What is a company CCJ?

What is a company CCJ

 

A county court judgment (“CCJ”) is a court order used to try and force a company to pay a business debt. The creditor can make an application for a CCJ once they have tried and failed with alternative methods of debt collection. The issuing of a CCJ can be a sign that the company in receipt of the CCJ, may be having financial problems and is struggling to pay its debts as and when they fall due but, more commonly, a CCJ is received because the claim has been disputed or the recipient disagrees with the sum being claimed.

 

Once a CCJ has been registered it is available in the public domain and, unfortunately, this is when “Ambulance Chasing” insolvency firms or their subcontracted sales teams look to make direct contact with the directors of the company offering them their services to assist and help. The contact is generally in the form of numerous unsolicited phone calls or even direct letters to the company, mentioning the CCJ. Clearly, these phone calls and letters can be intercepted by employees of the company, unaware that financial issues may be on the horizon, which can also have a damaging effect on the company.

 

If you or one of your clients receive a CCJ and it is a result of real financial pressures, then I am afraid you/they will be “Ambulanced Chased”. Here at PBC Business Recovery and Insolvency we would never hound the company directly, and we would recommend that the director(s) take immediate advice. The company’s professional advisors will no doubt know and trust an insolvency firm to provide the right advice for their client and not “fuel for the Ambulance”.

 

Should you have an insolvency-related issue then please contact a member of the highly experienced team at PBC Business Recovery & Insolvency who will be more than willing to provide you with guidance and advice that will be right for you and your circumstances – (Northampton office – (01604) 212150) or (Bedford office – (01234) 834886) .

 

Pull a rabbit out of a hat – yes it can be done!

Pull a rabbit out of a hat – yes it can be done!

 

PBC Business Recovery and Insolvency handled the liquidation of an Ex-Serviceman’s club in December 2019. In compulsory liquidation it is very rare for members to receive any financial return. In this instance we are pleased to report that recently, not only did all class of creditors receive payment in full plus statutory interest – total paid was £346,278, each of the 230 club members at the time of liquidation received £1,000 each from surplus funds held.

 

Whilst returning funds to members in insolvency proceedings is rare, we consistently return funds to creditors in insolvency proceedings. Should you have an insolvency-related issue then please contact a member of the team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office).

Who owns future sales?

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Who owns future sales?

 

Occasionally there are sound commercial reasons for taking the business from an existing insolvent company and moving it into a new entity (commonly referred to as “Phoenix liquidation”).   When this occurs, the most common feature surrounds completion of existing orders and can future orders be passed directly to the new company?

Directors are under statutory duties that include protecting the company assets.  However, when a company ceases to trade, due to insolvency, the obvious argument is that the company is unable to fulfil orders, both those in progress and new orders.

In general, completing existing orders through a new company without providing some value back to the old company could constitute a breach of duty.

A defence to such a breach is often the director is the business and without the director there was no business in the first instance.  In many cases this argument fails, both in company law and because the law considers title in the property (orders) rests with the company.  New orders that were secured by the company are considered likewise.

However, the court of appeal ruled in Reynolds -v- Caroline Stanbury [2021] EWHC 2506(Ch) that putting future sales opportunities through an alternative business did not amount to an unlawful removal of business.  The sales opportunities were not pre-existing corporate assets.

As with all law reports, the Reynolds case was decided based on the surrounding facts, unique to that case.  The respondent was a professional personal shopper for the seriously wealthy and was, for all intents and purposes a sole trader.  Even a key witness (a customer) believed the respondent traded as a sole trader and was completely unaware the company existed.

Whenever a company needs to cease trading, the question of existing/ongoing orders is discussed regularly, particularly when there is a potential for the business to continue under a new entity.  In every case the directors need to consider their statutory duties and before transferring orders, seek independent advice.

Should you have an insolvency-related issue then please contact a member of the team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may access our website at www.pbcbusinessrecovery.co.uk.

