Advice needed ASAP Please

[curly~sue]

Hello!

The company I work for is having problems financially and is struggling to pay its creditors. Another employee has just received a letter to his home demanding payment on behalf of one of these creditors. This employee was a director of the company for a couple of weeks before he resigned at the start of business a good four years ago. He now just works for it.

He called the company acting on behalf of the creditors and explained that he didn't owe the debt, that it is in fact the debt of the limited company. None of the invoices mention him and only have the limited company's name on.

The man on the other end of the phone was very aggressive and told him that he didn't care and they would be persuing him at his home address for the debt as he was a director of the company at some point.

Can they do this? He is so worried. What can we do without him having to find a solicitor, which he shouldn't have to do! Thanks in advance, c~s

[Lil O'lady]

Sounds like harassment to me.The guy should report it to the police first off especially if he feels intimidated, and also go to citizens advice or a lawyer. It is possible that this creditor needs serving with an injunction to leave the bloke alone if he won't listen to reason.

[redcrx]

Hi Curly sue,
Ive got an ex customer (sued them for funds) who used to go through directors like I go through shoes. I hope they are not near Norwich lol

Anyway, as far as i know as long as your friend didnt just ship knowing the company owed these debts (and it doesnt sound like it if 4 years ago) then hes not liable.

Doesnt mean that he'll easily be able to stop them writing to him though. He should double check with companies house that he isnt listed as having any connection with the company as the info mustve been found somewhere

[buildersmate]

Basically I agree with Red, Sue.
This might get you started - you could download it and forward it to the worried employee.
http://www.croner.co.uk/Croner/Factsheets/lega l/519-3%20Duties%20of%20a%20Company%20Director .pdf
No doubt Jenna will be along to offer advice shortly.

[Eve]

What kindof company is it? Does he know if it is limited by shares or guarantee or limited liability?

Any one, including a director, who signs "any bill of exchange, promissory note, endorsement, cheque or order for money or goods in which the company's name" is not "mentioned in legible characters" will be personally liable for the amount involved if the company does not pay (Companies Act 1985, s.349(4)).

He should check the invoice etc...

As regards liabilities, this should assist...

http://www.elbornes.com/index.php?section=arti cles¶m=33

[Eve]

Oooh Buildersmate, how prophetic :)

[Eve]

What if I resigned from the company. Will I still be liable?
Resigning will not, by itself, remove liability. In some circumstances, directors will be liable for all debts incurred up to their resignation.

Directors who resigned knowing insolvent liquidation was inevitable will, in principle, only be �safe� if they can show they acted on that knowledge � i.e. took steps to protect their interests and those of creditors. They must have tried to persuade the other directors to follow what they believed to be the right course, perhaps using the threat of resignation as a negotiating tool. They must have expressed their views at a board meeting, preferably after producing a reasoned paper for the board, and made sure the minutes accurately recorded their views. In other words, the resignation must be capable of being seen as a response to a refusal to listen � the last resort of a responsible director.

A director who resigns in an attempt to avoid any future liability but continues to be involved with the management of the company as a shadow director may still be liable.

[curly~sue]

Thank you for all your responses.

Jenna, how would I find out whether it's Limited Guarantee/Liability? There is not way he knew that the company would owe anything at this stage. As I say, he went on and came off as director for just weeks when the company first started up.

Thank you again. He's worried sick and can't afford a solicitor.

[Eve]

There is a webcheck here for companies house if it's a UK registered limited company.

http://wck2.companieshouse.gov.uk/ea2f070c368f 868d838dcbe0cb2cd225/wcframe?name=accessCompan yInfo

If you look up the the company then look at what it says under Company Type (second yellow box).

[curly~sue]

Thank you, Jenna. I'm very grateful.

It is a Private Limited Company.

[Eve]

On the company info page there is an option to order information on the company from which you should be able to see whether he was ever formally taken off as a director (there is a specific form which needs to be filed - 288b).

http://www.companieshouse.gov.uk/forms/general Forms/288B.pdf

You will be able to see free from the filing history if there have been any officers (directors/secretaries) appointed or got rid of by the forms filed (288a for appointment, 288b for getting rid of).

You can also order a current appointments list to see if he is still on it - usually about �1.00.

Ordering guide here...

http://wck2.companieshouse.gov.uk/goWCK/help/e n/stdwc/buyingGuide_H.html

[Eve]

You could also register with Companies House Direct on York Place.

You can view a list of directors for any company for �1.00.

You can also get the ccompany filing info from them as well as the main site from the link above.

[chas2008]

I was always under the impression that the directors were not personally liable for any debts unless there were guarantees in place i.e. the bank, until i read this..

As a director, the law says it is up to you must keep control of the company and to seek assistance if necessary. Directors of limited liability companies are personally liable for the debts of a company if trading continues after there is no longer any reasonable prospect of avoiding insolvency

Its fairly usual most companies in the UK that are in trouble continue
to run insolvent until they are at the point of no return..and from my experience very rarely are the directors pursued.
I believe in a certain scandinavian country immediately the company becomes insolvent they have to stop trading straight away or face being arrested !!..UK take note...