by Royal Rother »
10 Feb 2010 18:40
Muskrat This is a joke. HMRC have stated unequivically that Portsmouth are by any measure, trading insolvently, which I understand is against Company Law. They should simply be wound up as a business. End of.
That's not really correct.
If the Directors identify that they have a problem (i.e they are insolvent) it is their responsibility to take appropriate action to protect their suppliers etc. from incurring further debt. If they, and the insolvency practitioners they consult, believe that there is a good chance that they could obtain funding from some other source (sale of assets at good values / outside investment), then they are at liberty to continue to trade.
There are other things they are supposed to do as well, (like inform their suppliers that they are insolvent every time they place an order I think) but the above is the nutshell case as I understand it.
If it can be proven that the Directors continued to trade, and in doing so actually increased the debts, when there was no real likelihood of obtaining additional funds, then they could be in serious trouble because the creditors can come after them personally for the amount the debts were increased by after the period when they should, by rights, have ceased trading.
I can't believe they haven't taken the appropriate advice - if these various owners have all proved to have bugger all money, but at the time it looked they might well have, then it is unlikely a case could be proven against them of acting against the interests of the creditors by continuing to trade; after all, the creditors all want the directors to be successful in raising additional funds so they can get paid.
If on the other hand the various owners have all been in on some conspiracy with the Directors, playing a game of smoke and mirrors, then the whole lot of them could go down for a few years.