One of Kent’s Chambers of Commerce has ceased trading today in light of a winding up petition to be presented in court.
Thames Gateway (Kent) Chamber of Commerce now faces compulsory liquidation.
The board, which were only elected in January 2010 had decided to seek advice from insolvency practitioners earlier this week after December and January export services revenue was much lower than forecast.
The board also claim that revenue from memberships and cash at bank was lower than expected.
A statement from one of the directors said: "We have been saddened by a number of matters that have come to light which, had they been known to us when we were nominated and elected as directors, would have dissuaded us from accepting."
Although all the circumstances surrounding Thames Gateway (Kent) Chamber of Commerce are not clear, this is an all too common scenario in business.
It is the duty of all directors to be aware of the financial position of the company especially when the company enters an insolvent situation.
If directors are not aware, or they ignore statutory demands, solicitor’s letter s and other threats of legal action, they run the risk of a creditor presenting a winding up petition seeking a compulsory winding up order by the court of the insolvent company.
If the company cannot satisfy statutory demands or other threats of legal action or can’t pay its debts as and when they fall due, the company is insolvent under section 123 of the insolvency act 1986, then directors should seek advice from a licensed insolvency practitioner.
If the company continues to trade, the directors run the risk of wrongful trading which is a breach of section 214 of the insolvency act 1986 and can lead to legal action against the directors.
If directors take action early, they can propose a CVA and apply to the court for a moratorium (only available for small companies) or appoint an Administrator in order to stay proceedings against the company and get a better result for the creditors. This would be deemed as taking appropriate action as well as initiating a Creditors Voluntary Liquidation.
If you are worried that your company may be insolvent but still viable, a CVA can be used to restructure the historical company debts and rescue the business from liquidation (CVL).
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