Chinese Trade Creditor - Liquidation

[hightower2108]

My LTD company is highly likely to become insolvent in the next month or two.

One of the companies liabilities is an unpaid invoice to a Chinese supplier for £32000.

Does anyone know how this debt would be treated during a liquidation?

 

[Gavin Bates]

Hi

it would be an unsecured creditor like any other unless you have signed a personal guarantee

regards

gavin

 

[Elliot Green]

It would be another creditor.

 

[Frank Wessely]

My LTD company is highly likely to become insolvent in the next month or two.

One of the companies liabilities is an unpaid invoice to a Chinese supplier for £32000.

Does anyone know how this debt would be treated during a liquidation?

Hi Hightower2108, the above replies are correct but I sense there is more to this question. Why do you ask?

 

[JEREMY HAWKE]

Hi Hightower2108, the above replies are correct but I sense there is more to this question. Why do you ask?

Maybe the Triades are already involved Frank !

 

[MOIC]

My LTD company is highly likely to become insolvent in the next month or two.

Have you made your creditors aware?

 

[hightower2108]

Hi

it would be an unsecured creditor like any other unless you have signed a personal guarantee

regards

gavin

Thanks for your help Gavin. There's no PG.

Do you know what their involvement would be during a CVL in comparison to a UK based unsecured creditor?

Hi Hightower2108, the above replies are correct but I sense there is more to this question. Why do you ask?

Hi Frank,

Thanks for your reply.

I just wanted to be clear that the right thing to do is treat them in the same way as I would a UK based unsecured lender.

Maybe the Triades are already involved Frank !

Thanks Jeremy, really helpful.

Can't sleep as it is.

Have you made your creditors aware?

No not yet. I'm trying everything to reduce costs and increase revenue in the hope I can turn things around but I'm not hopeful in all honesty.

 

[Frank Wessely]

Thanks for your help Gavin. There's no PG.

Do you know what their involvement would be during a CVL in comparison to a UK based unsecured creditor?

Hi Frank,

Thanks for your reply.

I just wanted to be clear that the right thing to do is treat them in the same way as I would a UK based unsecured lender.

Thanks Jeremy, really helpful.

Can't sleep as it is.

No not yet. I'm trying everything to reduce costs and increase revenue in the hope I can turn things around but I'm not hopeful in all honesty.

Hi hightower2108, picking up on replies so far:-

The Chinese creditor would be involved in a CVL on the same legal basis as the creditors based in the UK; I assume their debt isn’t in dispute?

There may be a time to inform your creditors but from the snippets of information provided this is not that time. And that time may not come if your efforts are successful.

An important point for you is that you are taking all necessary steps as director to protect the business and its creditors, especially with the imminent threat of insolvency which carries with it the requirement that the interests of creditors will take priority over those of the shareholders.

If you’d like some reassurance and clarity you can call me on the mobile number below.

Regards.

 

[hightower2108]

Thanks Frank, really appreciate your advice.

 

[UK Contractor Accountant]

One of the companies liabilities is an unpaid invoice to a Chinese supplier for £32000.

What are the other liabilities?

Any company assets?

 

[hightower2108]

What are the other liabilities?

Any company assets?

Liabilities

£50K BBL
£45K Recovery Loan
£45-50K Trade creditors
HMRC £23K
Unsecured creditor £6K

Assets

£25K cash
£130K stock

 

[Frank Wessely]

Liabilities

£50K BBL
£45K Recovery Loan
£45-50K Trade creditors
HMRC £23K
Unsecured creditor £6K

Assets

£25K cash
£130K stock

Hi hightower2108, do the Liabilities exclude the Chinese supplier? Working on the assumption that they do, there are several issues to determine whether the business is already insolvent. The first being when the debts fell due for payment, and are you able to settle the debts within agreed credit terms? If not, then it may be that the business is insolvent on a cashflow basis. But there are a number of immediate steps you can take to remedy that. I'd recommend that you prepare prudent cashflow and profit projections as a starting point.

If you'd like some help with that and then stabilising the business so you can focus on growth rather than worrying about the threat of insolvency, you can give me a call to discuss.

Regards, Frank.

 

[Lisa Thomas]

Hi Hightower.

As Frank has already identified your company is insolvent. In a liquidation, the Chinese based creditor will be treated no different to the other creditors, except the proposed liquidator will have to give more notice than they would ordinarily do, to allow for overseas post.

I echo Frank's recommendation to get advice from a licensed Insolvency Practitioner and get a plan together, which could include rescue or a Phoenix.