Corporate Debt and the Law
Fortunately, as the Director, of a limited company, you are afforded some protection by law against the debts of your business. In fact, the law sees you as completely separate entities.
Unless you have personally guaranteed a debt, you are not liable for that debt, that is unless you have your right to limited liability revoked, which is unlikely at this stage.
The legal process for claiming against a limited company is fairly similar to that for a personal debt.
- County Court Judgment
- A creditor usually applies for a County Court Judgment (CCJ) against the company before they can do a lot.
A CCJ is just a way of the court acknowledging that you owe the money.Once the CCJ has been granted and ratified, then this opens the door for a creditor to enforce the debt in other ways.
- Bailiffs.
- The Creditor can ask the court to instruct a bailiff to attend your premises. There job is to recover goods to the value of the money you owe. Although Bailiffs can value goods on the negative side of their true value – just to make sure they are covered when they come to sell them.
- Winding Up Petition.
- The ultimate step is to issue a Winding Up Petition against the company. This is an invitation to all your creditors to attend a High Court hearing to decide on your Solvency.
Should the Winding Up Petition be granted then your case will be passed to the Official Receivers office to place into Compulsory Liquidation.