It is thought that Alexandra Kinninmonth of Baker Tilly will be appointed the liquidator of Hereford United (1939) Limited at a meeting of the club's creditors on March 9th.
This first meeting is due to be held at the Official Receivers Office in Bristol.
ING Lease, who are a small creditor of the football club, are pushing for Kinninmonth to be appointed and it's understood several large creditors have agreed to back the call.
If appointed Kinninmonth is expected to carry out a detailed review of the reasons why Hereford United went into liquidation.
Given the amount of assets of the club so far identified, Kinninmonth is unlikely to cover his costs. So that raises the question why does he want to be the liquidator? May be he feels there could be a case against the directors?
If that is the case then he might look at the directors role in the club as
under the Wrongful Trading provisions of the Insolvency Act directors may be made personally liable for some debts of the company.
(Wrongful Trading is defined as when a company continues to trade as normal even though the directors were aware of the fact that the company was going out of business.)
Liquidators often ask whether the directors took on credit knowing full well that they could not pay it back. Take HMRC – did the directors take VAT and PAYE/NIC deductions that they knew they could not afford to pay over? If they did then there may well be a legal action against the directors.
In the case of Hereford United, the directors continued to take in VAT from ticket sales and some other income despite owing HMRC a substantial amount of money.
The liquidator might also note the words of Marc Landsman, the Insolvency Practitioner who tried to steer through a CVA for the club.
"It's insolvent, it's had a long history. Unfortunately it finished today at a meeting at 10.00am," said Landsman on August 15th last year.
If that is the case then he might look at the directors role in the club as
under the Wrongful Trading provisions of the Insolvency Act directors may be made personally liable for some debts of the company.
(Wrongful Trading is defined as when a company continues to trade as normal even though the directors were aware of the fact that the company was going out of business.)
Liquidators often ask whether the directors took on credit knowing full well that they could not pay it back. Take HMRC – did the directors take VAT and PAYE/NIC deductions that they knew they could not afford to pay over? If they did then there may well be a legal action against the directors.
In the case of Hereford United, the directors continued to take in VAT from ticket sales and some other income despite owing HMRC a substantial amount of money.
The liquidator might also note the words of Marc Landsman, the Insolvency Practitioner who tried to steer through a CVA for the club.
"It's insolvent, it's had a long history. Unfortunately it finished today at a meeting at 10.00am," said Landsman on August 15th last year.
Directors of companies in financial trouble who wish to avoid allegations of wrongful trading should take the following steps:
- Ensure they always have adequate and timely financial information.
- Be alert to danger signs, such as pressure from creditors.
- Draw conclusions from the circumstances that a reasonably prudent business person would have drawn.
- Hold regular board meetings to discuss/review the company’s situation.
- Ensure they consider the interests of creditors as well as comply with their statutory directors’ duties.
- If there is a prospect of insolvency, do not incur new liabilities as if there was nothing wrong.
- Record conclusions.
- Take specialist, professional advice, consider it carefully and follow it unless there are very good reasons not to.
- Consider stopping trading and starting appropriate insolvency proceedings before creditors do.
Directors of companies in financial trouble who wish to avoid allegations of wrongful trading should take the following steps:
- Ensure they always have adequate and timely financial information.
- Be alert to danger signs, such as pressure from creditors.
- Draw conclusions from the circumstances that a reasonably prudent business person would have drawn.
- Hold regular board meetings to discuss/review the company’s situation.
- Ensure they consider the interests of creditors as well as comply with their statutory directors’ duties.
- If there is a prospect of insolvency, do not incur new liabilities as if there was nothing wrong.
- Record conclusions.
- Take specialist, professional advice, consider it carefully and follow it unless there are very good reasons not to.
- Consider stopping trading and starting appropriate insolvency proceedings before creditors do.
Wrongful
trading is when a company continues to trade as normal even though the
managers/directors were aware (or should have been aware) of the fact
that the company was going out of business. This is a civil offence, so
directors found guilty of it may be held personally liable for company
debts and/or banned from acting as the director of any limited company
for a period of up to 15 years. - See more at:
http://www.realbusinessrescue.co.uk/business-insolvency/difference-between-wrongful-fraudulent-trading#sthash.bXTqbCZ0.dpuf
Wrongful
trading is when a company continues to trade as normal even though the
managers/directors were aware (or should have been aware) of the fact
that the company was going out of business. This is a civil offence, so
directors found guilty of it may be held personally liable for company
debts and/or banned from acting as the director of any limited company
for a period of up to 15 years. - See more at:
http://www.realbusinessrescue.co.uk/business-insolvency/difference-between-wrongful-fraudulent-trading#sthash.bXTqbCZ0.dpuf
Wrongful
trading is when a company continues to trade as normal even though the
managers/directors were aware (or should have been aware) of the fact
that the company was going out of business. This is a civil offence, so
directors found guilty of it may be held personally liable for company
debts and/or banned from acting as the director of any limited company
for a period of up to 15 years. - See more at:
http://www.realbusinessrescue.co.uk/business-insolvency/difference-between-wrongful-fraudulent-trading#sthash.bXTqbCZ0.dpufFor example one crucial question is whether the directors took on credit knowing full
well that they could not pay it back. Take HMRC – did the directors
take VAT and PAYE/NIC deductions that they knew they could not afford to pay over?
If they did then there could be legal action against the directors.In the case of Hereford United, there's little doubt that right up to the end, the club were receiving VAT from ticket sales and some other income despite HMRC being owed a substantial amount of money. The liquidator might also take into account the words of Marc Landsman,the insolvency practitioner who acted as the nominee for the recent CVA proposal."It's insolvent, it's had a long history. Unfortunately it finished today at a meeting at 10.00am," said Landsman on August 15th last year.
For the record, Baker Tilly were Hereford United's accountants until shortly after former chairman David Keyte took over the club.