Winding-up petitions – back to normal!

Signing a contract

The restrictions implemented by the Corporate Insolvency and Governance Act 2020 in March 2020 on the issuing of statutory demands and winding-up petitions has now fully come to an end as from 1 April 2022.

Creditors are now free to issue winding-up petitions against companies who are unable to pay sums owed with monetary petition limit back to £750 instead of £10,000.

It is expected that there will be a substantial number of winding-up petitions going forward with creditors seeking to recover funds owed.

If you or a client have received a winding-up petition or are being threatened with the serving of a winding-up petition, then please contact a member of the Team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office).

Director Duties

You need a licence to drive

 

It is often said, to drive a vehicle on the roads you first need to pass a test, which demonstrates you understand the laws of the road.  You also receive a driving licence as evidence of passing.  This goes with many professions where you need to achieve certain qualifications and probably receive a certificate as evidence.  However, to be a director of a company, it is a simple case of filling in a form and filing that at Companies House with no question of whether you understand the statutory burden that office imposes.

 

As an employee you will either gain knowledge or acquire qualifications and you are employed for that service under a contract of employment.  However, add the label of “Director” to that employment and you immediately become a company officer that carries duties beyond a simple employment contract.

 

The principal duties of a director are laid down in the Companies Act 2006 and generally state a director shall:

 

  • Act within their powers
  • Promote the success of the company
  • Exercise independent judgment
  • Exercise reasonable care, skill and diligence
  • Avoid conflicts of interest.

 

In most cases, the true implications of these duties may never consciously arise.  But what if your company is experiencing financial difficulties?  All too often directors ask can I pay this person, or can I repay a loan where I have given a personal guarantee?  Alternatively, directors may decide to continue trading in the hope that something good is around the corner.  Unfortunately, it is often something that is far from good that awaits around that corner and that can occasionally lead to personal liability and/or director disqualification.

 

In any circumstances where a company requires restructuring or, is facing closure, it is always the directors who are at the end of the criticism, whether that is from The Insolvency Service or creditors who face debt write off.  It can be of little surprise that directors who have taken advice from an early stage and follow that advice find the criticism (and other ramifications) minimised, or even extinguished.

 

Should you have an issue of financial difficulties then please contact a member of the Team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to info@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk

Company Voluntary Arrangement (“CVA”) and HMRC’s approach to post approval tax liabilities

PBC Business Recovery and Insolvency are the Supervisor of several CVAs approved by creditors prior to the pandemic.  These CVAs are primarily based on contributions being paid from profit over a number of years.  In the majority of CVAs HMRC will be a substantial creditor.   If post appointment taxes are not paid, this would be a (potential) breach of the CVA which, if not remedied could lead to the failure of the CVA and the company being placed into liquidation.

Whilst the CVAs we are dealing with are continuing to trade, some are still facing difficulty paying post appointment taxation like many other companies in the UK.  However, it is becoming evident that HMRC are being more amenable at present, accepting time to pay agreements where in previous circumstances they would have refused.  This would appear no different when a company is subject to a CVA, allowing agreements to be reached and avoiding the failure of the CVA.

If you or a client have any questions surrounding the use of company voluntary arrangements and whether the process would be suitable, or there is need of assistance in trying to reach an agreement with HMRC please contact PBC Business Recovery and Insolvency on 01604 212150 or 01234 834886.

 

Bowled Over

It was a pleasure to invite friends, colleagues and contacts to an evening at KINGSTHORPE BOWLING CLUB LIMITED(THE) to enjoy a relaxing, but competitive, night of bowling challenges.

A special mention to Will Amos ACA and our very own Nicole Anderson who bowled away the competition and left the rest of us green with envy.

Thank you to all those that attended and the hospitality of the Bowling club for putting up with a bunch of amateurs.

Thomas Cook directors avoid disqualification

Sky News are reporting no further action shall be taken against the directors of Thomas Cook under the Company Directors Disqualification Act.

