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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11561
Experience:  30 years as a practising solicitor.
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Dear SirsI have been invited to join the board of a local

Resolved Question:

Dear Sirs
I have been invited to join the board of a local club which is a limited company. Before I accepted I investigate and found that, unsuspected by the current Board, their freelance administrator had embezzled substantial funds. As a result it is possible that the company is now insolvent.
The directors have asked me to examine the situation. They do not want to go to the police at the moment.
My question is: were I to accept the invitation to join the Board and discover after investigation that the company is in fact insolvent, would I also be liable along with the other directors?
Regards
Simon Piney
Submitted: 2 years ago.
Category: Law
Expert:  JGM replied 2 years ago.
Thank you for your question.
In terms of the Insolvency Act 1986, if a company is placed into insolvency, a liquidator can examine the actings of the directors and can pursue them for losses arising from the company trading whilst insolvent. Trading whilst insolvent could also result in a director being disqualified From being a director in the future.
Whilst it is doubtful that a director appointed to troubleshoot the situation would suffer adversely at the hands of a liquidator, I personally would advise you not to accept the appointment to the Board unless and until you manage to get them out of the insolvency situation to the extent that they can resume paying their debts as they fall due.
I think you have to put yourself first. By all means help them but don't join them at the moment.
Happy to discuss further.
Please leave a positive response so that I am credited for my time.
Customer: replied 2 years ago.
Thank you for your concise reply. It is most helpful and I shall follow your excellent advice.
Expert:  JGM replied 2 years ago.
You're welcome. Don't forget to rate my answer so that I am credited for my time.
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