My insolvent business has ceased trading but creditors are still harassing me

Can creditors continue to ask for payment when you stop trading?

When a business enters insolvency and can no longer pay its bills, it’s not uncommon for creditors to suspect wrongdoing of some description by the directors. Not surprisingly, people look for someone to blame, and this blame is commonly placed at the door of those who have run the business.

Circumstances can change very quickly in business, however, and it doesn’t take long for a ‘slow’ month or two to cause serious financial decline. Maybe the commercial environment or industry in which a business operates has caused it problems, for example, rather than negligence or wrongdoing on the part of the owners. Unfortunately, this means business owners can sometimes experience harassment by creditors.

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When creditors are harassing you

These situations can be difficult to deal with as a business owner or director who has genuinely attempted to steer their company out of danger, and if you’re being harassed by one or more creditors it may be time to report it to the police.

It’s important to keep a record of instances when you’ve felt threatened or harassed by a creditor, as it will support a complaint should you need to make one. Whether it’s continuing threatening phone calls, letters, or visits to your home, this type of harassment needs to be stopped. Making a complaint to the police may be sufficient to warn off the creditors, as it shows you’re serious about taking action if necessary.

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When misfeasance has occurred

If a business enters insolvency the owners have a duty to cease trading and place the interests of their creditors first. This protects creditors from losing more money than is necessary, and helps business owners to avoid accusations of wrongdoing or misfeasance.

In broad terms, misfeasance is the misappropriation of company funds or property assets - examples can include making preferential payments, selling assets for less than their true value, and taking such a high salary that it contributed to the business’ downfall.

What are the ramifications of misfeasance and fraud?

If a creditor makes a claim of misfeasance against you, it could result in personal liability for some or all of the business’ debts. Disqualification as a company director is also a possibility, and this could be for up to 15 years. In cases where fraud is proven, you may face criminal prosecution.

In an effort to win their claim the creditor could pursue you through the courts for repayment of the debt, putting at risk your own personal assets and funds if you can’t afford to pay and have to enter bankruptcy.

Our partner-led team at Real Business Rescue can offer support and advice if your business has ceased trading and you feel you’re being harassed by creditors. We offer free same-day consultations, and operate an extensive network of offices around the UK so you’re never far away from professional help.