Continuing to trade in the knowledge that a company is insolvent can be a precarious business as a press release displayed on the government website.gov.uk highlights.
The article relates to a builder who is now disqualified from trading altogether after it was discovered that he continued to take on work and receive payments while the business was insolvent.
The residential builders eventually ceased trading as when in 2017 it entered a Creditors Voluntary Liquidation process. The company was wound up after it was found that customers were owed substantial sums of money amounting to several hundred thousand pounds when building work wasn’t completed.
An insolvency practitioner had been contacted as early as September 2016 when the owner of the company sought to arrange a company voluntary arrangement. It was found that the company owner used payments from one set of customers to fund payments to his other customers.
All of this resulted in a complex web of issues that eventually resulted in the builder being disqualified from being a company director or being involved in the formation of a company for 6 years.
The case highlights how important it is that business owners come clean about their issues and deal with them via an insolvency practitioner as soon as it becomes apparent a business is in financial trouble.