Long service changes

A recent case in the insolvency courts has seen the court considering the possibility of forcing a bankrupt pension holder to draw down funds to be used by their trustee in bankruptcy.

Time will tell whether this type of order will filter into financial settlements on divorce. There are already a number of options for dealing with pensions on divorce that I consider with my clients, particularly when creating bespoke and creative solutions for them. The ability to force someone to draw on their pension would have to be seen as a last resort but would be a tool worth having.

There are certain rules and regulations surrounding company liquidation, many of which focus on your actions as a director. Once a company becomes insolvent, you must put creditor interests first by ceasing to trade and safeguarding its assets, with little or no consideration for shareholders, members or directors.

Click here to view the image.
What does this letter say?

“I have today seen and distrained on the goods listed in the inventory below. I did this at xxx

Accountant in Bankruptcy (Scotland)
The Official appointed to monitor personal insolvency procedures. She will also act as trustee where no insolvency practitioner is nominated on a sequestration petition.

If your company is approaching insolvency, you may be wondering if voluntary liquidation is a possibility. Perhaps if you do not act quickly a secured or unsecured creditor could take the future of the company out of your control, at the same time exposing you and other directors to accusations of wrongful trading?

A Company Voluntary Arrangement (CVA) provides a way for companies in distress to pay off their debts over a fixed period of time, and offers the opportunity to address issues surrounding management and operational systems that were not working.

Pressure from suppliers can be overwhelming when your company is experiencing financial difficulties. Even if it is only a temporary downturn in company fortunes, the fact that a supplier can apply for a winding up order leaves you exposed to compulsory liquidation and closure.

If suppliers have tried unsuccessfully to recover their monies, and your company has failed to respond or been unable to pay, their decision to take legal action could be disastrous.

Finally a decision on whether a bankrupt can be compelled to draw down a pension: The Court of Appeal has finally handed down its long-awaited judgment in Horton v Henry [2016] EWCA Civ. 989, the case determining whether a Trustee in Bankruptcy can compel a Bankrupt to draw down his pension even though the pension is not in payment because the Bankrupt has elected not to call it down.  

If you’re a company director then circumstances can arise in which you decide to offer personal guarantees in support of a loan application or your pursuit of a line of credit. Where these guarantees are given, a lender will take some reassurance that they could pursue a director personally for debt repayments in the event of the company becoming insolvent.