No longer a director on Ltd co. Am I liable?

F

fmcg

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To cut a long story short, I was a director on a business up until last October...my partner and I were seperating so I wanted out. I only held the nominal 1% shareholder because it was really my partner's business and a second person was needed to establish a limited company.
He has just informed me that the co will be going into liquidation v soon and that i might be hit by the revenue as well as other creditors because I was a director up until recently.
Is this true?! I am in shock and scared stiff as i thought that since he'd taken my name off as a director i would not have any liabilities regarding his company.
Help!
 
You can not normally be held liable for a company's debts because you were a director or a shareholder. That might not apply if there was some irregular practice in which you were complicit.

You might be exposed to some liability if you signed personal guarantees on something like a bank loan.
 
Even if you have not signed personal guarantees you could have a problem.
If the company traded recklessly and/or fraudulently prior to winding up and this occurred when you were a director,fairly recently,then directors can be held personally liable for the debts of the co.

Get a solicitor.
 
There was no fraudulent activity or any irregularities, well, not to my knowledge anyway. I am going to my accountant now to get some advice, also solicitor.
I did not sign any personal guarantees either. It is a car dealership business so its not sustainable in the current climate and my ex partner is struggling to keep head above water. All small suppliers have been sorted out with what is owed, major bills left are to the bank and revenue.
Thanks for your responses.
F
 
It sounds to me as if your former partner might not understand the law, and is needlessly scaring you -- or does understand the law and is needlessly scaring you anyway.

I am sure that your accountant will reassure you.
 
Just seen the accountant who has reassured me that I am not liable. He has audited the company recently and said that everything is above board and there has been no messing. The bank are the ones putting on the squeeze to wrap the business up, even though former partner has offered to pay them repayments of interest only or work out some kind of extension on the loan with them. It seems they would prefer to do a fire sale than look at the business in a medium term.
The Accountant is very surprised at the bank's attitude of cutting off their nose to spite their face in forcing a closure. Then again, nothing surprises me in the current climate.
 
fmcg said:
The Accountant is very surprised at the bank's attitude of cutting off their nose to spite their face in forcing a closure. Then again, nothing surprises me in the current climate.
Click to expand...

A sign of the times, it was this type of short term thinking by the banks which got us into this mess in the first place - trying to make quick profits with dodgy business models which were unsustainable, now it is the small and medium businesses that are suffering as the banks try to bring in revenue, cut costs and call in any loan which looks the slightest bit troublesome.
 
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