Advice to the
Company directors are responsible for the day to day running of a company’s business. In the event that the business is insolvent or becomes insolvent their statutory and regulatory responsibilities change in favour of the creditors and potential creditors.
A company is deemed to be insolvent if it cannot pay its debts when they fall due or if the value of the company’s assets is less than the value of its liabilities, taking into account its contingent and prospective liabilities. A company can also be found to be insolvent if it has an unsatisfied judgement or statutory demand.
The implication for directors is a serious one; decisions they take can have adverse and potentially far-reaching consequences. In the worst cases this can result in the directors being made personally liable for the company’s debts.
The common activities that trigger this are fraudulent trading, wrongful trading, misfeasance, preference - transactions at an undervalue, disqualification, capital issues and misleading the market. Cork Gully can advise directors, on the appropriate course of action to ensure they fulfil their statutory responsibilities.
It is important to note that even an individual who are not formally appointed as a director may fall foul of these provisions if they are deemed to be a “shadow director” or a “de-facto” director.