Liquidations & Directors Accountability
When a company goes into liquidation by order of the court or by way of a creditors’ meeting, the conduct of its Directors is investigated to determine if they are to be held responsible for the failure.
An examination of the Top Ten queries concerning a Director’s conduct (listed here) determines the extent of any further action.
Top 10 Queries concerning a Director’s Conduct
- Have any of the Directors been involved in a previous liquidation?
- Did the company take deposits from the public which are now at risk?
- How much money is owed to the Revenue? How much of the total debt is this amount? Over what period of time did the debt accumulate? Were estimated or incorrect returns submitted?
- Have the Directors preferred one creditor or class of creditor above another?
- How have the Directors dealt with ex-employees? Were employees given their P45 form and advised of their statutory entitlements regarding redundancy, pay in lieu of notice, arrears of pay and holiday pay?
- Did the Directors benefit personally (directly or indirectly) from the liquidation of the company? Do the Directors owe any monies to the company?
- Could the liquidation have been carried out sooner and at a lower loss to the creditors? Did the Directors seek – and then fail to take – professional advice that could have lessened the overall impact of the liquidation?
- Is the overall size of the company’s indebtedness disproportionate to the scale of its activities over the life of the company?
- Will the Directors be attempting to re-start a similar company?
- Were the Directors timely in submitting their returns to the Companies’ Office and the Revenue Commissioners over the life of the company?