FAQ's

A phoenix company is perfectly legal, subject to certain conditions and criteria being met, and the correct insolvency procedure being implemented; the Enterprise Act 2002 encourages business rescue via a phoenix company scenario.

With either a Liquidation or Pre-Pack Administration, the answer is yes. The business can easily be carried on by a new, completely debt-free, phoenix company.

In a CVA scenario, the company will remain in existence and continue to trade, but typically up to 75% of debts will be written off, with the remaining 25% paid over a number of years by monthly instalments.

As you will negotiate and agree on the acquisition of the business and assets prior to the formal insolvency process, you will know in advance that you will acquire the business, and exactly how much you will have to pay.

This depends upon your company's own unique circumstances, what you are seeking to achieve, and the intensity of pressure you are under from the company's creditors. Typically you will start your new, debt-free new business, within 3-5 days, although if creditor pressure is intense, then the business rescue process and transfer of the business & assets can be achieved the same day.

The Company Directors Disqualification Act 1986 provides for the disqualification of rogue directors i.e those that are considered unfit to be directors of a limited company and enjoy limited liability. Assuming that you have acted reasonably throughout, there is little chance of disqualification. There is no restriction whatsoever on you being a director of another limited company, although there are restrictions on the re-use of a company name, but this restriction can be overcome by the use of, and complying with, the appropriate procedure and legislation.

There will be little or no implications for directors personally, as the liabilities are the company's liabilities, not those of the director personally (although any personal guarantees given will be the responsibility of the director providing the guarantee). Also, the company's insolvency does not affect the personal credit rating of the directors or any associated parties in any way whatsoever. However, if the directors have been delinquent or in breach of their fiduciary duty, or made any payments which could be deemed to be voidable, or maybe there is an overdrawn director's loan account, then they may face actions personally for the recovery of monies from the duly appointed Liquidator, and hence expert advice is required pre-insolvecy.