FAQs for directors: general queries

What is a debenture?

A debenture is a legal charge and gives the debenture holder (the lender) security over the borrower’s assets. Typically, a debenture is used by a bank, factoring company or invoice discounter to take security over a limited company.

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Our club is insolvent what should we do?

If the club/society is unincorporated (not a limited company) then the members are usually personally liable for all the debts.  If the club is run within a limited company then the debts will rest with the company and not the individual shareholders – unless they have had to guarantee a debt.

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How to dissolve a partnership with financial problems?

If the business is a solvent partnership then it can be dissolved by agreement with the relevant parties in line with a partnership agreement.  If the business is insolvent and cannot pay its debts in full or as they fall due then it will need to go into either liquidation, administration or a partnership voluntary arrangement (PVA).  

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What is a phoenix company?

A phoenix company describes a new company that has risen again from a previously failed company.  Quite often the old company will have gone into liquidation and the directors will buy back the assets and start trading again in the same business.   

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