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Richard Simms Insolvency


Directors Actions

Pressure Explanation
Drawing dividends when the company is struggling Not necessarily a problem as long as a dividend is not taken when the company is insolvent. 

If a company enters insolvency, any dividend taken in this time will be an illegal dividend and upon entering liquidation, these dividends will need to be paid back into the company.


It is important to stay on top of understanding when the company is in trouble to ensure dividends are stopped and normal salary is resumed.

Director/shareholder propping up the company personally If a lack of funds is coming into a company then some directors feel it is their responsibility to prop the company up personally until trading increases. 

By pouring more money into the business without fixing the underlying problem then the money will just be a short term fix.


The danger here is that the director maybe investing their personal money with no return, especially if the company does not have a positive trading aspect going forward.

Directors not drawing a salary A lack of salary taken by the director could mean that there is not enough funds in the company to pay them a salary. 

If there are not enough funds, then the cash flow should be looked at in detailed to see where the drop in funds began and the reasoning for it.


If the problem can be identified then steps need to be taken to rectify it. If the problem seems to be ongoing then further professional help will need to be sought.


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