Andrea Leadsam, the then business secretary at the time of the liquidation, sought an enquiry as a priority given the significance of this case and its implications for thousands of customers and employees.  She added,

“I ask that the investigation by the Official Receiver looks, not only at the conduct of directors immediately prior to and at insolvency, but also at whether any action by directors has caused detriment to creditors or to the pension schemes.”  Labour MP, Rachel Reeves added, “Its directors had exhibited a lack of challenge in the boardroom as the company piled up debt and Thomas Cook management missed opportunities to reduce debt levels and give the business a viable future”.

“Will I be banned?”

A question we, at PBC, get asked constantly by directors.

 

Like most high-profile companies, the Thomas Cook demise was subject to significant media attention.  However, regardless of the media reporting or the size of the company that enters into an insolvency event, it all comes down to what was the conduct of the directors?  In the case of Thomas Cook they engaged with the creditors, they took independent advice throughout and, when they were advised their efforts were going to be to no avail, they followed that advice and took what is an incredibly difficult decision.

At PBC we have an immense level of respect for every person that contacts us for advice.  It is often a period of heightened emotion and, at times, can feel intimidating.  However, taking that advice generally dismisses the “Pub talk” stories and can open up options to address those issues that are keeping you awake at night.

Taking early advice helps to control the situation, provides more options being available and helps avoid directors doing things that could see them getting embroiled in issues where disqualification and possible personal liability are a real threat.

Should you have an insolvency-related issue then please contact a member of the team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to info@pbcbusinessrecovery.co.uk.

Lies, Damn Lies and….

PBC Logo

Most readers are probably smirking as they finish the quote in the heading.  However, talking statistics, The Insolvency Service has released the latest statistics relating to registered company insolvencies in December 2021. Commentary – Monthly Insolvency Statistics December 2021 – GOV.UK (www.gov.uk)

 

In total there were 1,486 companies that registered as insolvent during December.  Of these 1,365 were voluntary liquidations, which is 73% higher than December 2019.  What is probably more concerning is that the principal rescue procedures of administration and company voluntary arrangement only numbered 79 companies, being 49% and 67% down respectively on December 2019 figures.

 

The remaining 42 companies all fell into compulsory liquidation, which is a 75% fall in numbers as compared to December 2019.  However, this is understandable as a moratorium over most winding up petitions was introduced by the Corporate Insolvency & Governance Act (“CIGA”) and, new tapering measures were introduced from 30 September 2021 when the moratorium was to be lifted.  This will continue to have a direct impact on post CIGA moratorium winding up petitions for the interim.

 

To add to the above numbers, two new procedures were introduced that were designed to assist safeguarding businesses.  However, in the 6-months ended 31 December 2021 the company moratorium numbered just 15 while the restructuring plan only 10 of which two concerned parts of the Virgin Group of Companies.

 

No doubt there will be plenty of analysts who will draw their own conclusions as to why there seems a disproportionate number of liquidations as opposed to rescue procedures.  At PBC we have considered this and summarise our opinion of the key reasons as:

 

  1. There is not a viable core business to save.
  2. The secondary preferential status, now enjoyed by HMRC, acts as a block to any opportunity of a return to the general body of creditors.
  3. Creditor frustrations are at such a level they will not entertain proposals for restructuring/saving the business.
  4. The procedural costs are sometimes prohibitive when compared to the company liabilities.
  5. Due to various legal and technical reasons, it is more constructive to look at a “Phoenix” and start afresh,

 

Much of the cause for the above issues also stems from that long-running problem of directors not taking early advice.  At PBC we fully understand it is a very difficult step to take in calling our offices and seeking help, but it cannot be a coincidence that those early callers generally find they have more options available to them and invariably matters can be addressed in a more orderly  & positive manner.

 

Should you have an insolvency-related issue then please contact a member of the team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk