if a company is trading as a partnership

[andie]

hi,if a company is trading as a partnership and then goes limited are all previous customer governed by the limited liability if the company should go bust.there are no outstanding debts fron the partnership

the company is trading as a limited company and then enters into a factoring agreement with royal bank of scotland.however this account is a 'trading as' account. are the company creditors still covered by limited liability or is the full debt due.

any ideas pls
rds andie

[MelanieGiles]

Hi andie

I assume you are enquiring whether former partnership debts are transferred rightly to a limited company upon incorporation. The answer to that is NO I am afraid. Partnership debts remain debts of the old partnership which remains in existence until it is formally dissolved, and therefore are the personal liability of the partners.

I do not understand your second point - please clarify. If the factoring agreement is in the name of a limited company, which trades under a separate name, the agreement remains with the limited company, being the legal entity. It is usual for factoring companies to require personal guarantees from the directors, rendering the benefits of limited liability worthless.

Hope this helps

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[andie]

hi melanie the company was ltd but when he went into factoring the royal bank of scotland had him as'trading As'. is he responsible for the debts to the creditors or is he covered by limited liability as the creditors was trading with him as ltd. the debts are not to the factoring company but trade creditors.rgs andie

[MelanieGiles]

Andie

Sorry I still don't understand the term "trading as" can you clarify the name of the company and the "trading as" name. Also find out which legal entity entered into the factoring agreement, and whether your husband has personally guaranteed it if there is any outstanding balance owing.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk