The operating company of a care home in the New Forest had been in liquidation before. In the two years following the first liquidation, the new operating company racked up liabilities of £225,000 which resulted in a second liquidation.
The director/shareholder blamed this failure on the generic issues within the private care home sector. The care home closed and staff were made redundant.
The Solution - how we helped
Following our appointment as liquidator, we carried out a review of the company’s trading performance. Whilst it was undoubtedly true that the care home sector faced particular challenges of income versus operational costs, it became clear that one of the main reasons for the company’s demise was the substantial cash demands placed on the business by its director.
This case is ongoing. We will be seeking recovery of funds from the director in the region of £70,000. This will enable a significant return to creditors.
Our strategy is to obtain recovery of funds due at the earliest opportunity and having regard to the circumstances of those involved. If necessary, we will issue proceedings but this will inevitably take longer and ultimately result in significant unrecoverable additional costs. Early dialogue and plain speaking will in this case enable early recovery in the most cost-effective way.
This case highlights the fact that all too often owner managers treat company money as their own with little regard for the financial performance of the business. Awareness of these issues would allow early corrective action thus mitigating personal risk.