The Business
Two Directors of an IT company were referred to us, as the Company had failed and was placed into Voluntary Liquidation.
The Challenge
The Directors had personal guarantee debts from banks, other financial institutions, and their Landlord. Their personal credit card debts had also built up, as these funds were borrowed and then injected into the business to help with cash flow difficulties. In addition, mortgage arrears were starting to accrue, statutory demand’s and judgments had started to be served.
NBR solution
A full review was carried out in relation to the Director’s financial affairs. It transpired that the salaries they were being paid in their full-time jobs were so much more than the dividends which they were taking out of the company.
This meant that they had sufficient income stream from which to live comfortably but they were unable to afford the monthly payments in relation to their personal guarantees and credit card debts. This evidently had resulted in the Company’s failure.
Their only asset was the matrimonial home which was independently valued and indicated that the average equity in the property was £275,000.
One of the Director’s sister made an offer to buy the house from both Directors. We advised the Director to obtain three professional valuations which would be needed to show a reasonable calculation of the equity in the property.
The sister released from her current Matrimonial home adequate equity to pay the £275,000 and the Directors’ were both advised to petition for their own bankruptcy.
We assisted the Directors with the Bankruptcy process and provided full details (of the transaction with the Sister) to the Official Receiver. The £275,000 was given to the Official Receiver for the benefit of Creditors. This successfully resulted in the Director keeping his home.
Disclaimer
This article is for general guidance only and does not constitute legal advice. Each case depends on its own facts and circumstances and professional advice should always be sought before taking any action. Navigate Business Recovery Limited does not accept responsibility for any loss arising from reliance on this information.
For confidential advice and practical guidance, please contact:
Vee Bharkhada
Navigate Business Recovery Limited
Email: vee@navigatebr.com
Office: 0330 236 9937
Mobile: 07961 116321
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