In an insolvency situation if the directors are overdrawn by means of a directors loans (in other words the directors owe money to the company) then that money will be demanded by the liquidator appointed for the company.

I am sorry to say I have come across a large number of insolvency practitioners over my life working in the insolvency and business turnaround sector who do not point out to the directors the loan accounts and that they will personally become liable to pay the sums back. All I can put it down to is shear greed to get the client signed up knowing full well there is a directors loan outstanding but say nothing till a few months down the road and then start demanding the money back or further litigation to recover from the directors.

If I have seen this once or twice I would be more than happy to say they made a mistake and overlooked the fact to mention it to the directors that they will want the loan account paid back. But I have seen it with small insolvency practitioners and the bigger practices as well. So sad when greed becomes the key factor.

There are a number of ways that the amount can be reduced well before the liquidation takes place and even during the liquidation also, there are ways to lower the amounts paid back. But what the liquidator will tell you that I am duty bound to collect the loan account in the interest of the creditors. What he is saying is I need that money in my account so I can run my bill up.

Over the years I have helped to reduce and even eliminate the directors loan accounts by way of understanding how the system works and the greed factors for the practitioners as well as other creditors.

If you owe money to your company and you are considering insolvency as an option, do not go to the insolvency practitioner until you know all the facts of the power he has and what works in your favour to reduce or eliminate the loan.

If you need professional help and advice to save you from the directors loan account, then give me a call on 0800 24 0800 and leave me a message with a brief description of the problems you are facing and the best time to call you back for private and confidential chat to see how we can assist you.

Moe Nawaz: Author  -  Speaker  -  Turnaround Practitioner  -  Insolvency Auditor  -  Mastermind Strategist.

This is one of the most common questions I get asked via email and by phone calls. There are a number of answers to the complicated question, each case is different but what I am going to describe is where the bulk of the answers to the question.

If your company has no creditors, in other words your company does not owe any money to anyone and your company accounts are up to date with companies house then you don’t need an insolvency auditor or practitioner to liquidate your company. You can go to companies house and ask them to remove the company from the register.

If your company has debts that have not been paid or you have ongoing court cases running then you will need the service of an insolvency auditor or practitioner to help you plan the best way forward for your company. These normally involve charges. If on the other hand you don’t have a viable business and loads of debts you can arrange a creditors’ voluntary liquidation to liquidate your company, this rout will also cost you money at a cost of £5,000 or more depending on how complex your case is. But if the company has no means of money to pay for the liquidation then the only other option open is to wait for one or a number of your creditors to apply to the courts to wind the company up which is the compulsory liquidation.

Most people have companies that have debts and they want to close the company down but can’t. The only way you can close a company down if it has debts is via a voluntary liquidation which you or your company has to pay for or allow the creditors to go down the court process for a compulsory liquidation.

Why should you pay for a liquidation rather than let creditors pay for it?

Depending on the number of creditors and the total amount of debts of the company and also who the money is owed to, is it to HMRC or suppliers and so on. This might well cause an investigation in to the affairs and conduct of the directors of the company to see if they acted in a manner fit to hold office as directors in the future and what they did to reduce the liabilities of the company. But if you appoint a practitioner to liquidate the company then you are in the driving seat to a degree which is better than not being in the driving seat if the creditors are running the show and possible pushing the investigation in to the conduct of the directors. If found that you were trading the company under wrongful trading the directors could face criminal charges as well as being banned for being company directors in the future.

Sometimes all it takes is a simple telephone call to make sure you are doing the right thing.

If you need professional help and advice to save your business from the storm, then give me a call on 0800 24 0800 and leave me a message with a brief description of the problems you are facing and the best time to call you back for private and confidential chat to see how we can assist you.

Moe Nawaz: Author  -  Speaker  -  Turnaround Practitioner  -  Insolvency Auditor  -  Mastermind Strategist.

What does the petition mean for the company?

The biggest number of winding up petitions being issued are by HMRC for none payments of tax for VAT, PAYE or corporation tax. Some company directors are smart enough to seek professional advice as soon as they know there is trouble ahead with company debts, they seek professional advice and end up saving their business regardless of the amount of debts to the company. Then there are other directors who wait until it is too late and the petition has landed in the post.

