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There is a risk for directors personally that they could be found liable personally for their company's liabilities. Many directors aren’t aware of that. If they carry on trading in business beyond the point that they know or ought to know that it's not going to avoid insolvency, then a subsequently appointed liquidator could apply to court to have them found personally liable.
That is a big risk for directors and one that not many are aware of. Another thing for directors to watch out for when they have businesses that are in financial difficulty is the question of preferences.
So for example if they have given a personal guarantee to a bank, and they arrange, in the period leading up to the appointment of a liquidator or administrator for that loan to be repaid, so to take away their personal guarantee liability, then that's something that can be overturned by the liquidator of the company subsequently.
So they're not avoiding that liability. That also applies to director's loans account, if they have taken loans from the company... sorry if they have given loans to the company and either arranged for those to be repaid just before the company goes into liquidation or administration, then that's a transaction that can be overturned by the liquidator or administrator.
So that also applies where directors have given loans to their companies and in the period leading up to the company going into some form of insolvency process, whether that's administration or liquidation, they arrange for those loans to be repaid by the company to themselves. That's a transaction that a subsequently appointed liquidator would certainly seek to return and would be successful in doing so.
For more information on the personal liabilities of company directors as well as other types of risk, you can watch more videos from Henry Shinners here.
Entrepreneurial spirit will be portrayed in various parts of a persons character. In this TV show Julie Meyer discusses persistence.
I’m fairly good at picking up on how much steel somebody has in their spine. So, you can tell and it’s not just the level of intensity or the stare that they give you, it’s more you can kind of sense in how concerted an effort. People betray their level of persistence in many ways and I don’t know how, it’s almost like a neural network after you’ve done it for so long. But you can kind of sense whether somebody’s going to pull through, for example, with Alastair Lukies of Monitise there’s just something that I felt about him that he was extraordinary and exceptional. And, you know, when he got his first client he secured the first client and he sent me a text message, it was like a Friday night in 2006. And I remember getting a text message that said, you know, 106 meetings, 76 nights away from my wife, but we have a client today. And, you know, that’s irrational, that’s obsessive behaviour. Normal people do not do that, normal people don’t just keep on going. Now, he wasn’t just banging his head against the wall, what he was doing was constantly learning, constantly retargeting, adjusting. And so the man is extremely smart, which is why Monitise is doing, you know, Monitise will be one of the most important companies ever to have been founded in the United Kingdom. But it takes an irrational level of persistence. And I think I’m pretty good at figuring out whether somebody is up for that.There are many more great videos about entrepreneurial spirit and business success on Inside Finance. Look out for more briefings on the subject.