At PBC we regularly hear directors express their fear of being disqualified, held liable for wrongful trading or even believing they may face going to prison!  Admittedly, they are the most serious cases where these events happen, but it remains a minority when considered against overall insolvency numbers. 

Advisors and other businesspeople, alike, often ask us what are the current trends that cause a company to experience difficulties.  Over the past 18 months, or so, insolvency practitioners across the country have seen some general patterns, including:

• Cashflow difficulties, resulting from cancelled orders to enhanced employment rights, material and other general operational costs increasing.

• An increase in HMRC enforcement activity.

• Directors taking drawings as opposed to salary, creating an adverse director loan.

• Company assets are disposed of or transferred away, often at an undervalue or in the hope of putting them beyond the reach of creditors.

The PBC Team acknowledge that first call to seek guidance can be very difficult.  We appreciate that difficulty and respect every director who takes that first step.  Many directors have expressed their gratitude after having made the initial call and listened to the options available to them.

What experience has shown is:

1. Leaving things until the “11^th hour, or beyond,” reduces options available, creates a hostile environment with creditor enforcement actions commencing and, invariably, you find the director has unwittingly breached their duties by disposing of assets in an inappropriate manner.

• Taking early advice opens up more options for the directors to consider, generally with a degree of control and minimises the potential exposure for directors.

If you need any advice or assistance on any corporate restructuring or insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton), 01908 033150 (Milton Keynes), 01234 989150 (Bedford) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.