The early warning signs is the best time to get an insolvency auditor involved to help you plan on how best to deal with the debts and avoid the petition regardless of the size of debt or debts for your company. The other avenue open to the early warning signs person is to get a turnaround practitioner involved to help turn a viable business around. Provided you have a viable business worth saving an insolvency auditor or a turnaround practitioner will be able to help you structure a plan to save your business from a winding up petition.

On the other hand if you have not had the chance or the opportunity to seek advice and you have had the winding up petition served on you then your options are very few. One, is to fight it if you have a good defence as you have an ongoing dispute over goods or services with the creditor. Two, pay the full amount plus any legal costs before the court hearing day and have the petition discharged. Three, if you have a viable business which could be turned around then we might be able to get the courts and the creditor to agree to an administration order to save and restructure the company as this will result in returning more money than a liquidation via a petition. There are a few more options which are also open but these all depend on your financial position short term and long term.

Regardless of where in the winding up petition cycle you are there is always of finding options open to your problems provided your business is worth saving.

Most of my clients come to me seeking an umbrella once the storm has arrived on their doorstep, this is where I help them by coming out of the cold storm and having a nice hot coffee or tea and see what solutions and option we can create to save their business.

If you need professional help and advice to save your business from the storm, then give me a call on 0800 24 0800 and leave me a message with a brief description of the problems you are facing and the best time to call you back for private and confidential chat to see how we can assist you.

Moe Nawaz: Author  -  Speaker  -  Turnaround Practitioner  -  Insolvency Auditor  -  Mastermind Strategist.

Sales slowing down, costs going up and creditors chasing for outstanding invoices seems to be the most common problem most small business owners are facing in today’s economical climate. HMRC are also faced with difficult times ahead to collect monies due from PAYE and VAT taxes, this is money that the small businesses do not have.

HMRC says it can and is happy to residual the payment of taxes but don’t always end up helping the small businesses. Instead we are seeing more and more businesses being issued with Winding Up Petitions in order to close the companies rather than taking guarantees and getting paid. In a way I can relate to what HMRC are doing as the government is running short of funding it applies pressure on to HMRC which in turn forces the businesses that owe money to HMRC.

But be forcing these small business to close is not helping anyone, because each time a Winding Up Petition is issued against a company with zero assets it is costing HMRC (or us the tax payer) £800 to £1,400 to issue the petition. If there are no assets in the company why chuck good money after bad makes no sense at all to me. Maybe they see the business not being able to increase any further liabilities?

And the businesses that have assets end up doing a deal with the liquidators or insolvency auditors before or during the winding up petition to safe guard the company assets by buying them back and starting all over again without any liabilities. Yes we can do the above because the law allows the directors to start up a new company and buy back the assets before or after the liquidation / winding up petition subject to a number of factors being complied with to protect all parties’ inc creditors.

So who are the winners and losers in all this pressure being applied by HMRC for the bad debts?

Closely Look at The Structure of Your Company

Often, the answer to your company turnaround is right there in front of you staring you right in the face. Just look at your company and the staff closely. Focus on areas that are productive and staff members who are productive, I don’t mean staffs that are busy because busy is not necessarily productive. Productive in my book means making a contribution to the company i.e. money. You will need to consider all the factors needed to start making savings for the company. Of course, these decisions will not be easy to make, as they may involve laying off employees who are not really needed or are not contributing to the company’s bottom line. But this has to be done for the ultimate good of the company if the company is to be turned around. And in the event these harsh measures are not acted on and implemented immediately, you might all find your selves looking for jobs. But the reality for the business owners or the company directors is worse not only have they invested large amounts of money in the company but they might have given personal guarantees which might become due if the company fails.

Perhaps a little restructuring is all that is required to save you a lot of money. Some job descriptions may have to be changed and some streamlining of responsibilities may have to be done in order to increase productivity and cut out wasteful and unnesscessory activities. Next, there may be duplication of work as some jobs overlap. Eliminate these and see your profits increase.

Cut Costs

A Company turnaround it is possible, when you start to look at the bigger picture and the overall savings possible by cutting costs. Look at ways in order to decrease costs to your company. Talk to your company suppliers and check if they will be able to give you a reduction in costs, every percent you can negotiate down will help. You will be amazed how many suppliers will agree as they would not like to lose your business as this will mean losing a good client. Or else, look for other vendors who can provide you the same quality products or services for less. There are many other ways to save money if you are able to think outside the box.

