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Debt Advice Handbook 14th edition

Business debts
Many people seek advice about business debts (see Chapter 16). If a business is still trading but is facing financial difficulties, seek specialist advice from, for instance, an accountant, insolvency practitioner, local business centre or small firms advisory service on the viability of the business.
The legal position
If the business has already ceased trading, deal with debts as with any other case of multiple debt, using the same criteria to decide whether they should be treated as a priority or not (see Chapter 8).
First, establish liability for the debts. You should check whether the client was a sole trader, in a partnership or a limited company. A sole trader is personally liable for all the debts; in a partnership, all partners are ‘jointly and severally’ liable. In limited companies, only the directors can be held liable for any debts, and then only if they have personally guaranteed a loan or, under company law, if there has been wrongful trading or neglect of their duties as directors.
Checklist for action
Advisers should take the following action.
    Consider whether emergency action is necessary (see Chapter 8).
    Consider whether the client should be referred to a specialist agency – eg, Business Debtline (see Appendix 1).
    Otherwise, assist the client to choose a strategy from Chapter 8 for any priority debts and/or from Chapter 9 for any non-priority debts.