When a key and sometimes sole director/shareholder of a company passes away, things are understandably thrown into disarray both inside and outside of the company. BRI Business Recovery and Insolvency are often asked to support during these challenging times. We fully appreciate that these are difficult circumstances for everyone involved, and we will provide the required support with empathy and professionalism.
If you have found yourself in a situation where a director or shareholder has passed away and you need assistance in how to manage business finances, contact our team of insolvency practitioners today. We can give you the best advice for your individual situation.
What Happens When a Director Dies? What We Do First
When a director dies, BRI Business Recovery and Insolvency will start by ascertaining as many facts about the company as might be available, sometimes it is very little. We will attempt to see if the business can continue in its current form or be continued by someone else via an asset sale.
If the business is unable to continue or be sold and needs to close, this support is usually to help the family have the company struck off (dissolved) or place the company into either solvent or insolvent liquidation.
Types of Assistance Provided by BRI When a Director Dies
Next, we will discuss the situation with the executors and discuss the options available to them.
- If most or all the facts of the company are known and the company has no assets and no liabilities, then a strike off might be the best and cheapest way to conclude its affairs.
- If the company has assets to distribute to the estate/shareholders in excess of its liabilities, then a solvent liquidation might be suitable.
- When there are insufficient assets to pay the liabilities, or we simply don’t know enough of the facts of the company, then an insolvent liquidation might be the best option to return money to creditors or shareholders.
When a director dies, everything can be very overwhelming and emotional for all involved. That’s why we are here to help. You don’t need to know what type of assistance you require, contact us today, and we will alleviate the pressure on you.
Providing Sensitive Handling and Authority to Act
During these difficult times, the team at BRI Business Recovery and Insolvency recognises that the situation requires careful handling of sensitive family matters together with both legal and practical considerations.
In both solvent and insolvent scenarios, we are required to verify that those seeking support have the authority to act on behalf of the estate of the deceased director. If not, then we put them in touch with solicitors who can assist them in obtaining the necessary authority.
Information and Documentation to Gather When A Director Dies
To move forward with the closing or restructuring of a business when a director dies, we will require certain documents. Before you meet with a member of our team, you may want to start gathering this information.
To ensure that the relevant documents are in order, we often need the following:
- Death Certificate of the Director:
- To confirm the passing of the director, the death certificate is an essential document. If the director was the sole director, this document becomes even more critical to demonstrate the company’s inability to function without its director.
- Grant of Probate or Letters of Administration:
- A Grant of Probate is issued by the court to give the executors the power to deal with the estate where there is a will. Where there is no will, Letters of Administration are granted to the administrator of the estate.
- Articles of Association and Memorandum of Association:
- These documents should be reviewed to check for any clauses related to the appointment or removal of directors, and to confirm if there is any mention of what happens in the event of a director’s death.
- Register of Directors:
- Check to see if the register of directors reflects the death of the director and ensure that this is recorded at Companies House as soon as possible. If the company only has one director, it may need to appoint a temporary or new director to proceed with formal steps (this could be a family member or professional).
- Company’s Financial Statements and Tax Records:
- Review the most recent financial statements, management accounts, and tax records. These will help determine the financial status of the company, liabilities, and assets. It is crucial to establish whether there are outstanding tax filings, unpaid debts, and other financial obligations.
- Bank Statements:
- Obtain recent bank statements to assess the company’s cash flow, any pending payments, and debts. We also need to identify the company’s bank accounts to ensure proper handling during the liquidation process.
- Creditor Information:
- Gather a full list of creditors, including HMRC, suppliers, employees, and any secured or unsecured creditors. This is crucial for preparing the Declaration of Solvency in an MVL or Statement of Affairs, which will be filed as part of the CVL process.
- Shareholder Information:
- If there are shareholders (other than the deceased director), their details and any decisions or consents they need to provide should be reviewed. The process for appointing a new director or a liquidator may require shareholder resolutions.
- Asset and Property Documentation:
- Identify and gather any documentation regarding the company’s assets, including leases, property ownership, vehicles, intellectual property, and other tangible or intangible assets. This information is needed for the liquidation process.
- Employment Contracts and Payroll Information:
- If the company has employees, employment contracts, salary information, and payroll records are needed. This is important for employee claims in the liquidation process.
Deceased Director and Working with BRI
When a director dies, the key steps revolve around ensuring the legal and financial documentation is in order, obtaining the necessary authority, and resolutions. By following these steps, BRI Business Recovery and Insolvency often helps families navigate the difficult process smoothly and efficiently whilst ensuring that the executors are dealing with the company correctly.
If you are in the unfortunate position of needing to deal with a company following the death of a key director, then please do reach out to any of the management team at BRI Business Recovery and Insolvency at https://www.briuk.co.uk/contact/ by email at info@briuk.co.uk or telephone 02476 226839.