Business v Personal Finances

KCKNRS

Morning all,

In September 2010 my business became insolvent and stopped trading, we are currently in the process of being struck off Companies House register.

At the time of stopping trading we had two outstanding overdrafts, one of c.£3000 and another of c.£600 - the banks have written to us asking for payment but we are not in a position to be able to clear these overdrafts - we have no assets to sell.

What is the best course of action to take bearing in mind there are no funds to repay the overdrafts? Will my business activities have an impact upon personal finances?

Thanks for your help in advance.

DVardysShadow

Are these overdrafts personal or business? Is the company Ltd?

KCKNRS

Hi DVardysShadow,

Thanks for your reply. It is/was a Ltd company with all shares fully paid up.

The overdrafts were both taken out in the name of the business. I am aware that the details held on the banks file for contacts are myself and the other director - this is why I am worried that they will be able to chase the debt.

I also hold a current account with both of the banks.

DVardysShadow

Unless you signed personal guarantees, they cannot chase you for the overdrafts directly. But beware! As you cannot clear them from company assets, your company is insolvent and you need the right advice as to how to close the company down. If for example, you ceased trading but carried on paying yourself, leaving an overdraft, you would be in the wrong. Also if you paid off all your suppliers and created the overdraft, you would also be in the wrong, because you have made the bank bear all of the losses of your business, whereas these should have been split across everyone who was owed money.