Real Story – Paying back Dividends and an Overdrawn Loan Account

When the director has been paid too much

Before S Ltd was placed into liquidation, it looked as though no-one would get paid. The amount the Director admitted he owed the company would not even pay the costs of the liquidation. After Carmichael & Co had finished their investigations, it became clear that the Director owed the company far more than he said. Not only had the company loaned him money but it had paid him dividends on his shares when it did not have the profits to do so, and was also not paying its creditors.

Carmichael & Co tried negotiating with him, but he stuck his heals in trying to keep the excessive dividends. He had set up a new company (doing something totally different) and obviously wanted to invest his money in that one.

Just days before a bankruptcy petition was issued, the director agreed to pay the illegal dividends back to the company and it was possible to pay the preferential creditors in full, and 17p/£ to the other creditors.

Despite the new company being based on a very good idea, the extra costs meant that his new business did not get off the ground. If he had agreed earlier on creditors would have been paid about the same as our costs woudl have been a lot lower.

Other pages to read with real stories

All of these are true stories, real amounts, with just the names shortened. One of the people even phoned to ask if it really was him!

Not managing with a debt management plan
The debt laden dentist
New shopping centre led to financial problems
Personal Appearances led to a personal guarantee
When your health is more important than your company
Paying for liquidation if you can’t afford it
When insolvency isn’t the answer

Carmichael & Co has experience dealing with the insolvencies of people and companies from the following trades: accountants, barristers, builders, bus drivers, civil servants, dentists, doctors, electricians, engineers, firemen, football clubs, gardeners, glaziers, health clubs, house-husbands, housewives, independent financial advisers, jewellers, lifestyle coaches, mechanics, nurses, printers, property developers, pubs, restaurants, scientists, shops, solicitors, supermarket workers and truck drivers to name just some.

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