Take Advantage of Company Turnaround Consultants

A good company turnaround consultant will be able to help you with quick fixes and long term strategies and various financial secrets to help your company turnaround back in to healthy profits. Choose a mastermind strategist with a proven track record who has expertise in company turnaround and who can help you to grow your business not just cut costs only. Most company turnaround consultants will show you what to do but it is always helpful to have an expert who will also show you how to do it as well. A company turnaround specialist can see things with his exert eyes that you might not see because that is what he is trained to do, find the problems and fix them by providing all the solutions needed to get the company back in to the black by making profits. Some of the best turnaround consultants are that confident in their ability that they will be happy to get paid on a contingency based results.

Be Inspired and Motivated

Company turnaround is a delicate balance. You need to have belief in yourself, your staff and the potential growth of your business. Once you have a good turnaround strategy in place, then you need to start to roll it out and start looking to fine tune it in places for more efficiency each time till it is running at its optimum. This can be achieved by having a good turnaround consultant who can coach or mentor you throughout the whole process from start to finish. There will be incredible pressure on you if you are on your own, as it is very lonely at the top being the boss. If you have stakeholders or investors they will be keeping a close eye in your direction. You need to disclose your new turnaround strategy in order to inspire your investors, employees and shareholders. Do ensure that you do not compromise on ethics or on product safety under any circumstances. Your overall strategy is all about sustainability and profitability. You need to think long-term, even if it means losing business to competitors who might be offering lower-prices, as that will only be short-termed.

Get a Buy-in

Do not try to get agreements on each recommendation for change. People will always fight change. Rather, discuss your objectives, goals as well as your vision of where you want the company to be. Rather, create a vision together that you need to share as a team. Get the company really excited; and then you get them all to buy in to the bigger picture, the long term success of the company and their jobs.

Open Lines of Communication

In any company turnaround, communication is of the utmost importance. Each team member has to be involved individually in order to achieve corporate turnaround. This would also add value to the complete process in various ways. It is so important that everyone is pulling in the right direction and everyone and every department is productive, this can only be achieved by good lines of communication between the leaders and the workforce.

Provide Added Value to Your Customer

You may customise your services or products in order to deliver breakthrough benefits to your customers. Add enough value so that you are able to balance the incremental change in costs.

in order to make sure you have a successful corporate turnaround you must keep the customer in mind, you must look at the life time value of each customer and explore how you can up sell, cross sell to your existing customers to increase revenues and profits.

Wishing you a great company turnaround.

Featured Business Turnaround & Growth Specialist

Moe Nawaz: Business Turnaround Consultant & Strategist
Turning Companies Around Since 1989.

So how do you deal with company debt when you know you can’t turn to your bank as you have no security to put up for the loan. Well you have a number of options which I have listed below for you to take a look at:

·         Increase credit limits from suppliers

·         Add on extra suppliers

·         Delay payments to suppliers

·         Sell off surplus inventory / stock at discounted prices

·         Bring in private investors / partners

·         Sell off any fixed assets you are no longer using

·         Lease back any assets you have fully paid for

·         Try and extend existing creditors terms from 30 days to 60 days

·         Try increasing your profit margins

·         Increase the number of times your customers buy from you

Did you know you can only increase your sales in THREE ways only?

1)    Increase the number of customers

2)    Increase the price

3)    Increase the frequency of your customers purchase

If none of the above don’t work for you because the company debt is too large and you don’t have time on your side, then you need to sit down with a very good Insolvency Auditor who will help you create a strategy to eliminate or reduce your total company debt.

There are a number of options that are open to company directors with a help of a good insolvency auditor. I am not going to go into details because each company debt is different to another company debt. But in brief your options might be, a CVA, a Liquidation, a Pre-Pack administration, an Administration or a Liquidation of your old company and registering a new company and starting up without the debts.

With all of the above options you do need professional advice to make sure you do not get prosecuted for wrongful trading or better known as insolvent trading.

You can call our office for FREE and confidential advice on the telephone 0800 24 0800 or search Google for an Insolvency Auditor and sit down with him or her to help you map out a strategy that will help you reduce or eliminate your company debt.

