Separation of relationship/business

[goodsoil]

Hello all,
I separated from my partner and father of my kids just over a year ago and we also are joint directors of a small business together (ltd company). He now wants to "give the company to me" but I have since discovered that it's not such a gift as he made out - we are financially in a bad way (at the bottom of big overdrafts etc, with some turnover but not enough right now until I can really put energy into the business to change that) I have been very ill and looking after young kids these past few years so he has made the financial decisions. I'm unsure what to do and what advice I should seek to make sure this is done well and I'm feeling very overwhelmed. What are the steps I should take to make sure I'm not left liable for the whole debt if it comes to that after he has stepped down? Is there a way I can close the company and continue using the business name as a sole trader? If I do close the company, what would be the situation with debts that are unpaid? Should I seek a lawyer, and/or business adviser?
Any help gratefully received ?

 

[Mark T Jones]

You need to speak to one (or more) of the IPs on here, who I'm sure will be along soon.

However, it seems that you are being offered a poison chalice.

 

[HFE Signs]

Hold fire, don’t negotiate directly with him until you’ve had some good advice. With it being a Ltd company you are protected personally.

 

[Gyumri]

If it's not worth while struggling to make the Ltd Co viable then it may be better to start afresh by registering a new Co online for £15 or whatever the fee is nowadays. You can do it online from the comfort of your armchair, open a new bank account and go it alone which is what you are doing anyway.

 

[ChrisCallaghan]

Hi @goodsoil ,

If I can give you any comfort from the get go, is that any personal liability will hopefully be minimal because of the limited company set up.

The first thing I would recommend is to get a fully breakdown of the company's debts and commitments. If possible try and find out whether either of you given any personal guarantees. Once you have this info, you would benefit from taking some free advice from an insolvency practice. Myself or any of the insolvency regulars here on UKBF would be happy to give you some advice.

It is certainly possible for the company to be closed, for some or all of the debts to be written off, and for you to continue as a sole trader. It just may be that the closing of the company may be tricky unless you both agree that closing is the right way forward.

 

[The Resolver]

You have a number of options - liquidate, Company Voluntary Arrangement with creditors (if you beleive you can trade out of the situation) , close down business etc etc - but , assuing you are 50/50 at present you can take no step without his agreement, Best to respond positively and acquire the shares so all the options are open to you alone and then take advice as to next steps. If you act in accordance with Insolvency Practitioner advice you should not incur any personal liability. However, if you both have taken interim dividends that the end of year finances do not justify such sums may then be owed back, in full or in part, to the company

You should not just take a Stock Transfer for his shares but both sign a Sale and Purchase Agreement with terms protective of yourself and your interests, For example, you would beneft from inemnities from him for loss/damage resulting from decisions he took in the past. You do not want to give him a waiver (as is common in SPAs) of his duties for past actions (if you feel they have contriuted to the current adverse position.)

Did you sign a Shareholders Agreement because, if so, that needs looking at for any relevant positions.

At all times the option of closing down and starting afresh should be considered. But you would need to have resigned as Director at that point so as to avoid liablity for breach of your duties as Director (if you are).

If he resigns you need to have in place a second replacement director or to immediately amend your Articles of Association (see my page here on problems with sole directors).

Call me as below for a free 30mn advice call

 

[DontAsk]

Have either of you given personal guarantees for loans/overdarfts? Has he done so in your name without you realising?

 

[Newchodge]

Have either of you given personal guarantees for loans/overdarfts? Has he done so in your name without you realising?

Have either of you given personal guarantees for loans/overdarfts? Has he done so fraudulently in your name without you realising?