Should i resign as director.

[la5577]

I'm currently a co director at a business i started with my ex partner. For all intent purposes I have been just a way to get the start up funding. I've had no decision making authority and have no access to the bank accounts.

I now can see that the business is not doing well as I was asked to co sign a loan to pay debts. Having asked more there is a lot of debt that has mounted and bailiffs have been involved.

I want to end my involvements I no longer trust that my ex partner is running things well and no longer want to be associated. But I am owed close to 20k in directors laons that I know I may now lose. What should I do?

 

[Paul Kelly ICHYB]

Seek legal advice?

If there are debts in the company, you are unlikely to get the £20k back.

Without a lot more information, there really isn't much more advice anyone could give.

 

[Deleted member 335660]

Is this a limited company? If it is then as a director you have rights to see the accounts and you have a say. How many shares do you have?

You could of course just resign and walk away. Make sure you get your name off any “Directors Guarantees” you may have signed.

I did this but kept my shares.Did me no good as company folded anyway.

If it is more complicated then as Paul has suggested you could take legal advice.

 

[The Resolver]

Since you lose, subject to any Shareholders Agreement that might be in place, all rights of access to ay to day financial and trading information once you are no longer a Director, you should not resign as Director at any time before you have become fully knowledegable about the finances of the company and its trading.

One approach I have found helpful when advising clients in a similar situation,is to approach, or at least threaten to approach, the Bank to request, as Director, a freeze on all outgoings save those approved by both of you. As a preliminary you might indicate that such step will be taken if your co-shareholder does not agree to an urgent meeting and the provision of all the financials. With the cash and book information including the purchase book and list of creditors, you can begin to see if there are options that will support your ex-partners continuation of the business.

If you are to transfer youre shares make sure you have a Sale and Purchase Agreement to regulate the move and protect yourself should your ex-partner have committed any insolvency offences.

 

[siangana]

you should speak to a lawyer!

 

[Socio South West]

The key word that rings alarm bells to me is 'ex'

Very sound advice from the very experienced head of @The Resolver

I think the answer lies in the level of debt: If its mounting and there is no prospect of getting your loan repaid, I don't think that feeding the legal industry fatter is going to help one bit.
You should sit tight so you still have right of access to financial information to be able to monitor the situation.

Anything you try and do is likely to inflame the situation on a personal level, so the less you can do the better.