How willing are you to place your company assets in the hands of a “Faceless” unqualified advisor, while also exposing yourself to personal liability?
Unfortunately, the phrase, “Desperate times lead to desperate measures,” can mean directors will easily be attracted by online offers to “take the stress away” allowing you to simply walk away. Invariably, it is not a matter of walking away but one of abandoning your statutory duties and being penalised for a breach of duty.
Recently, the Government published their annual (insolvency) report. That report cited the number of appointment-taking insolvency practitioners has reduced to just 1,257, which further emphasises how specialised insolvency is and the importance of getting right advice.
In addition, The Association of Business Recovery Professionals, have warned about the risk of using unlicenced insolvency advisors and produced a very helpful guide which can be found on the following site;
The problem of unlicenced advisors is not a new one but something that has grown over the last few years. The guide highlights some of the common marketing phrases these firms use, including:
- We act for you, not your business’ creditors
- Don’t take advice from an insolvency practitioner, as they only act for your creditors, whereas we act solely for you
- We can offer you an alternative way to close down your company, leaving you free to launch a new business debt-free
- We have a way to allow you to continue trading, keep your assets and yet benefit from writing off all your debts
What they do not tell you is a director has various statutory and fiduciary duties, including:
- To act for the company creditors as a whole.
- Exercise reasonable care, skill and diligence.
- Avoid conflicts of interest.
These unlicensed advisors will also fail to point out if the company was eventually wound up it could lead to a director being pursued for personal liability. Saying you did not know you needed to instruct a licensed insolvency practitioner carries no weight. The court says ignorance is not a defence. Indeed, the court will say throughout the insolvency legislation reference is made to the official receiver or an insolvency practitioner – there is no reference to any unqualified advisors. The simple reason being, a licensed insolvency practitioner is held out as an officer of the court and must act accordingly. They are also regulated, must hold professional indemnity and take out a specific insurance bond on each appointment they accept. That protection is not afforded to directors by unlicensed advisors.
At PBC, we are aware some directors fear approaching an insolvency practitioner as they hear stories of the ramifications a director faces. To the contrary, an insolvency practitioner will advise you of your options, duties and will discuss potential issues with you. Those who chance engaging an unlicensed advisor merely promote the likelihood of allegations of a breach of duty where personal liability for any loss suffered may arise.
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 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.