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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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A small Design & Build company had two directors when we started

Resolved Question:

A small Design & Build company had two directors when we started dealing with them last February. Last July/August one of them relinquished his directorship leaving one only. I was told a director despite resigning is still liable following three years. Is this correct? You can't just wash your hands from a directorship because things are not going well.?
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

my name is ***** ***** I help you with this.

Alex Watts :

please let me know whether there was a Directors agreement at all?

Customer:

Companies House has both directors listed initially. We then put a watch on the company and were told that one had resigned. I do not know what agreement they had. There are creditors that have up 6 months overdue accounts with this firm and I and they would like to know if any claims should be addressed to both the directors.?

Alex Watts :

Are there any personal guarantees by that Director?

Customer:

Sorry I don't understand your question?

Alex Watts :

With any of the debts were there any personal guarantees signed?

Customer:

These are tradesmen having done work company as requested but have not been paid. The work would have been requested sometimes in writing, sometimes verbally and would have been quoted by the tradesmen to the company. Basically the company has run out of money or is waiting to come in from customers which may never happen because they have delivered unsatisfactory work or are totally overdue in completion because of shocking organisation on their part. They may be trading but actually have no funds at all. They have taken tradesmen work but can't pay.

Alex Watts :

Can someone resign - yes

Alex Watts :

Are they personally liable debts - unless they said there was a personal guarantee then no

Alex Watts :

You cant' stop someone from resigning.

Alex Watts :

However if the company was closed down the Receiver can investigate and they can consider going back 3 years as to why the company closed.

Alex Watts :

Then and only then can an application be made to disqualify the Director and they could be personally liable

Alex Watts :

But generally if the debt is in the Company name, unless there has been some fraud, then it would be the Company debt

Alex Watts :

Can I clarify anything about this today please?

Customer:

Ok. If an architect was a consultant to this company and is listed as such on the companies letterheads, can the architect withhold the final build certificate if money is supposedly outstanding?

Customer:

The architect is not a director

Alex Watts :

If the architect terms and conditions allow him to - then yes

Alex Watts :

If he has not been paid he could be entitled to withhold

Alex Watts :

Does that help?

Customer:

If the director resigned because he might have known that they are insolvent, how does the law look at this then

Alex Watts :

The Official Receiver may take a dim view and apply to Disqualify as a Director

Customer:

The company was only one year old last October. Will they have to file accounts yet? How can I check if indeed they were insolvent last August?

Alex Watts :

www.companies-house.gov.uk/info

Customer:

ok thanks

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