When a company is insolvent, directors need to be very careful.

bad credit

Common pitfalls include;

  • Making preferential payments to suppliers
  • Making preferential payments to a director or associated company
  • Overlooking personal guarantees to suppliers
  • Overlooking personal guarantees to the bank
  • Selling assets at an undervalue
  • Taking credit while the company is insolvent
  • Carrying on trade knowing that the company is insolvent

The directors need to be fully aware of the financial position of their company and the consequences of their action’s.

Above all, the directors need to take professional advice.

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