It’s quite common for individuals running companies to appoint their spouses or partners as directors of their company, even though there is no intention that the spouse or partner should take any active role in the company’s management. Apart from anything else, there may be sound tax mitigation reasons for doing so.
Even companies with the most rigorous credit control procedures run the risk of incurring a bad debt should a customer fail. For smaller companies, incurring a significant bad debt can result in the end of the business itself.
Many of us remember the revulsion that we felt in 2011 when watching the BBC’s Panorama undercover investigation into the private hospital in South Gloucestershire known as Winterbourne View.
It’s often said that a company shouldn’t trade whilst it’s insolvent. Trading whilst insolvent, even knowingly, is not necessarily unlawful although it is, of course, far from desirable.
When a company requires corporate recovery advice or enters the insolvency process, it shouldn’t necessarily mean the end of the business. In many instances, the company remains viable and could be saved through a process of restructuring.