have any control to stop that happening then you are exerting control over the company

[alongroadahead]

but simply giving it over on the expectation that they will give it back after a year is exerting control over the company,

 

ypu deciding what job role you are going to be assigned during the bankruptcy is exerting cotrol over the company,

 

would you be happy if the new director decided that you should just scrub the toilets, as he feels that is your best role

 

what would you do if the new director just decided not to employ you and take the name and business contacts for himself

 

if you have any control to stop that happening then you are exerting control over the company

 

i trust that would not happen with who i finally decide, family or close friend and i would have a contract for my designated job, im confident with that side of things.

[alongroadahead]

Just a thought.....if I were to close the Ltd Co when a creditor was about to apply to make me BR or I apply, is that unlawful? And if during BR would i have to inform IR if i become sole trader? if yes, would the OR take any of my earnings for creditors during and after discharge?

[toddle2u]

Answers in red below

 

Just a thought.....if I were to close the Ltd Co when a creditor was about to apply to make me BR or I apply, is that unlawful? No as you are unable to be a Director when BR.

And if during BR would i have to inform IR if i become sole trader? Yes if yes, would the OR take any of my earnings for creditors during and after discharge? Would depend upon your surplus income in regards to Income and Expenditure

[alongroadahead]

can the OR have a financial interest in the LTD Co if there is a new director pre-BR?

 

I gut tells me to go with the sole trader route as i do not want to do anything wrong but sole trader is just as compliacted as to declaring to creditors that i would be BR and then getting refused a card merchant account! Grr........very frustrating

 

am i completely discharged from ALL creditors after BR? Or would my income still be OR interest?

[debtinfo]

The OR assesses your income and expenditure, if you have a surplus you may have to pay that in for up to 3 years

[alongroadahead]

The OR assesses your income and expenditure, if you have a surplus you may have to pay that in for up to 3 years

 

I see....Im contemplating is BR is worth it then! If i'm forced by a creditor then i wil have no choice but to upset the apple cart with change within the company....either way i am going to end up with bad credit. do i have better chance with creditors/mortgage application few years after BR? Because at the mo i sure dont stand a chance in hell (nor if i dont got BR!)

[toddle2u]

can the OR have a financial interest in the LTD Co if there is a new director pre-BR?

It's nothing to do with the Director it is who is the shareholder as it is the shareholders who own the company. If you have shares in the company at daye of BR the OR will have the benefit of these.

.either way i am going to end up with bad credit. do i have better chance with creditors/mortgage application few years after BR? Because at the mo i sure dont stand a chance in hell (nor if i dont got BR!)

 

if you have defaults on your credit file at the moment you are going to struggle to get a mortgage or credit card. Defaults stay on your credit file for 6 years from the date of first being registered. If you go BR you would probably be able to look at getting a mortgage about 3 years after discharge but expect to pay higher rates and have fewer options available to you. I know people who have got credit cards after 3 months of being discharged (why?!) with people like Vanquis.

[alongroadahead]

i see, but the shares are worthless as company at a loss, so why worth taking them? atleast if i kept as director and made profit during BR they could have it for creditors or if still loss then i have gained nothing? or is it not that simple?

[debtinfo]

They dont take them as such in the way you are thinking, by law they automatically transfer over to the trustee with no effort involved

[alongroadahead]

They dont take them as such in the way you are thinking, by law they automatically transfer over to the trustee with no effort involved

 

oh ok! I am swaying towards the sole trader route to be honest because the other way could be percieved as illegal or wrong and i do not know who i can appoint anyway, i am making a few enquiries to card merchant companies (including existing one) to see if they offer accounts to sole traders in BR...await there reply.

 

I have a few questions though:

 

1. To be a sole trader, would i do it the day after i file for BR? If so, do i have to inform OR?

2.would i have a basic current account to be a sold trader? (not a business one right!), can you run card merchant transactions through non-business accounts?

3. what banks would give me an account being in BR?

4.will the OR close down my personal bank account i have already prior to BR? If so, could i clear it of small money then close it prior myself?

5. do i go to my local court with the BR papers and its done on the day? and is that classed as the official BR day? then i can be sole trader next day?

 

and thanks again to both debtinfo and toddle2 for all your effort and taking your time ito clarify everything with me....

[toddle2u]

1. To be a sole trader, would i do it the day after i file for BR? If so, do i have to inform OR? Yes and yes. You need to inform the OR of a change in circumstances

2.would i have a basic current account to be a sold trader? (not a business one right!), can you run card merchant transactions through non-business accounts? You are not supposed to run a business through a personal bank account but lots of people do. You would struggle to get a business bank account whilst BR and if this is the desiginated bank account the merchant account transfers the money to they will just transfer the funds as instructed.

3. what banks would give me an account being in BR? You can try Natwest, Co-Op and Barclays

4.will the OR close down my personal bank account i have already prior to BR? If so, could i clear it of small money then close it prior myself? If it's just a basic bank account with no credit facility they will just normally temporarily freeze it and then let you keep it. However, even though the OR may say you can keep it the bank themselves may close it once they are informed you are BR. Best bet is to set up a parachute account with one of the banks in point 3.

5. do i go to my local court with the BR papers and its done on the day? and is that classed as the official BR day? then i can be sole trader next day? Depends on the Court. Some you can do it on the day others you have to ring and make an appointment. Speak to your local Court. The date of the appointment will be the one that you are made BR (barring an unforeseen problems with the Petition

 

i am making a few enquiries to card merchant companies (including existing one) to see if they offer accounts to sole traders in BR...await there reply.

 

Not a hope in hell of getting one in these circumstances.

[alongroadahead]

thanks for that. The only problem i am facing is card merchant services for a PDQ, so if i change to sole trader i cant get one but if i stay as ltd co with new director i can keep the ne i got,right?

[alongroadahead]

Hi,

 

Can anyone recommend a business account bank and a card merchant service for a sole trader during bankruptcy?

[BazzaS]

thanks for that. The only problem i am facing is card merchant services for a PDQ, so if i change to sole trader i cant get one but if i stay as ltd co with new director i can keep the ne i got,right?

 

The company can keep the one the company has.

The company's director can allow you to use it as a company employee, with sales processed on behalf of the company.

You can't keep the current one as it belongs to the company, but the company may allow you to keep / use it for the company.

[alongroadahead]

so if i find a card merchant as sole trader in BR, can i get them to pay into personal account? as i realise i cant have bus acc as sole trader in BR!

[alongroadahead]

Bump Bump

[alongroadahead]

If i file for Bankruptcy and i am the registered owner of a car but not the legal owner, can the OR take this as assets?