Directors Loans – We Do Accounting

Not Everything Is As It Seems

As a child, you may have been captivated by the enchanting yet cautionary tale of Little Red Riding Hood. In this beautifully woven story, a young girl is asked to deliver a picnic basket filled with delicious treats to her beloved grandmother.

Her mother, speaking in a serious tone, warns her daughter about the importance of sticking to the route she has given, sharing her own experiences and cautioning her that straying from the path can be dangerous.

However, as the narrative unfolds, Little Red Riding Hood, disregarding her mother’s wise advice and convinced she has found a shortcut, chooses a different path. Soon, she becomes lost deep in the heart of the woods, where she encounters the cunning wolf.

With a charming demeanor, the wolf inquires about her journey. He pretends to be concerned for her safety, his eyes glinting with mischief as he offers to guide her to her grandmother’s house.

Beneath his seemingly friendly facade lies a web of treachery. Once the wolf learns of her innocent plans, he seizes the opportunity to satisfy his wicked appetite, scheming to have two meals: the unsuspecting grandmother and the naïve Little Red Riding Hood herself.

Ok, so if your thinking nice story but how's that going to help me and my situation then read on....

Expert help when you most need it

We’ve helped hundreds of business owners by significantly reducing director loan payments, negotiating with creditors, ensuring a business is properly closed so nothing comes back as a problem, helping transition seamlessly and correctly from one company to another (Phoenix) and help with many other often complex issues.

We are problem solvers and fixers, and if you are in a tight spot, we are a great team to have in your corner. Using our experience, knowledge, supported by expert teams covering accountancy, law, finance, creditor negotiations, debt collection services, sales & marketing are all there to help you navigate out of the situation you are in.

We recognize that this is a highly stressful period in your life, and the pressure you are under is likely affecting your business, home life, and well-being. By partnering with us, you can relieve yourself of much of this burden, quieting the chaos around you. You’ll have the chance to take a breath, take stock and be able to think more clearly. Rest assured, your pressing challenges will be managed by professionals who tackle these situations daily.

Are you ready to regain control get your life back? If so, keep reading…

In the beginning - 'All Smiles'

Faced with the difficult decision to close your business you will want to seek expert advice and guidance, for most that will involve contacting an Insolvency Practice.

A Google search shows the market is competitive and for good reason (we will explain why below).

It is likely when you speak to an IP they will advise closing your business using a Creditors Voluntary Liquidation (CVL). This is because:

Avoiding Legal Action: A CVL is often chosen to avoid more severe consequences like bankruptcy or forced liquidation by creditors. It provides a formal, legal structure to manage the closure of the business.
Creditor Relations: It allows for the proper management of creditors, avoiding direct confrontation and reducing the risk of legal actions or creditor pressure.
Protection from Personal Liability: If you have acted in good faith, opting for a CVL can help shield directors from personal liability for company debts, though this is not always guaranteed, particularly if directors have been negligent or have broken the law (such as trading while insolvent).

Speaking with many business owners who utilized an insolvency practitioner to close their businesses, we found that their experiences were generally positive.

They were satisfied with how it went and the service provided and the IP was all smiles too, but this is not the whole story to use our little Red Riding hood analogy this is the scene where the Wolf is disguised as Grandma, read on…

Things are not what they seem

What we are going explain may suprise and even shock you, many we work with are understandably angry about being misled and unwittingly caught in a trap.

To understand better let’s breakdown how an IP gets it’s revenue which is made up of two parts.

Part One is the fee the IP charges you for closing your business.

Part Two is made up of two parts:

The IP is paid a management fee for managing the business’s closure and collecting any money owed to the business.

The IP retains a percentage of any monies collected this includes director’s loans.

For the IP, Part Two is where the big money is, in most cases, worth many times more than what they receive in Part One. Once you understand this you can understand why the IP might want to make the fees in Part One quite competitive. Not quite a loss leader but you grasp the point I hope that in order to unlock the big money in Part Two they need to secure clients for Part One..

IPs Can Be Disguised As Wolves

To clarify in Part One, the process of closing the business, the IP is working for you; hence, everything is all smiles. But…

Once the initial steps have been taken to close down the business and the IP moves into Part Two, the pursuit of money owed to the company that no longer works for you will now work for the company on behalf of the creditors.

The first you may become aware that the IP disguise has slipped is when you are being chased for payment of a directors’ loan you were most likely unaware of.

What Next...

Most business owners seeking our help have made the difficult decision to close their businesses.

To tailor our help and support and work towards the best possible outcome for you, please look at the three scenarios shown below and click on the most appropriate button. Complete the simple form (takes 30 seconds) and we will call you within 48 hrs to discuss you situation and see how we can help you.

Our help falls into three distinct groups, which can be categorised as follows:

An IP has not been appointed: • While you have decided to close the business, you are still researching the best way to do this and who to appoint as your IP to do this for you.
An IP has been appointed but the business is not closed: Your situation is that the business is in the process of being closed, and you have appointed an IP to do this for you.
Your business is legally closed: Your situation is that the business is officially closed.