A recent case has raised issues which may have far-reaching and important consequences on the finances of one spouse in the event of the bankruptcy of the other. The question which arose in the recent case of Lemon & Wood v Chawda concerned a residential investment property jointly owned by Mr and Mrs Chawda since it was purchased in 1995. Both before and after Mr Chawda’s bankruptcy in November 2011, the rental income had been shared equally between them.
… that, according to the latest figures from The Money Charity, at the end of September 2013: Outstanding personal debt in the UK stood at £1,428,000,000,000; The average household owed £54,178 (including mortgages). Put another way, every adult in the UK owed £28,649;
Should we open an office in the London Borough of Walford? It’s probably about 12 years or so since the BBC soap Eastenders ran a story-line in which would-be catering magnate, Ian Beale, became bankrupt. His then squeeze, Laura, bought back his fish and chip shop from the Official Receiver enabling the business to continue. But 2013 has seen a rash of real-life bankruptcies of past and current Eastenders stars.
Recent years have seen a growth in the number of unqualified, unregulated so-called “insolvency advisers”. Frequently the advice given is, to say the least, decidedly dodgy, and the Insolvency Service is conducting an ongoing operation looking at such businesses.
Businesses aren’t out of the woods yet in terms of financial security. Corporate insolvencies are down, but this might only be storing up problems for later. If your business is struggling financially, what should you do to try and keep the company running?
Throughout the last few years of economic difficulty the number of company insolvencies has remained remarkably low. Given the depths of the recession – the deepest for generations – the assumptions of some sort of “insolvency boom” seem to have been misplaced.
Some people like Mr Allan Jeffrey Court. Mr Court was a director of Project Two Services Limited, which went into administration in 2004. In November 2006, he was disqualified from acting as a director of a company for a period of 3 years and 6 months. At the same time he formally resigned as a director of another company in which he was involved, Ducal Building Services Limited.
It pretty well goes without saying that, especially where small companies are concerned, and lender will insist on personal guarantees from the directors. No-one ever gave a guarantee expecting it to be called up, so when things do go wrong directors are often exposed in ways they never envisaged when they formed a “limited” company. And their surprise is all the greater when they had resigned from the company some time before the failure.
Section 388 of the Companies Act 2006 requires company directors to ensure that their companies maintain accounting records which explain each company’s transactions and disclose with reasonable accuracy at any time the company’s financial position. They must also preserve those records for a period of time, which varies depending on whether the company is a private company or a public company. Failure to keep and preserve records as required is a criminal offence.