Nationally, figures show 4,624 companies became insolvent in the three months to the end of September 2009 – a fall of six per cent compared with the previous quarter. But, an estimated 134,000 businesses nationally are still showing “material signs of distress” as falling GDP continues to hit firms.
“The business waters have suddenly changed beyond recognition, they are a lot more dangerous and there are many more casualties,” comments Mace & Jones insolvency unit partner Dominic Vincent. “The stark and sobering reality is that if a business is found to be wrongfully trading – and the non-exec knew it would go into liquidation – this can lead to personal liability, even in a limited liability company. And if the company does not have the assets to pay the creditors, they’ll come after potentially everything a non-executive director owns.”
Vincent says many non-execs have spent a lifetime grafting, expending blood, sweat and tears on a career and building a solid and solvent home, family life and retirement. “All of that is on the line if the business is in trouble and the director does not act in accordance with the law,” he says. “Remember as a non-executive director you have the same general legal responsibilities to the company as any other director.”
Non-execs should know precisely how well the business is doing. “Demand to see regular accounts weekly or monthly and take professional advice if you are concerned about the solvency of the business,” advises Vincent. “Don’t be fobbed off. Seek support from other non-execs and legal advice.”
For further information, contact email@example.com or call the Mace & Jones insolvency unit in Manchester: 0161 214 0500 Liverpool: 0151 236 8989 Knutsford: 01565 634234.