why is he still called a Millionnaire??

[WhiteBear]

Why is that man Chris Foster from Shropshire still being called a Millionnaire even though his company Ulva Ltd, had gone into liquidation and owed about �800,000 in tax. It also faced legal action from one of its suppliers for thousands of pounds

?????

http://news.bbc.co.uk/1/hi/england/shropshire/ 7594411.stm

sad news but hes not a millionnaire is he if he owes so much money???

[WhiteBear]

sorry should have posted this in the News section!!!!!!

[puss_boots]

Why didn't he just shoot himself, it's only money, so what. He didn't need to kill his wife and daughter plus the dogs and horses he must have been so ashamed about his financial situation, but bankruptcy these days is nothing to be ashamed of it happens every day.

[Jafi]

maybe it was a case of it affecting his pride. If you've lived in a big mansion, drove fancy cars, lived the high life, it would be pretty tough for some to have to downgrade. I can't understand why he would do that to his wife and daughter though, really sad.

[WhiteBear]

yes i agree what u guys r saying, but this wasnt my question..... my question was... why are everyone still calling him a Millionnaire, where hes in sooo much debt????!!

[Buenchico]

Chris Foster didn't owe anyone a single penny (unless, of course, he had personal debts which weren't mentioned in that BBC report). He owned a limited company, which is a completely separate legal entity.

As an analogy, Richard Branson might set up a new limited company to try to break into a new area of business. If things go wrong, the company could go bust, owing millions (or even billions) of pounds of debt. Richard Branson wouldn't owe one single penny of that debt to anyone, and he'd still be a billionaire.

The whole point about setting up a limited company is that it divorces the liabilities of the company from those of its owners and directors. Suppose you employ a building company, run by Fred Bloggs and trading as Fred Bloggs Ltd, and the company goes bust just as they've removed your roof (leaving you with the rain pouring in). Fred Bloggs doesn't owe you a penny and he can keep his fortune. 'Fred Bloggs' and 'Fred Bloggs Ltd' are entirely separate legal entities.

Chris

[WhiteBear]

thanks for the Advanced details Chris!!

does that mean he just lost his company..... ? which means he just owes company's debts, but still a millionnaire?? i still dont get it! couldnt he sold his mansion etc to pay off the debts or was his home was liable? oh i dunt know what im talking about
lol mayb im just a bit dumb :P

[messyjessy12]

for argue ments sake he was a millionaire! if the headlines read 'chris foster from shropshire,was a millionaire but owes �800,00 in tax and also faces legal action from suppliers for thousands of pounds...' bit of a page filler!

[Buenchico]

Hi Whitebear.

The word 'limited', in 'limited company', means that the directors of that company only have (very) limited liabilities in terms of the debts of that company (if it goes bust).

If someone sets up a limited company, he has to follow various rules in regard to such things as having the accounts properly audited each year (and then forwarded to Companies House). However, the directors of that company (which often might just mean the guy who set it up and his wife) are free to determine how much profit to take from the company (to put into their own pockets). They're meant to leave enough in the company's accounts to pay any debts but sometimes things go wrong and the company goes bust.

There would be nothing to stop a director from selling his house, and putting the money into the company, to try to prevent closure. But such a move would rarely make economic sense. It's usually far simpler for the directors to let the company go bust. When the creditors come looking for money, the (former) directors can lawfully say 'Nothing to do with us, mate. Get knotted'. They don't owe anyone anything. It was their company which owed the money and that company no longer exists.

It's just the same if, say, you were to order an expensive 3-piece suite from a shop (and pay up front). While you're awaiting delivery, you find out that the firm (which is a limited company) has gone bust. You probably won't get a penny back from the receiver because 'preferred creditors' (like the tax man) get 'first bite' at any money which is left in the company. You might know that the (former) boss of the company lives just up the road from you, in a massive mansion with a fleet of Rolls-Royces and a private jet. When you knock on his door and ask for your money back he can simply (truthfully) say "I don't owe you a penny".

Chris Foster was in a similar position to my fictitious businessman. He

[Ethel]

He lived in a house worth �1m but was mortgaged to the hilt; his business owed over �1m to other companies and nearly �1m in tax.

He used his property as security for business loans, which is why he couldn't sell it.

He was a man of straw.

[Buenchico]

. . . didn't owe any of the company's creditors anything.

Chris

(I hate it when AB cuts off the end of answers!)

[WhiteBear]

ohh thanks guys makes more sense now!!!!

hugs to u all
im just thick :P
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