Like most honest hard working business owners Tom borrowed more money against his house, on his credit cards and even from other members of his family with a view to paying it all back once things picked up. But the business debts were just spiralling out of control and Tom was not prepared to call it a day because he had so much ridding on his business.

How will he pay the bank back, his credit cards and family if the business failed was the question that kept him awake at night?  Tom’s family did not know the full picture of the business debts that Tom had accumulated, VAT debts, PAYE debts now known as HMRC debts, bank overdraft, credit card debts and also supplier debts.

One morning driving to work and listening to his radio, Tom heard a man talking about the economy and the debts that small business owners were facing and how most had been doing exactly like Tom borrowing more money to try and dig themselves out of debts but only to find a month or two later that they were deeper.

Tom could relate to this man on the radio because he made sense in what he was saying about facing up to the business debts and doing something so you can sleep easy at nights.

That was the hardest moment in Tom’s life to pick up the phone the next day and call the person who was on the radio show and share his business problems with a total stranger. After talking with this man, it all seemed so simple on how to handle all his business debts. Surely it can’t be all that simple Tom thought to himself. After all Tom had over £211,000 worth of company debts inc VAT, PAYE (HMRC) and suppliers too. But Tom had done his homework before calling this man Moe Nawaz who had created 100’s of debt strategies for business owners since 1989 and got them out of debts. Tom had found 1,000’s of pages of articles, blogs, video, interviews, press releases and testimonials about Moe Nawaz on Google.

A week later Tom had a meeting with Moe at Pall Mall in London, Moe and Tom spent about 3 hours looking at ways to reduce or eliminate the business and personal debts that Tom was now carrying.

Tom now had 3 options on the table, a CVA, Pre-Pack or a Liquidation. Tom went for the Pre-Pack administration route. Then Moe began to break down in details of a pre-pack, costs, buy backs, up side of a pre-pack and the down sides of a pre-pack, creditors rights and so on….

There were more down sides to the pre-pack route for Toms company, so it was decided to go for a company liquidation and buy back select assets of the company and re-start a new company without having to carry over the old company’s debts. This was by far the cheapest rout for Tom and all the company debts he had with his business. Between liquidating Tom's old company and starting his new company Tom took a two week holiday with his family.

If your business has debts, be it HMRC for VAT, PAYE, bank debts or supplier debts, why not call our Directors Helpline and ask to speak with Moe Nawaz and see how he can help you to sleep easy at night. Tel: 0800 24 0800.

Moe Nawaz

Author – Speaker – Insolvency Auditor — Strategist

James wanted me to explain what an administrative receivership is and how it works. Let’s start with explaining what it is shall we, an administrative receivership is when an administrator is appointed normally by a creditor who has a fixed / floating charge over the assets of the company by way of a fixed / floating debenture registered at companies house over the assets of the same company.

Who is Administrator?

The Administrator is normally an Insolvency Practitioner who gets appointed as the Receiver by the creditor, this could be a finance house like the bank as in James case or other money lenders who in order to protect themselves have taken a registered charge over the company’s assets. The administrative receiver is appointed to liquidate whatever assets he or she sees fit to recoup the creditors funds and all costs associated with it, inc the administrators costs.

Time was not on James side as he was already 3 months behind on his repayment of the company loans, so we had to act quickly in order to save the company or find a solution to minimize his personal and business liabilities. After carefully examining the documents at companies house we found that James also had another business who had also lent money to this same company but James other company also had a debenture (a charge over the assets) the good point which we manage to pick up on was that James other company’s debenture was registered first before the banks charge.

Armed with this information we spoke with the bank’s lending and legal team and explained James other company could if needed to appoint an administrative receiver which would super seed the banks charge and this could leave the bank in the cold. To cut the story short the agreed to give James another 6 months to pay the loan off subject to the first property being sold.

So if you are being threatened by a creditor with an administrative receivership seek the advice of an experienced insolvency auditor like myself and seek his advice to provide you with other options to minimize your liabilities without going down the rout of administrative receivership.

Call our FREE Insolvency Helpline on 0800 24 0800

So what remedy do directors have to call a directors liquidation of a company. As a director of a company if you feel or know the company is insolvent and cannot pay its debts then you need to stop trading and seek the advice of a good Insolvency Auditor to help you to cease trading and to help you find optional ways of avoiding any further liabilities in the event of wrongful trading. The insolvency auditor will explain the best course of action needed to do a directors liquidation of your company whilst minimizing your liabilities and exposure from future liabilities as well.

