The background
A construction company suffered a devastating loss, when one of the two directors, only in their mid 30s, unexpectedly passed away. What was in place to run the company without this key person?
The former director was fundamental to the operation of the company. Though the remaining director was able to make decisions about what could happen going forward, [in amongst their personal grief]; the company had no plans, no Key Person Insurance and no Power of Attorney in place.
Trading ceased. There were assets in the company, but these were less than the outstanding creditors were owed. Their accountant was helping by piecing together the paperwork from the last few months to see what the level of creditors was.
The letters from creditors began to arrive demanding payment, which was frightening for the director. They had not handled this side of the business before and found it difficult to deal with the requirements of running the company.
What happened next?
As an Insolvency Practitioner, we were recommended to the director by their accountant and worked with them to find establish the best way forward. Using active listening skills and demonstrating empathy were important whilst talking to the director all the while ensuring that they fully understood the liquidation process.
Although there is no requirement by law or regulatory bodies; Even Keel Solutions’ licensed Insolvency Practitioner, Dorothy Brown, felt strongly that her duty of care to the director should acknowledge the former director’s achievements within the business, and allow the remaining director to work within their timeframe. The emotions of loss and grief were deeply felt, affecting the mental health of the remaining director.
The end result
The outcome was that by
liquidating the company it could be brought to an end. The director remained involved at every stage, as this was part of making their own goodbyes.
The moral of this case study is to
think about the future; even if the company is small how will your loved ones be affected by any major changes? How will the company be affected? Will everyone involved be affected in the same way?
Whilst there is no crystal ball, planning will certainly help the future should the worst happen.
Dorothy Brown comments “this situation was heart-breaking. My skills and experience as a trained counsellor were incredibly useful when it came to dealing with the remaining director. It is not only the technical knowledge of insolvency that was important in this case, emotions, feelings, and the understandable fragile mental health of the director also had to be handled very carefully.
It always pays to have a plan in place for your business. Whilst we all hope that these situations are very few and far between, hope is not a strategy and it is quite straightforward to have simple things in place such as a
Shareholder Agreement, Key Person Insurance and a
Power of Attorney which would have helped tremendously in this case.”
