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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I am looking accountant or one who deals with liqui

Customer Question

I am looking for an accountant or one who deals with liquidators.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith and will try to assist you with your question. What exactly is your problem as Just Answer site protocol does not allow us experts to make individual recommendations? From the tenor of your question you would need a licenced insolvency practitioner and not all accountants are so qualified.
Customer: replied 1 year ago.

Hi Keith

My questions are

1-why would some companies need to go through corporate insolvency?

2- If one director has about 5 companies gone into liquidation under his directorship although all debtors paid, does that make him a risky director? or unhealthy record as a director?

Thank you

Expert:  bigduckontax replied 1 year ago.
If a company is insolvent then the Directors must put it into receivership.
Also any dissolution of a company, solvent or insolvent, must be undertaken by a licenced insolvency practitioner.
You will appreciate that I could not possibly comment on an individual director. He might have just been unlucky or appointed too late when the organisation had gone beyond the point of no return. I was once taken to look after the accounting of a company and a few moments work revealed that a series of contracts were actually losing the company a quarter of a million a year. The directors simply didn't believe it and within two years the company had gone to the wall. In the meantime the executive who had negotiated the contracts decided to seek employment elsewhere.
The director was unlucky in that case; he simply lacked the management accounting skills to analyse his business. It had taken me a few minutes on the back of the proverbial envelope to reveal the true position.
Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3116
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.

My questions are general and I have not mentioned any name as it is evident from my question. So i really do not understand your comment when you say you cannot comment on an individual director. Also I did not mention one company and mentioned several companies so really luck does not come to it. As I said my question is general. I can understand this is not the area of your expertise. Please can you leave the question open for others to reply.

Thank you

Expert:  bigduckontax replied 1 year ago.

Well, I was being professionally cagey! Any of the professional accounting institutes could point you in the direction of an appropriate practitioner.

I would personally to be inclined to avoid that particular person as a director. Remember Napoleon's old adage when inquiring about a general's ability asked 'Is he lucky?' The same principle could well be applied to a director.

Thank you for your support.

Customer: replied 1 year ago.

haha Thank you! Wise words!

However I still do not understand if a company can pay all its debt why do they choose to enter into voluntary liquidation and appoint a liquidator to look after the affair and pay debt. I assume when a company is linked to a liquidator, this is not good for them whether all the debt is been paid or not. Right?

Expert:  bigduckontax replied 1 year ago.
Well, a liquidation is merely one way to get rid of an unwanted company. Personally I always suggest that it is sold off on eBay then you don't have the palaver and possibility of large costs of shutting it down and you might get a few quid out for it into the bargain.
If the company is to be closed down a licenced insolvency practitioner must be appointed to handle it even if it is not insolvent and these people do not come cheap. If it is being closed down frankly, who cares about its reputation.
Customer: replied 1 year ago.

It does matter to the reputation of a director. Doesn't it?

If a person records indicates several companies liquidated under his directorship that could make him look risky or incompetent right?

I suppose my question is why they do not pay the debt themselves and close the company rather than call the liquidator which does not sound nice I suppose. Is there any benefit in calling liquidators?

Thank you

Expert:  bigduckontax replied 1 year ago.
I would have thought the reputation as a director would be of importance. However some persons who were bank directors when their banks went pop seem to have done very well for themselves!
Directors must call in liquidators if their company is insolvent. They have bo alternative under Company Law.
Customer: replied 1 year ago.

But if a company can pay its debt is not insolvent right? They are solvent. That it what I like to understand that why they appoint liquidators when they are solvent?

Expert:  bigduckontax replied 1 year ago.
As I told you even a solvent company must be wound up by a licenced insolvency practitioner even if they are not insolvent.
Customer: replied 1 year ago.

Thank you

Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance.

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