 What is the main difference between a directors liquidation and a compulsory liquidation? The directors liquidation is a voluntary liquidation by you and the compulsory liquidation which is a court lead liquidation ordered by a creditor or creditors of the company.

Depending on the amount of debts the company has, you might have a number of options open to you provided you feel the company has a viable business but for the debts. You have the options of a CVA, pre-pack administration, voluntary liquidation, a company administration order or just simply liquidate the company and walk away with minimal liabilities.

If you can gather some information about the company the number of creditors and the amounts outstanding along with what the company is owed from customers (if anything) and what assets the company has. Then simply give me a call on 0800 24 0800 we can probably run through a few options which might be open to you regarding a directors liquidation of your company.

On the other hand if the company has no debts then simply go to companies house and ask them to remove your company from the register, there is a small fee of about £10 to companies house. But this is only if the company has no debts otherwise you will have seek the advice of an insolvency auditor to guide you through the various option open to you for a directors liquidation of your company.

Some Common Questions You May Have:

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I was having a round of golf with a local Barclays bank manager at the Marriott Breadsall Priory in Derby when I got a text message from my office saying could I please call a gentleman called Peter who was looking for us to recommend a good insolvency practitioner in Nottingham on his mobile when I finish my round of golf.

As an insolvency I get more calls being asked to recommend a good insolvency practitioner in Nottingham, Manchester, London, Birmingham and so on….. So why do so many people phone me to find them a good insolvency practitioner when they can find loads just by Googling insolvency practitioner in any city? It is my belief and I have been told that many a times, that I am the most trusted insolvency auditor in UK. Don’t take my word for it, just Google Moe Nawaz and see what others are saying about me.

So what is the difference between an insolvency practitioner and an insolvency auditor? Very good question, the insolvency practitioners job is to look after the interests of all the creditors regardless of who might have employed / engaged the insolvency practitioner (the company directors, bank, HMRC or any other creditor), he is governed by law to look after the interests of the creditors and not the directors. An insolvency auditor on the other hand looks after the interests of the directors by minimizing the directors liabilities and advising the directors which is the best case for them as well as the company and then if an insolvency practitioner is required in Nottingham or any other city, we will find an insolvency practitioner who is approved by one that we can all work with.

In addition the insolvency auditor will explore all avenues before the liquidation which might come back to bite the directors in the future.

Anyway, when I had finished playing golf that day, I phoned Peter up to find out why he needed an insolvency practitioner in Nottingham? As he began to explain he had HMRC debts of £137,000 which included VAT and PAYE, in addition he owed suppliers £455,000 and the bank £49,000 which he had given guarantees against his house.

After listening to Peter for about 35 minutes I then said to Peter that we really need to meet and sit down and spend a few hours to explore the best possible action which would leave Peter with minimal liabilities.

We met up with Peter 3 days later in Nottingham, the first thing which I noticed on Peters Company accounts were the directors load accounts of £133,000. I had explained to Peter in the event of the company being liquidated the liquidator would come after Peter after the liquidation for the loan account. The insolvency practitioner is not likely to say anything when he takes you on as a client but is going to take action to get that money owed to the company which is the directors loan account.

We needed to create a strategy that would allow Peter to reduce his bank overdraft and to try and get off with paying as small as possible amount back to the company from the directors loan account and make sure that HMRC do not investigate and further action personally against Peter for wrongful trading after the liquidation.

Two months later, Peters bank overdraft was now sitting at £1,150 compared to the £49,000 which he had when we first met Peter. We had negotiated a figure of £21,000 to be paid back to the liquidator for the directors loan account compared to £133,000 which Peter would have been made to pay. And no further investigation from HMRC.

You see I have been working and creating pr-liquidation, pr-insolvency strategies since 1989 by reducing the directors personal liabilities in the event of a company liquidation. So if you are going through difficult times and need an insolvency practitioner in Nottingham or need someone who can and will guide you through the maze of insolvency and be by your side through the whole process, then simply pick up the phone and call me on Tel: 0800 24 0800 and lets see what we can do to help you.

 

Moe Nawaz: Insolvency Auditor  -  Published Author  -  Mastermind Strategist

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