debts of 40k which was taken as wages above the amounts on our wage slips over two years
The first year was a directors loan, and the second year was meant to be dividends but the company went downhill quickly without accounts being done. We only took the equivalent to minimum wages overall. The lockdowns, the result of them on the high streets, then the economic crisis caused the fall of the business.
This post is confusing!
Sorry if my vocabulary is not as technically correct as it should be. The first year they investigated which was the year after lockdowns showed an overdrawn directors loan on the accounts. The following year, the business folded just on the year end, so no accounts had been done. We only ever took just enough money out of the business to live on, however this was more than the amounts assigned to payroll. It has now only too late come to our attention that we did not really understand the process of dividends, directors overdrawn account, etc. and should have folded the business earlier. But we worked hard after Covid and believed the government when it said that things would return to normal. It never did and only got worse and worse. We had the business for a decade and the accounts were always healthy before the retail sector was forced to close down.
yes the IP is doing the job but looks like the Accountants didn't - advice would have been to walk away and do nothing and let the Creditors petition to wind up the company.
As I understand the bank is able to recover the BBL from the government and so the IP is under no duty to try and recover that debt, which would be akin to a double recovery. The other trade creditors are obviously suffering because they have sold their goods to the company although nobody could foresee Covid.
Directors need to understand that the veil of incorporation comes with a duty of loyalty that outflanks the duty to put food on their own table. Whilst such a duty might be considered challenging in the face of a conflict of interest, the duty in effect flips from the members to those who will suffer a loss when a company is insolvent ie. the creditors.
The IP is under a duty to realise the assets inter alia by virtue of Section 107 of the Insolvency Act 1986. Any suggestion the IP does not have such a duty to realise the assets because the BBL creditor could otherwise be paid out by the government appears to be a threadbare proposition. It is as @Lisa Thomas says.
Let's not forget that in a CVL (although a procedure that might not be without its critics) the directors don't lose all control until the Liquidation formally starts because the company has contractual relations with the IP and typically access to advice from the IP - often provided with alacrity. Contrast that with Compulsory Liquidation.
