Insolvency And The Futility Of Persistence Hunting
Persistence hunting is an art that is almost 2 million years old
, as old as the first hunters before their crude spears and knives. It is still in practice among the bush men of Kalahari Desert who track and chase down deer and kudu to near death from exhaustion, and then spear or knife it from close range. It is a hunt that displays the power of human will power and endurance in short persistence. And that 2 million year old habit has left its visible imprints in our blood too and when it comes to the fore, we find ourselves in winning situations though not always surely not when you are looking down the barrel of a shot gun to find if it is really loaded and insolvencys trigger happy finger is twitching to pull. Perhaps it is not so bad if you are overcome with the dread of your company facing insolvency but it is worse than the above scene if you are already insolvent and still trading.
As the ugly claws of recession digs deeper and wider, company directors who find them-selves bleeding heavily in their battle against an unforeseen devil to keep their businesses afloat are multiplying by the minute. Persistence is a good quality in business but it won't pay beyond a point, not in this recession hit economy. When a director doesnt realize that his company is taking a downturn towards possible insolvency or doesnt want accept that due to emotional attachments, it can make one carry on regardless, hoping things will regulate themselves to normalcy. This kind of an instinctive strategy with the possibility of insolvency looming ahead would only make things worse because at some point or the other the law will take over. It is like loosing the tracks in the middle of a hunt after having gone too far and following your instincts and imagination rather than solid hoof prints in the sand. If it is important for you to save your self and also the company, you must decide on when an where to stop and not to follow a cause that is lost. Some directors who might not be able to make a clear judgment about the point of no return should seek professional support as soon as problems emerge and are identified to be out of control.
As a director would do all that is within in power and reach to fight insolvency and tide through the current economic difficulties. But the consequence of holding on for too long over a business which was already lost could put any director at the risk of facing criminal and civil proceedings.
While some may fail to accept that their business has no chance of avoiding insolvency others would use it as a chance to escape the burden of paying personally guaranteed loans of the company. Directors could be punished for wrongful trading if found making new contracts or accepting credit after they knew or should have known their status as not being able to avoid insolvent liquidation.
by: Paul Smythe
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